Why Small Businesses Should Invest in a Workmen’s Compensation Policy?

Operating a small business involves several responsibilities, including maintaining its reputation, motivating employees, and ensuring their safety. What if an accident happens at work tomorrow? How do you manage the situation when your hardworking team is suffering from the incident? 

Without having a Workmen Compensation policy, a financial burden can entirely fall on you. This commercial policy covers medical costs, compensation for injured employees, and rehabilitation. Therefore, keep reading and understand how this policy can boost morale, build trust, and keep your small business running smoothly.

What is Workmen’s Compensation Policy? 

A Workmen’s Compensation policy is an insurance plan that protects employers from financial liability if an employee suffers a major injury or death due to accidents during employment. 

This commercial insurance plan for small businesses ensures employers get protection against legal expenses, claims, and compensation arising from occupational diseases or workplace accidents. 

Why Should Small Businesses Invest in the Workmen’s Compensation Policy? 

• Maintain Legal Compliance 

According to Indian law, Workmen’s Compensation policy is mandatory for every small business organisation. Companies with more than 20 employees must provide compensation to their employees. It is a smart decision for small businesses to follow employment law and avoid legal penalties.

• Overall Employee Protection 

The compensation is eligible for illnesses or injuries caused in the workplace. Having a workers’ compensation policy helps employers provide comprehensive protection for every employee. It is a safeguard against financial loss for company employees and legal complaints for employers.

• Reduce Lawsuits Against Business 

Every small business must have workers’ compensation insurance to avoid time-consuming, costly lawsuits. This commercial insurance operates on a no-fault basis, meaning an employee can receive compensation regardless of who is at fault for disability, death, or injury.  

• Employer’s Liability Coverage 

Employers of small business organisations have an ethical responsibility to compensate their employees for disabilities, death, or work-related injuries. A Workmen’s Compensation policy provides employers’ liability coverage and helps employees enjoy basic financial support and necessities during emergencies. 

• Effective Risk Management 

Any accident or injury in large or small businesses leads to serious incidents that can hamper finances and business operations. The small business has to pay medical and legal fees, as well as compensation for employee injuries. In this situation, having a Workmen’s Compensation policy covers risk management on behalf of the small organisation. 

• Improve Reputation  

With Workmen’s Compensation policy, small businesses provide financial security for their employees due to work-related partial or permanent injuries, including medical care and compensation for the time being. This creates a positive reputation for the small business organisation among employees and in the industry. A good reputation can boost business operations and attract more employees. 

• Talent Retention and Acquisition 

All business organisations are liable to maintain their social responsibilities and ethical business practices. Having a workers’ compensation policy, small businesses can provide coverage and protect their employees in the event of an unexpected incident. It is a strategy of employee retention and acquisition efforts that keeps your business operations smooth.

• Enhance Employee Morale and Productivity 

With rising medical and living costs, working professionals are looking for an organisation that values them as individuals and provides medical protection. When employees receive medical support during unexpected circumstances, they feel valued and motivated. 

This commercial insurance covers medical bills, medication costs, and employee compensation. Through this, small businesses reduce absenteeism and boost overall productivity with employee morale at the workplace. 

How Does a Workmen’s Compensation Policy Work? 

• Bodily Injury or Death Coverage: If an incident occurs and an employee dies or suffers a physical injury within the workplace, the Workmen’s Compensation policy offers protection. 
• Cover Diseases: For any occupational disease directly caused by employment duties, this commercial policy offers coverage for medical expenses. 
• Legal Payments: It provides compensation eligible under the Employees’ Compensation Act. 
• Defence Charges: If any litigation arises, the Workmen’s Compensation policy provides defence costs and legal fees to the employer of small businesses. 

Why Does Workers’ Compensation Plan Have Legal and Ethical Necessity? 

Under the Indian Employee Compensation Act, employers are legally bound to provide compensation to their employees who are injured or die during employment. In case the employer fails to compensate an employee, they will face the following problems.

1. Civil lawsuits
2. Criminal penalties 
3. Business reputation damage 
4. Risk of revocation or suspension of operating license

Wrapping Up 

Whether small businesses employ part-time, full-time, temporary, or contractual workers, a Workers’ Compensation policy is essential. Warehousing, manufacturing, construction, transportation and logistics providers, commercial and retail setups with a large number of employees must provide employee compensation insurance. With a Workers’ Compensation policy, small businesses can protect their employees against workplace bodily injury or death, and employers against public defamation and legal lawsuits.