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All about Workers' Compensation and Employee State Insurance?

16-09-2022 |

Employers across the globe ensure the well-being of their employees, boost their morale and establish an employee-oriented workspace by offering a slew of employee welfare programs. These welfare schemes can range from group lunches/dinners and annual retreats to comprehensive employee insurance schemes, such as group health insurance, workplace accident insurance and group life insurance.
 

Among the various employee insurance schemes in India, there are two popular social security schemes aimed at ensuring and enhancing employee welfare -  Workers' Compensation and Employee State Insurance.
 

What is a Workers' Compensation Insurance Policy?
 

The Workers Compensation Insurance Policy or WC insurance is a type of insurance policy designed to financially protect employees in the wake of any accidents that occur at the workplace.
 

The scheme helps employers discharge their legal liability toward their employees. The framework of the policy is defined and confined by the Workmen's Compensation Act, 1923, as well as the much earlier litigation titled Fatal Accidents Act, 1855.
 

Here are the major features and benefits of the WC Insurance Policy.
 

  • Compensation to employees and/ or their families in the event of death resulting from an accident at the workplace
  • Compensation to employees and/ or their families in the wake of injuries arising out of a workplace accident, including:

    • Permanent total disability
    • Permanent partial disability
    • Temporary disability (Total and partial alike)
       
  • Compensation to employees and/ or their families for injuries or death caused due to any occupational disease.
     

Not only is WC insurance applicable to the people employed in India, but employees with foreign nationality can also be eligible for this scheme, provided they are employed by an Indian company. Under the Workers' Compensation Insurance Scheme, employers in various fields are covered, including:
 

  • Manufacturing firms
  • Services firms
  • Trading firms
     
What is an Employee State Insurance Policy?
 

The Employee State Insurance Policy is a social security scheme aimed at providing the requisite medical and financial assistance to employees across the country. Owing its genesis to the Employees' State Insurance Act, 1948, the ESIC Insurance Scheme covers the following:
 

  • Compensation to employees and/ or their families for the medical expenses arising out of sicknesses
  • Compensation to employees for maternity expenses
  • Compensation to employees for disability or death resulting from an injury at the workplace
     

Not only does the ESIC cover include financial assistance for the beneficiaries, but it also has a provision for the substitution of the loss of income during the period of illness and recuperation. The scope of the Employee State Insurance Act is restricted to India and the people employed within the sovereign boundaries of the country.
 

All about  the Workers' Compensation Insurance Policy and the Employee State Insurance Policy

 


On the surface, both WC Insurance and ESIC Insurance seem to fall under the same bucket of employee insurance schemes.
 

Point of Variation

Workers' Compensation Insurance Policy

Employee State Insurance Policy

Nature of the scheme

The Workers' Compensation Insurance Policy is a non-contributory scheme.

The Employee State Insurance Policy is a contributory scheme, and the contributions are as follows (from July 1, 2019):

  • Employer's contribution: 3.25%
  • Employee's contribution: 0.75%

Maximum wage limit for subscription

The maximum wage for subscription to the Workers' Compensation Insurance Policy is ₹8,000 per month.

As of January 1st, 2017, the maximum wage limit for subscription to ESIC insurance is:

  • ₹21,000 per month for able-bodied persons
  • ₹25,000 per month for persons with disabilities

Applicability

The WC Insurance Policy is applicable to the employees of Indian companies, even if they are the citizens of a foreign country.

The ESIC Insurance Policy is applicable only to Indian citizens.

The minimum number of employees

There is no minimum number of employees for the application of the Workers' Compensation Insurance Policy.

For the Employee State Insurance Policy to be applied to an organization, it must have a minimum of 10 employees. In some states, this number is 20 employees.

Claim Filing

The Workman compensation claim is to be filed with and paid by the applicable employer.

The ESI claim is to be filed with and paid for by the Employees' State Insurance Corporation (ESIC). You can file this claim and check your ESIC claim status on the UMANG app.


Life Insurance Plans for Employee Benefits
 

We hope all is clear for both. Along with these two schemes, employers in India offer multiple programs for employee welfare. One such scheme is a group life insurance plan.
 

Employers buy life insurance policies on behalf of their employees in order to provide them with some degree of financial protection against accidents and ailments, along with financial stability for the employer’s family in case of unfortunate eventualities.

However, even if your employer has purchased a life insurance policy for you, it is advisable to extend the scope of your overall life insurance coverage. There might be instances when you are changing organizations, and there is an intervening period where you are not covered under either group life insurance. Also, most professionals are taking sabbaticals for cross or upskilling. Therefore, buy a life insurance policy over and above the one offered by your employer, to ensure continued coverage.
 

Check out the wide range of life insurance policies offered by Tata AIA Life Insurance Company now and secure your and your family's finances and future. You can use our online life insurance calculators to browse the various plans and choose the one that suits your financial plans and budget. All the best! 
 

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Frequently Asked Questions

What is the maximum wage limit for employees covered under the Employee State Insurance Scheme? 

The maximum wage limit for employees covered under the Employee State Insurance Scheme is ₹21,000 per month. However, this limit is ₹25,000 per month for persons with disabilities. If an employee earns northward of the monthly wage ceiling defined under the scheme, they cannot be a beneficiary under ESIC insurance

Does the Workers' Compensation Insurance Scheme apply to foreign nationals? 

Yes, the Workers' Compensation Insurance Scheme applies to the citizens of foreign nations who are employed by Indian companies

What is the minimum number of employees an organization must have in order to offer them ESI coverage?

If an organization wishes to offer ESIC insurance to its employees, it must have a minimum of 10 employees. In some states, this minimum limit stands at 20 employees. No such limit restricts subscription to the Workers' Compensation Scheme, however. 

Disclaimer:

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and does not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.