Workers' Compensation Policy: Is It Needed with Existing Group Insurance Coverage?

We have 25 staff working in a plant/factory setup, and based on their salaries, they do not fall under ESIC. Is it necessary to take a WC policy when you have your staff covered by Group Accident, Group Mediclaim, and Group Life insurance policies?

Since they are out of the ESI coverage net, they will be automatically covered by the EC (WC is no longer applicable) Act of 1923, subject to meeting the requirements of Schedule 1 of the Act.

Group Insurance Policies

Group Accident, Group Mediclaim, and Group Life insurance policies are wider in scope and coverage. They would definitely be of help in complying with the EC Act.

Coverage and Calculation Under the EC Act, 1923

The coverage of employees, the nature and method of calculation, and the forum for adjudication under the EC Act, 1923 are entirely different from the insurance policies mentioned in the post. In those policies, the settlement of claims is strictly based on the value of the policy. Therefore, in my opinion, such policies cannot be substituted for an insurance policy taken to cover the liabilities of the employer in respect of employment accidents under the EC Act, 1923.

It is also not mandatory under the Act to take an insurance cover. The important point is that taking an EC policy would cover the entire liability of the employer.

In addition to our learned members' reply on insurance policies, Employees' Compensation Policy is statutory in the absence of the ESIC Statute. Hence, you need to take an EC Policy with any private insurance companies available at your location.

Optional Policies: GMC and GPA
The other two policies, GMC Policy and GPA Policy, are only optional. However, these policies will give your company a reputation for having welfare aspects, providing an edge over other companies. Though the amount spent on these policies is small compared to other welfare expenses like canteen and transport, they add value to an organization's ethics in line with multinational companies.

Additional Policy: Group Term Life Insurance
In some companies, they are going the extra mile by adding a wonderful policy called Group Term Life Insurance Policy with LIC. In the event of the unfortunate death of an employee, the nominee will be paid a hefty sum, which not only supports the family but also builds trust in the company.

I endorse the view of Shri Umakanthan. There is no bar to having policies like group accident and Mediclaim. The objective is to indemnify and provide coverage in case of need.

Comparison of EC and PA Policies

EC policy is a little expensive compared to PA policy. As long as the sum covered under PA meets the quantum of EC amount based on the incident, it is okay. Under PA, weekly payments and medical treatment (subject to additional load) are available.

Factors to Consider

One has to keep in mind these factors to evaluate, see protection, and save from indemnity.

Regards, Ram K Navaratna HR Resonance