Workers compensation is an integral part of running a business. It ensures that employees receive fair compensation if they suffer injuries while performing their duties. This offers peace of mind to workers as they know they are adequately cushioned in case of any eventualities.
Given India’s federal structure, multi-state workers’ compensation or employer-employee insurance is a tall order. Hence, workers compensation insurance across states is governed by the Employee’s Compensation Act. Every state must comply with this law, which ensures that employees injured at work receive medical and financial support.
Compensation provisions under the Employee’s Compensation Act
The Employee’s Compensation Act, earlier known as the Workmen Compensation Act, lays down compensation provisions that businesses operating in the Indian territory must follow related to workplace injuries suffered by workers. Compensation is provided in the case of:
- Bodily injuries suffered during an accident
- Temporary disablement
- Permanent disablement (total or partial)
- Death
- Injury or death resulting from working conditions
The compensation is provided as per the type of disability suffered (see table).
| Type of Disability | Compensation Offered |
| Temporary disability | Up to 25% of the employee’s monthly wages |
| Permanent total disability | 60% of the monthly wage or ₹1.4 lakh, whichever is higher |
| Permanent partial disability | Certain percentage of the earnings loss by employee due to injury |
| Death | 50% of the wages or ₹1.2 lakh, whichever is higher |
Countries where multi-state workers compensation exist
Unlike India, where a single law governs workers’ compensation, in countries like the US, every state has its own compensation laws. These laws are outlined in state statutes and can vary in:
- Coverage requirements
- Benefits offered
- Employer obligations
- Dispute resolution processes
Employers operating in multiple states must comply with each state’s laws. This requires careful planning and legal guidance. Multi-state compliance brings several challenges, including:
- Understanding of the different laws – Keeping track of each state’s unique policy is challenging
- Knowing the varying benefits and covers – Coverage offered in one state may not be offered in another
- Managing costs – Premiums may vary across states which can affect business expenses
Summing it up
With a single framework regarding workers’ compensation in India, the rules are clear with almost no ambiguity. This makes compliance easy and less tedious. That said, businesses must be proactive and know the rules to ensure their workforce gets adequate compensation when needed.