This class of insurance is governed by Tariff regulations as such, Rates, as well as rules and regulations must be observed as per Tariff.
The Policy seeks to indemnify the Insured employer against his liability under :
W.C. Act, Fatal Accident Act 1855 and
at Common Law.
If any employee in his immediate service shall sustain personal injury by accident or disease arising out of and in course of his employment except those stated under Schedule III of W.C. Act – Part ‘C’.
In addition the Company will also pay for all legal costs and expenses incurred with its consent in defending any claim for such compensation.
The laws applicable are as under :
The Workmen’s Compensation Act, 1923 and subsequent amendments the wage limit was removed by omitting the words : “on monthly wages not exceeding Rs.1000” as a result, the W.C. Act as also in W.C., Tariff would apply to all employees irrespective of the amount of wages.
However it is provided that “where the monthly wages of a workman exceed Rs.1000, his monthly wages for the purpose of computation of compensation for death and permanent disablement shall be deemed to be Rs.1,000 only”. This would mean that calculations for maximum liability under the Act would be based on a monthly wage of Rs.1000 only.
“Factor-multiplier” is a new concept introduced by the 1984 amendment for the purpose of working out lump-sum compensation amount in case of “death“ and “Permanent Disablement”. The provisions are as follows :
Where death results from injury :
An amount equal to 40 per cent of monthly wages multiplied by the relevant factor or Rs.20,000 whichever is more.
Where permanent total disablement results from injury:
An amount equal to 50 per cent of monthly wages multiplied by the relevant factor of Rs.24,000 whichever is more.
For each age W.C. Act lays down factor multiplier between 228.54 and 99.37 and for some age groups value of F.M. would be as follows :
Completed year of age of workman Factor-Multiplier
Not more than 16 years 228.5 (Max.)
Not more than 20 years 224.00
Not more than 30 years 207.98
Not more than 40 years 184.17
Not more than 50 years 153.09
Not more than 60 years 117.41
Not more than 65 or more 99.37 (Min.)
Taking into consideration the above basis, the minimum and maximum liability of the Company would work out as under :
Where death results from injury Rs.20,000 Rs.91,416
Where permanent total
Disablement result from the injury Rs. 24,000 Rs. 1,14,270
In case of permanent partial disablement or amputation of a full limb or a part, the Act lays down different percentages for loss of earning capacity according to the nature and extent of injury.
Liability for Temporary Total Disablement is payable half monthly being 25% of monthly wages. Maximum monthly compensation not to exceed Rs.500/- payable for maximum duration of 5 years.
The Indian Fatal Accidents Act, 1855: This Act enables claims for damages upto an unlimited amount to be maintained against a person who by his wrongful act, neglect or default causes the death of another.
The Common Law : Gives a person the right to claim from another, damages upto an unlimited amount for injury or loss sustained on account of the negligence of such other person or of his servants acting within the scope of their employment.
Following 2 forms of cover are available.
Table ‘A’ : Indemnity against liability under Indian Workmen’s Compensation Act, 1923 and amendments thereto and Indian Fata Accidents Act, 1855 and at Common Law.
Table ‘B’ : Indemnity against liability under Indian Fatal Accidents Act, 1855 and at Common Law.
The insurance under Table ‘A’ can be extended by charging an additional premium of 50% of applicable Tariff rate to cover liability out of diseases mentioned in part ‘C’ of Schedule III of Workmen’s Compensation Act as amended. Otherwise liability for such occupational diseases is excluded from basic covers.
The insurance also does not cover any interest and/or penalty which may be imposed on an Insured on account of failure to comply with the requirements of the W.C. Act as amended.
The Tariff classifies the risks according to the trade or business and gives alphabetically the classified risks. Against each trade or business so classified the Tariff gives the premium rates per mille which is applied to the total earnings of the employees so Insured during the period of insurance. It is important therefore that the trade and occupation of the worker are correctly described in the proposal form.
The term “earnings” include regular salary/wages, overtime, value of board/lodging, housing accommodation, bonus and all perquisites, privileges or benefits in cash or kind. Initially a provisional premium calculated on estimated total earnings is charged. This is subject to adjustment at the end of the policy period when the insured will be required to furnish details of the actual earnings on the “Wages Adjustment Statement” form.
These details of actual earnings should be submitted to the Company within one month of the expiry of the policy.
