Understanding WC Policy: Is It Mandatory and How Should Workmen Be Counted?

I have a few questions and need advice from seniors and esteemed members:

1. Is the WC Policy mandatory? If not, is there any judgment on this?

2. Is it compulsory to have the exact number of workmen in the WC Policy? Can we have up to 50% of the total strength without specifying names? Again, is there any judgment copy on this?

As far as I know,

Insurance Requirements Under the Employees' Compensation Act, 1923

1) There is no statutory mandate in the Employees' Compensation Act, 1923 for taking up an insurance policy against injuries caused to employees due to employment accidents. However, if the employer is an owner of a motor vehicle, Section 146 of the Motor Vehicles Act, 1988 mandates a suitable insurance policy in respect of third parties' risk arising out of the vehicle's use in a public place. Section 147(1) of the M.V. Act makes it obligatory for the insurer to cover the liability under the E.C. Act, 1923 in respect of death or bodily injury of an employee arising out of or in the course of employment, and such liability is with regard to the available compensation under the Act. In other words, the insurer virtually steps into the shoes of the employer for the purpose of paying the compensation to the workman. In case you are a Contract Labor Establishment, your Principal Employer can insist on an E.C. Insurance Policy in respect of the contract labor you are going to supply. If the contract is very dear to you, you have to take up an insurance policy accordingly.

Insurance for Workmen

2) As it is, there is no legal compulsion to take insurance in respect of all the workmen likely to be actually employed. Since insurance is virtually a contract between the employer and the insurer, the conditions are to be discussed and decided mutually. Normally, unnamed insurance policies are taken in respect of workmen category-wise depending upon the normal requirements of any work.

The necessity for quoting judgments arises only in case of practical ambiguities, and I do hope there is none regarding your queries!

Regards

As rightly said by Mr. Umkanthan, it is not mandatory statutorily to obtain an insurance cover for the employees except as provided under the Motor Vehicles Act. However, what is mandatory is the liability to pay compensation to the employee if injured in the course of employment. Thus, it is advisable to take insurance, whether as an immediate employer or as a principal employer, to cover not only the employees against injuries but also yourself against liabilities under the EC Act 1923.

Regards,
B. Saikumar
Mumbai

Thank you very much for your valuable suggestions, Umakanthan.M Sir and B.Saikumar Sir. I am requesting judgment on whether our principal employer is insisting on taking out a WC Policy for the total number of employees, even though the contract does not specify this requirement. We have made numerous attempts to persuade them, but they are not paying attention and instead asking for legal documentary proof. Therefore, I would greatly appreciate any advice on how to satisfy their request.

Regards,
Abhishek

In general practice, Group Insurance Policies for liability under the E.C Act, 1923, are typically unnamed policies where insurance companies do not require the specific number of contract laborers expected to be employed. Instead, they ensure adequate coverage for every category of employees and establish rates of wages on which compensation would be determined in the event of claims. The likelihood of injury to all workers in an employment accident is very low. Nevertheless, the Principal Employer's insistence on obtaining a policy covering the maximum number of contract laborers is understandable. He will either reimburse the cost, or you will need to adjust your rate accordingly. Please proceed accordingly.

Thank you.

Workmen's Compensation Policy

A Workmen's Compensation policy is taken in the interest of the company. By taking the policy, any liability that arises will be taken care of by the insurance company.

Regards,
J. Ambashankar

First of all, you have not mentioned whether your first establishment falls under the purview of a factory or an establishment where 10 or 20 employees are working. Secondly, you need to determine whether the factory or establishment is covered under the ESI Act. If it is covered by the ESI Act, you can include employees drawing a salary of up to Rs. 15,000 per month under the Act. Once employees are covered by the ESI Act, there is no need to provide coverage under any other insurance policy.

However, if the ESI Act does not apply and an accident occurs arising out of or during the course of employment, the principal employer would have to pay substantial compensation to the injured person or their legal heirs. To avoid this, we can obtain a master policy for all employees under Employees' Compensation with an Insurance Company by paying the premium.

I hope this information meets your requirements.

Regards, BV Sudhakar