Accidents or injuries in a workplace can sometimes result in long-term consequences for employees. While some injuries may completely restrict a worker from working, others may reduce their capacity to earn but still allow them to take up certain tasks. This latter condition is called permanent partial disablement (PPD). It is an important part of compensation under the workmen compensation policy, which ensures financial support for workers who suffer from work-related accidents or illnesses.
This blog explains what permanent partial disablement means, its role in employee compensation, eligibility and how compensation is calculated.
Understanding employee’s compensation policy
An employee’s compensation policy, often referred to as the Workmen’s Compensation Act (now aligned with the Employee’s Compensation Act in India), is designed to provide monetary relief when employees suffer injuries, illnesses or fatalities arising out of and during employment.
This policy:
- Covers compensation for temporary and permanent disablement.
- Ensures financial protection for dependants in case of an employee’s death.
- Provides support to employees who cannot fully resume work after an accident.
By offering compensation in defined scenarios, this policy safeguards both employers and employees against financial stress arising from workplace accidents.
Permanent partial disablement in workmen’s compensation
Permanent partial disablement refers to a condition where the worker sustains an injury that does not completely restrict them from working but results in the partial loss of earning capacity. Examples include:
- Loss of a finger, hand or limb.
- Impaired vision in one eye.
- Reduced hearing ability.
The Employee’s Compensation Act provides a structured schedule to determine the percentage of earning capacity lost in each case. For instance, losing a thumb may account for a different percentage of disablement than losing an entire arm.
This assessment helps ensure compensation is calculated fairly in proportion to the extent of the disability.
Benefits of having permanent partial disablement coverage
Having coverage for permanent partial disablement ensures that employees receive financial security if their capacity to work is reduced permanently due to a workplace accident. Key benefits include:
- Income replacement: Compensation supports workers whose earning potential has been reduced.
- Employer protection: Reduces disputes between the employer and the employee by defining compensation clearly.
- Security for dependants: Provides financial stability to the family of the injured worker.
- Compliance: Helps employers meet their statutory obligations under employee protection laws.
Who is eligible for permanent partial disablement compensation?
Employees may be eligible for compensation if:
- The injury arises out of and during employment.
- The disablement has been certified by a qualified medical practitioner as permanent and partial.
- The loss of earning capacity can be assessed in percentage terms according to the schedule provided under the Act.
It is important to note that the exact eligibility criteria may vary depending on the case and assessment.
Calculating compensation for permanent partial disablement
The compensation amount for PPD is calculated using a formula set out in the Employee’s Compensation Act. The factors include:
- Monthly wages of the worker.
- Relevant factor based on the employee’s age.
- Percentage of loss of earning capacity determined according to the injury.
The formula is:
Compensation = 60% of monthly wages × relevant factor × percentage of loss of earning capacity
For example:
If an employee earning ₹15,000 per month loses a thumb (30% loss of earning capacity as per the schedule), the calculation will apply the above formula using the relevant factor linked to their age.
This ensures the compensation is proportional to the degree of disablement and the worker’s earning profile.
Conclusion
Permanent partial disablement is an important concept under the workmen compensation policy, as it ensures financial support to employees who lose part of their earning capacity due to workplace accidents. The policy provides clarity on compensation, offering protection to both employees and employers.
By understanding the eligibility, benefits and calculation method, employees can be aware of their rights and employers can fulfil their statutory obligations in case of workplace injuries.
FAQs
-
What is meant by permanent partial disablement?
It refers to a situation where an employee suffers an injury that permanently reduces their ability to earn, but does not completely prevent them from working.
-
How is the compensation amount decided for permanent partial disablement?
The amount is calculated using the worker’s monthly wages, age factor and percentage of loss of earning capacity as specified under the Employee’s Compensation Act.
-
Does every injury qualify as permanent partial disablement?
Only injuries certified by a qualified medical practitioner and listed under the schedule of the Act are considered. Other injuries may need to be evaluated on a case-by-case basis.
-
Can the compensation amount vary between employees with the same injury?
The amount may differ because it depends on factors like age, wages and other relevant factors.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It is advised to verify the currency and relevance of the data and information before taking any major steps. Please read the sales brochure / policy wordings carefully for detailed information about on risk factors, terms, conditions and exclusions. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.