Before every renewal make sure that the wages Adjustment statement is obtained from the Insured and premium is adjusted accordingly, since the policy is issued for estimated wages for all workmen on pay roll.
Check whether all the workmen entitled to compensation under the Act have been included. Otherwise there would be selection of risk.
Declined Risk : Following risks must be referred to the Regional Office before acceptance : Aviation Ammunation filing, breaking down of Explosive, Collieries, Demolition as a separate contract, explosive factory, fireworks factory, Gunpowder factory, Mines, Quarries, Railways, shipping, Tunnelling.
Exclusions under the Policy :
War and allied perils
Liability to employees of contractor (unless specifically covered)
Any employee who is not a “workman” within the meaning of the Law
Any contractual liability.
Claims : The official handling claims should be thoroughly conversant with W.C. Act and should familiarize himself with its provisions, rules, regulation, procedures. The claim becomes payable if the accident in respect of which it is made arises “out of and in the course of the workman’s employment”. Over a period of years numerous legal decisions have been passed over the interpretation of the expression “arising out of and in the course of employment”.
Under the workmen’s compensation Act following are the few exceptions under which no compensation would be payable :-
Any injury which does not result in total or partial disablement for a period exceeding 3 days.
In respect of any injury for the first 3 days of disablement unless such disablement lasts for a period of 28 days or more.
For any injury not resulting in death caused by accident directly attributable to :-
Workman having been at the relevant time under the influence of drinks or drugs.
Willful disobedience of the workmen to an order expressly given or to a rule expressly framed for the purpose of securing the safety of the workmen.
Wilful removal or disregard by the workman of any safety guard or other devise which he knew to have been provided for the purpose of securing his safety.
Employees of sub-contractors have right to claim compensation direct from the principal. The principal, however, may obtain reimbursement from the main contractor. Cover in respect of claim on the principal to pay compensation to contractor’s workmen is normally excluded from the scope of the policy. Provision is however available to cover the workmen of the contractor by endorsement when wages paid to the contractor’s workmen are included in the amount of wages declared and extra premium thereof is charged.
It is important to note that if a workman institutes a claim before the Workmen’s Compensation Commissioner for damages in respect of his injury, he cannot subsequently file a civil suit against his employer. On the other hand, if he institutes a claim under Common Law, he cannot subsequently claim compensation under the Workmen’s compensation Act. The workman cannot take with both hands. he has to choose his form of redressal.
In this context it is interesting to note that :
Both the Fatal Accidents Act and Workmen’s Compensation Act abolished the defence of “rule of fellow-servant or common employment”;
Also the doctrine of assumption of risk called ”volenti non fit injuria” is not permitted as defence under the W.C. Act;
When contributory negligence is established, it helps to reduce the liability of the employer under Common Law, the W.C. Act however, does not permit contributory negligence to be raised as a defence, but, as observed earlier; the Act absolves the employer of liability in respect of claims against injury, not resulting in death, arising out of the workmen’s willful disobedience or willfully disregarding the safety measures laid down to be observed or being under the influence of alcohol or drug.
The amount of compensation depends on the injuries sustained and the percentage of loss of earning capacity consistent with the injuries sustained. The physician or surgeon who treated the injured employee should give a certificate as to the nature of injuries sustained and the percentage of loss of earning capacity resulting therefrom based on the provisions laid down in the W.C. Act.
When we are not satisfied with such a certificate, we may direct the employee to a registered medical practitioner of our choice and insist on a certificate from him.
In claims involving death of the workman, the inquest report of the Police or other authorities, the death certificate from the local authorities and the post-mortem report, if any, should provide the required evidence as a proof of loss.
The employer should take steps to ensure that every accident is brought to the notice of the Company, Every fatal or serious accident should definitely be reported to the Workmen’s Compensation Commissioner within the time limit specified in the Act.
The compensation payable in respect of fatal injuries must be deposited with the commissioner. In the case of permanent disablement benefits, it is necessary to draw up a Memorandum of Agreement setting forth the terms of the settlement which must be registered with the Commissioner. Only the half-monthly payments for temporary disablement may be made directly to the insured. Hence, in all lump sum payments a discharge from the Commissioner is a sufficient discharge to us and for half-monthly payments the insured’s discharge would be sufficient.