What Is The Difference Between Workmen's Compensation Insurance Policy And ESIC?

Contents hide

1 What is Meaning of ESIC?

2 What is an Employee State Insurance Policy?

3 What are the Coverages under the Employee State Insurance Policy (ESIC)?

4 What is a Workmen’s Compensation Insurance Policy?

5 What are the Coverages under the Workmen’s Compensation Insurance Policy (WC Policy)?

6 What is the Difference between Workmen’s Compensation Insurance Policy and ESIC?

6.1 1. Contribution Limit in ESIC and WC Policy

6.2 2. Wage Limit in ESIC and Workmen’s Compensation Insurance Policy

6.3 3. Nature of Compensation Payment

6.4 4. Number of Employees

7 Is ESIC compulsory for all employees?

8 Can an employee avail compensation under both ESIC and WC Policy?

9 Conclusion

What is Meaning of ESIC?

The meaning of ESIC is Employee State Insurance Corporation. ESIC comes under Minister of Labour and Employment, Government of India.

Employee Benefits Package are an important part of retaining and attracting talented employees. Employers cover their employees under various insurance plans such as a Group Health Insurance Plan, Group Personal Accident Insurance Policy, a Group Term Life Insurance Policy etc.

Another two important insurance policies that provide social security benefit to employees in India are Workmen’s Compensation Insurance Policy and Employee State Insurance (ESIC). Even though both offer similar benefits, there are differences in the way contribution is made, compensation is provided and in the eligibility criteria.

This article will explain the differences between Workmen Compensation Insurance Policy and Employee State Insurance Policy.

What is an Employee State Insurance Policy?

Employee State Insurance Policy is a scheme managed under the Employee State Insurance Act 1948. It protects employees against sickness, maternity, disablement or death suffered as a result of employment injuries.

The ESIC Scheme applies to companies that employ 10 or more people, such as hotels, restaurants, cinemas, logistic operators, etc. The scheme is self-financed as the employees make regular monthly contributions upto a certain percentage of their wages.

What are the Coverages under the Employee State Insurance Policy (ESIC)?

ESIC provides a range of coverages such as

Sickness Benefit
Disablement Benefit
Maternity Benefits
Dependents Benefits
Medical Benefit

What is a Workmen’s Compensation Insurance Policy?

A Workers Compensation Insurance Policy is a type of insurance policy which covers the legal liability of the employers to provide compensation to the employees in case the employee suffers from employment related disablement or death. The WC Insurance Policy is governed by the Workmen’s Compensation Act 1923 and Fatal Accidents Act 1855.

What are the Coverages under the Workmen’s Compensation Insurance Policy (WC Policy)?

Death
Permanent Total Disablement
Permanent Partial Disablement
Temporary Total Disablement

Other add-on covers can be chosen to include cover for Medical Expense and Occupational Diseases as well.

What is the Difference between Workmen’s Compensation Insurance Policy and ESIC?

There are some key differences between the Workmen’s Compensation Insurance Policy and ESIC which are listed below:

1. Contribution Limit in ESIC and WC Policy

ESI scheme (Employee State Insurance Scheme) is a contributory scheme where the contribution is made by both the employer and the employee as a fixed percentage of the salary. The employer contributes 3.25% of salary while the employee contributes 0.75% for a total share of 4% from 1^st July 2019 onwards.

The Workmen’s Compensation Insurance Policy is a non-contributory policy where the complete contribution is made by the employer to cover his liabilities in the case of an disablement or death that occurs at the workplace.

2. Wage Limit in ESIC and Workmen’s Compensation Insurance Policy

ESIC has a provision to cover employees upto a Wage Limit of Rs21,000 per month for able-bodied people and this limit increases to Rs25,000 per month for a disabled person. There is no wage limit to subscribe to the Workmen’s Compensation Insurance Policy.

3. Nature of Compensation Payment

Another area where the WC Policy and ESI Scheme differ is the nature of compensation payments. The Compensation Amount under the ESI Scheme are paid on a periodic basis while the WC Insurance Policy pays the compensation amount on a lumpsum basis.

4. Number of Employees

A company requires a minimum of 10 employees to avail the benefits of ESI Scheme while there is no restriction on the number of employees under the Workmen’s Compensation Insurance Policy.

The table below illustrates the differences between Workmen’s Compensation Insurance Policy and ESIC Policy succinctly:

	Workmen’s Compensation Insurance Policy	Employee State Insurance Policy
Contribution Limit	WC Policy is a non-contributory scheme	The ESI Scheme is a contributory scheme requiring the following contributions from 1st July 2019 onwards: Employer’s Contribution – 3.25% Employee’s Contribution – 0.75%
Wage Limit	No Limit	Rs21,000 per month
Nature of Compensation Payment	Lumpsum	Periodic
Number of Employees	No Limit	Minimum of 10 employees are required to be eligible for ESI Policy
Claim Settlement	Claim Settled by WC Commissioner	Claim Settled by Employee State Insurance Corporation (ESIC)

Is ESIC compulsory for all employees?

Yes. All establishments covered under the ESI Act and employing more than 10 employees must register with the ESIC and contribute towards the ESI scheme. Employees earning upto Rs21,000 per month are eligible to avail the benefits of ESI Scheme.

Can an employee avail compensation under both ESIC and WC Policy?

No. An employee can avail benefit only from one scheme and not under both. Depending on the organization and the monthly wages of the worker, an employee can either be compensated under ESI or Workmen’s Compensation Insurance Policy.

Conclusion

Workmen’s Compensation Insurance Policy and ESIC are both important forms of insurance for employees. Both policies provide benefits to employees, however it is necessary to be aware of the differences. The benefits of Workmen’s Compensation Insurance Policy are immense and if you wish to purchase a WC Policy for your organisation, you can email us at insurance@qian.co.in or call us on 022-22044989. We would be glad to assist you.