Workmen Compensation vs. Employee State Insurance: What's the Difference?

Employee protection at the workplace is of utmost importance, as they are the ones exposed to the highest degree of risk. There are two types of safety policies that safeguard employees in India: workers compensation insurance and employee state insurance.

While both of them offer safety, workers’ compensation policy offers injury protection and ESI provides social security. Find out how these two employee safety policies differ from each other so you can pick the right one for your employees.

Workmen's Compensation Vs Employee State Insurance: A Quick Glance

Difference Between Workmen's Compensation and Employee State Insurance Explained

Definition

Workmen's Compensation: Workmen's compensation insurance is an injury insurance for employees, which is specified under the Workers' Compensation Act 1923. Under this policy, the employer is obliged to compensate the worker if he suffers any workplace injury/illness and provide him with medical expenses.

Employee State Insurance: The Employee State Insurance Act 1948 lays down the foundation for ESI in India. It is also a type of labour insurance that can be defined as social security insurance for workers, under which they receive medical and financial assistance from the employer. It is a contributory scheme under which the employer and employee both contribute to the fund.

Coverage

Workers’ compensation insurance covers the following:

• Employee death
• Permanent total disability
• Permanent partial disability
• Temporary total disability

Employee State Insurance covers the following instances:

• Sickness benefit
• Maternity benefit
• Dependents benefit
• Medical benefit
• Disablement benefit

Contribution Scheme

Workers' Compensation Insurance: WC insurance is a non-contributory scheme. Under this type of insurance, no contribution is expected from the employees and the payment for compensating the workers is entirely the employer's responsibility.

Employee State Insurance: Under the ESI scheme, the employer and employee both contribute a fixed percentage of the salary to the ESI fund. The employer contributes 3.25% and the employee contributes 0.75%.

Wage Limit

Workers Compensation Insurance: There is no specific wage limit for employees who can be covered under this type of insurance. The benefits of this plan are available to employees working in an organisation.

Employee State Insurance: To be covered under ESI, the wage limit for able-bodied employees is ?21,000 per month and for disabled individuals, it is ?25,000 per month.

Nature of Payment

Under workmen's compensation, the payment made is of a lump-sum nature and under ESI, the payments are made periodically to employees.

Type of Employees

Workmen's Compensation: This is applicable to employees whom an employer hires to work for his trade or business. Casual workers are not covered under this Act. It is applicable to businesses or firms that employ drivers, labourers, workers employed for civil work and so on.

Employee State Insurance: For compensation under ESI, a worker is a person who is employed for wages in a factory or an establishment covered under the Employee State Insurance Act 1948. It includes the workers who are directly employed by the principal employer, through an immediate employer, or those who are hired for temporary services. The provisions of the ESI Act apply to various businesses, including restaurants, cinemas, hotels, transport businesses, etc.

Claim Process

Under workmen's compensation insurance, employees can raise a claim by following the steps below:

• When an accident or event occurs, an employee must immediately inform the employer.
• The employer must then gather all the necessary information related to the incident as per the insurance requirements.
• All the information must be submitted to the insurance company so the claim proceedings can begin.
•  After reviewing the claim and verifying the documents, the insurer will approve or reject the claim.

As for the claims under Employee State Insurance, there is no specific process to be followed. However, the eligible employee or his dependents is entitled to receive medical benefits provided they visit an ESI empanelled hospital along with the ESI card. Besides, workers may also receive cash benefits under the ESI scheme in case of sickness, maternity, unemployment, disability, etc.

Enhance Workplace Safety with TATA AIG Workmen's Compensation Insurance

Both workmen’s compensation insurance and the ESI scheme function to benefit the employees and protect their well-being. However, there are some significant differences in their coverage, scope and eligibility.

If you are an employer looking for workmen’s compensation insurance for the safety of your employees, then TATA AIG is the name you can trust. With many years of experience in the insurance industry, they provide comprehensive, affordable and customisable workmen’s compensation insurance to protect your employees from workplace accidents.

Their plans provide the much-needed safety net to the employees if they suffer from illness or injury and it also protects the employer against financial loss that may occur from compensating the employee.