Workers’ compensation or labour insurance policy is an integral instrument of social security. It encompasses various measures implemented to protect the interests of individual workers and their families.
Understanding the relationship between social security and workers’ compensation is crucial for organisations to take the necessary steps to safeguard their employees and finances from liabilities due to claims.
What is Social Security in India?
The Code on Social Security, 2020 (SS Code) establishes measures to safeguard employees. It ensures that employees have access to quality healthcare and income security during periods of unemployment, work-related injuries, maternity leave, or in the event of the death of an employee.
The Social Security Code 2020 was passed in September 2020 and forms part of India’s labour reforms. The code merges some existing social security laws and aims to include the unorganised workforce within the domain of social security. Here are some of the social security instruments to know about:
- Workers’ compensation or labour insurance policy
- Maternity Benefits
- Employee Provident Fund
- Employee State Insurance
- Employees Liability
What is Workers’ Compensation Insurance?
Workers’ compensation, also known as a WC policy, is a type of commercial insurance that provides coverage against legal and financial liabilities to employees. The policy provides financial compensation to employees of an organisation for injuries, disability or death that occur due to workplace accidents.
Workers’ compensation insurance helps employers fulfil their financial and legal obligations as per the Workmen Compensation Act 1923.
Benefits of Workers’ Compensation Insurance
There are several benefits of getting workers’ compensation insurance for small business owners, such as:
Compliance With Law
Organisations are legally mandated under the Workmen’s Compensation Act 1923 to provide compensation to employees. This law applies to all companies with 20 or more employees. They are required to provide financial compensation to their employees in the event of workplace injuries or accidents.
Employee Protection
Having a labour insurance policy within an organisation is essential for employee safety. Employees are the building blocks for any organisation’s success; their safety is the company’s top priority.
This is especially true for businesses that are exposed to day-to-day risks, such as those in the construction and manufacturing industries.
In such situations, having a WC policy is beneficial for both employees and employers. For employees, it provides financial protection, and for employers, it enables them to comply with the law.
Cover’s Employer Liabilities
WC policy is also beneficial for businesses as it provides coverage for their liabilities towards injured employees. Every employer has an ethical responsibility to provide coverage to their employees in case of work-related injuries, disablement or death.
The insurance covers the employer’s liability by providing employees with financial support to meet their medical and basic expenses.
Reduce Lawsuits Against Businesses
Organisations that have a labour insurance policy are also safeguarded from legal procedures. It saves them time and money that would otherwise be spent on costs associated with lawsuits and penalties.
As the WC policy operates on a no-fault principle, employees are eligible to receive compensation regardless of who is at fault for the injury, disability, or death. This means employers are fulfilling their responsibility, which saves them from legal troubles.
Helps in Risk Management
Any injury or death sustained by an employee in an organisation can have a negative impact on its business operations. It includes penalties and lawsuits against the company. However, if a WC policy is in place, in such situations, the insurance will manage the risk on the company’s behalf.
Boosts Employee Morales
Another benefit of having a labour insurance policy for an organisation is that it helps boost employee morale. Employees are an integral part of any organisation; when they feel protected and valued, it is reflected in their work performance.
By providing employees the financial security of a labour insurance policy, employers can achieve high employee morale.
Positive Brand Image
WC policy also helps organisations create a positive brand image for themselves. Providing financial support to employees during emergencies fosters a positive reputation for employers among their staff. Moreover, it also helps create a better public image in the eyes of society and stakeholders.
Social Security and Workers’ Compensation Interconnection
The relation between social security and WC policy is that workmen compensation is a part of the social security landscape.
Although workers’ compensation only addresses workplace injuries, the core values are similar to those embodied by Social Security. That is collective responsibility, solidarity and equal resource distribution.
Summing Up
Employees are exposed to various workplace dangers, and social security and labour insurance policies help provide them with better financial protection.
That is why having a social security instrument, such as a labour insurance policy, is made mandatory by law. Organisations can choose a trusted insurer like TATA AIG to get a WC policy for their organisation and safeguard their interests and their employees.
Santosh Kumar is a Professional SEO and Blogger, With the help of this blog he is trying to share top 10 lists, facts, entertainment news from India and all around the world.
