What is Workers’ Compensation Insurance?
Workers’ compensation insurance is a scheme or policy that provides financial support to employees who suffer injuries, illnesses or disabilities while working. For example, if an employee is injured while performing their job or develops a work-related disease, the scheme will provide compensation for their medical expenses, lost wages and other related costs. If the worker passes away, the scheme will offer financial support to their family. Therefore, the workers’ compensation policy acts as a safety net for workers during tough times.
The following are the key features and benefits of workers’ compensation policy:
- Employees and their families are compensated for injuries resulting from workplace accidents, including:
o Permanent total disability
o Permanent partial disability
o Temporary disability (whether total or partial)
- It offers compensation to employees and their families in case of death due to workplace accidents or occupational diseases.
- It covers rehabilitation costs, such as physical therapy, job training and support with finding new employment, if needed.
- The policy offers financial support for lost wages to employees and their families.
- The scheme helps employees manage financial liabilities related to workplace accidents and health issues.
What is Employee State Insurance (ESI)?
The Employee State Insurance (ESI) scheme, managed by the Employees’ State Insurance Corporation (ESIC), is a more comprehensive social security scheme. It aims to protect employees in case of employment-related injuries, sickness, death as well as maternity-related issues. However, employees must be registered under the scheme to access medical care and other benefits. This financial support helps replace salary lost due to illness or injury, ensuring they are taken care of during difficult times.
The key features of Employee State Insurance (ESI) are:
- It applies to employees earning a salary up to INR 21,000 per month (INR 25,000 per month for disabled individuals).
- The insurance provides medical care for employees and their families.
- It offers assistance for sickness, maternity and work-related injuries or diseases.
- The scheme also covers permanent or temporary disability.
- ESI is a contributory scheme, so employees must contribute a small percentage. These contributions go towards supporting the ESI scheme.
- Employees covered under the scheme can avail of many health benefits. It covers doctor’s consultations, diagnosis, hospitalisation bills, and more.
- The scheme offers health benefits to employees as well as their dependents, ensuring they receive quality and timely healthcare.
How is Workers’ Compensation Policy Different from Employee State Insurance?
Here’s how workers’ compensation insurance is different from employee state insurance policy:
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Parameter
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Workers’ Compensation Policy
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Employee State Insurance (ESI)
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Administration
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The scheme is governed by the Employees’ Compensation Act of 1923.
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ESI is managed by the Employees’ State Insurance Corporation (ESIC).
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Nature of the Scheme
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This is a non-contributory scheme, meaning employers bear the full cost.
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This is a contributory scheme, where both the employer and the employee contribute. The employer contributes 3.25%, while the employee contributes 0.75%.
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Benefits
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It offers compensation for medical expenses, lost wages and death benefits.
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It offers monetary benefits for medical treatment, maternity, disablement and death.
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Scope
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The scheme is limited to workplace-related injuries or diseases.
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ESI covers a wide range of conditions, including sickness, maternity and unemployment.
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Applicability
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Workers’ compensation insurance is generally mandatory for most industries.
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It applies to establishments with 10 or more employees in some states and 20 or more in others.
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Maximum Wage Limit for Subscription
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For the workers’ compensation scheme, the wage limit is INR 15,000 per month.
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The wage limit for ESI is INR 21,000 for regular employees and INR 25,000 per month for disabled individuals.
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Who is Covered
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Workers’ compensation insurance covers all employees of Indian organisations, even if they are foreign nationals.
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ESI covers only Indian nationals.
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Filing of claims
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Claims for workers’ compensation insurance are filed and handled by the employer.
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ESI claims are filed and managed by the Employees’ State Insurance Corporation (ESIC).
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Conclusion
Before deciding which framework applies, employers should check the nature of the establishment, employee category and applicable statutory requirements. Maintaining accurate employment, wage and accident records can also make compliance and claims easier. Where additional financial protection is required, consider workmen compensation insurance based on your workforce and business risks.
FAQs
1. What is the main difference between Workers’ Compensation and ESI?
Workers’ Compensation covers specified employment-related injury, death or disablement, while ESI also provides medical care and benefits for sickness, maternity and employment injury.
2. Who is eligible for ESI coverage?
Employees in covered establishments earning up to ₹21,000 per month are generally eligible. The limit is ₹25,000 for persons with disabilities.
3. Who pays for ESI?
The ESI scheme is financed through contributions from both employers and employees. The employer contributes 3.25% of wages and the employee contributes 0.75%, subject to the applicable rules and exemptions.
Related Articles
Worker’s Compensation Insurance Guide
Workmen Compensation Insurance Features Guide
What is the Difference Between ESI and Group Health Insurance?
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the topic featured in the article. 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.