Dear Colleague,
WC not applicable for ESI Covered Employees
ESI is applicable for employees who draw wages up to 21K, as you know. For these employees, the accident risk, medical support, and so on are fully taken care of by the ESI Scheme based on contributions by employers and employees. The moment an employee is covered under ESI, then WC will not be applicable. The employee covered under ESI can only seek benefits under ESI, and no claim will be allowed under WC.
When might WC be needed?
However, in the case of employees who are drawing above 21K wages and are not covered under ESI, it is suggested to have a WC policy for those employees to mitigate the risk on the part of the employer who needs to compensate non-ESI employees in the event of any employment injury, disability, death, etc. If you have a WC policy, then it will protect. If you operate in an area that is not notified under ESI and is a non-operating area by ESI, then also a WC Policy is suggested.