Can We Have Both ESI Act Coverage and Workmen Compensation Policy Together?

Dear Senior,

This is Sunil Prajapati, working as an HR Executive in MNC Group. I would like to inquire whether we are covered under the ESI Act, as the management is considering taking out a Workmen Compensation Policy for those employees who are covered under the ESIC Act. Is it possible for us to have both the WC policy and ESI Act coverage? Please advise. Generally, where ESIC is applicable, we prefer not to have a Workmen Compensation Policy.

Regards,
Sunil Prajapati

The Workmen's Compensation (WC) Act was implemented in 1923 and is applicable to all establishments. The Employees' State Insurance Corporation (ESIC) Act was enforced later in 1948. While WC is applicable to all, when ESIC is applicable, it supersedes all coverage for employees. Therefore, if an establishment falls under both Acts, there should be no issue, and it will be beneficial for the employees.

Dear Bijayakumar,

Thank you for your kind information, but I would like to clear some doubts I have regarding WC and ESI. My question is: Can an employee benefit from both ESIC and WC in the event of an accident? If an employee meets with an accident, can they avail benefits from both bodies? Please clarify.

Regards,
Sunil Prajapati

Mr. Sunil Prajapati,

If the ESI Act is applicable and the workers are covered under it, then WC is irrelevant and need not be taken. While WC covers only on-the-job incidents for the worker alone, ESI covers the risk from home to job and back, on the job, and for the dependent family members as well. It also pays for the medical leave period, maternity leave/expenses, etc.

Kindly go through the ESI Act.

Tks

PL Kanthan

Clarification on Employee Benefits Under ESI and Compensation Acts

Sir, Sections 53 and 61 bar employees from receiving benefits under both Acts (i.e., under the ESI Act as well as under the Employees' Compensation Act, 1923). Moreover, the question also arises as to why the employer should pay for employee compensation under the Compensation Act, 1961 when they are already contributing under the ESI Act for the said employee?

Update on Wage Ceiling Under the ESI Act

Further, it appears that the final notification regarding the enhancement of the wage ceiling under the ESI Act, 1948 has not been issued by the appropriate government.

In the case of the General Manager, Karnataka State Road Transport Corporation, Bangalore, and others, a Division Bench of the Karnataka High Court followed its earlier judgment and reiterated that Section 53 created a bar to the recovery of compensation under any other law in cases where the insured person had received an employment injury [AIR 1972 Mysore 255]. It was held by the Mysore High Court that the right to sue under the Motor Vehicles Act originates from the substantive law, namely, the law of tort.

(A tort, in common law jurisdictions, is a civil wrong that unfairly causes someone else to suffer loss or harm, resulting in legal liability for the person who commits the tortious act, called a tortfeasor.)

The Court analyzed the provisions of Section 53 of the Act and observed on page 260: "In the background and context, we have to consider the effect of the bar created by Section 53 of the ESI Act. The bar is against receiving or recovering any compensation or damages under the Workmen's Compensation Act or any other law for the time being in force or otherwise in respect of an employment injury. The bar is absolute, as can be seen from the use of the words 'shall not be entitled to receive or recover, whether from the employer of the insured person or from another person, any compensation or damages under the Workmen's Compensation Act, 1923 (8 of 1923) or any other law for the time being in force or otherwise.' The words employed by the legislature are clear and unequivocal. When such a bar is created in clear and express terms, it would neither be permissible nor proper to infer a different intention by referring to the previous history of the legislation. That would amount to bypassing the bar and defeating the object of the provision. In view of the clear language of the section, we find no justification in interpreting or construing it as not taking away the right of the workman who is an insured person and an employee under the ESI Act to claim compensation under the Workmen's Compensation Act."

The judgment under appeal in the present case of the Full Bench of the Kerala High Court was considered, and it was observed that "we cannot agree with some of the assumptions and observations made by the Kerala High Court. Section 53 disentitles an employee who has suffered an employment injury from receiving compensation or damages under the Workmen's Compensation Act or any other law for the time being in force or otherwise. The use of the expression 'or otherwise' would clearly indicate that this section is not limited to ousting the relief claimed only under any statute, but the workings of the section are such that an insured person would not be entitled to make a claim in torts, which has the force of law under the ESI Act."

Refer https://accountscadrecsir.wordpress....nsation-claim/

Regards,

As some other members have already pointed out, employees covered under ESIC are not allowed to claim any compensation under the WC Act (now called the Employees Compensation Act, not the Workman Compensation Act). So, the insurance company will also refuse to reimburse any compensation towards an employee who is covered under ESIC. Therefore, the practice of taking such a policy covering those already under ESIC is a waste of money. Instead, the WC Policy should be taken only for those employees who are outside the coverage of ESIC.

Further, it's a good idea to take a public liability insurance cover for all those who are visitors, contractors, etc., for any accident when they visit your premises or for anything incidental to that visit where you can be held responsible or liable. They are not covered by the WC policy as they are not your employees.

No. Both schemes are similar/parallel schemes. Compensation can be taken only under one scheme. Further, sections 54 and 61 of the ESIC Act prohibit any other compensation under any other scheme or act.

Case studies:
(The New India Assurance Co. Ltd vs S. Govindaraj on 15 June 2012) and A. Trehan vs. Associated Electrical Agencies and Another (1996) 4 SCC 255.

Dear Prajapati, As you mentioned, if the organization is covered under ESIC, is Workers' Compensation mandatory? In this regard, I have studied and come to the conclusion that there is no need for a Workers' Compensation policy if ESIC covers it. According to Section 53 of the ESIC Act, if any medical claim or compensation arises, only one authority is applicable, and you can claim at only one place, either ESIC or under the Workers' Compensation policy.

Regards, Shivaji Aher

Hello Sunil Prajapati,

Yes, it is possible to take a Workmen Compensation Policy even if your company is covered under the Employees' State Insurance Corporation (ESIC) Act. In fact, having both ESI and a Workmen Compensation Policy can provide comprehensive coverage for your employees in case of any work-related injuries or accidents.

While the ESIC Act provides medical and cash benefits to employees who suffer from work-related injuries or illnesses, the Workmen Compensation Policy provides compensation to the employees or their dependents in case of any disability or death caused by an accident or injury during employment.

It is important to note that the Workmen Compensation Policy is mandatory under the Workmen Compensation Act, 1923, for all employers in India, irrespective of whether the employees are covered under the ESIC Act or not. Therefore, taking a Workmen Compensation Policy is a legal requirement and can help you fulfill your legal obligations as an employer.

In summary, it is possible and advisable to take a Workmen Compensation Policy even if your company is covered under the ESIC Act. It can provide comprehensive coverage for your employees and help you fulfill your legal obligations as an employer.

Mr. Sabat, Your information is incorrect. The Workmen's Compensation Act (now renamed as the Employee Compensation Act) applies only to those who are not covered by ESIC. Please read the act.