Employer liability · Protect
Workmen's (Employee's) Compensation Insurance: What Indian Employers Need to Know
The policy is still sold as “workmen's compensation”, but the law behind it changed in 2025. Here's what the cover is, who needs it, and what it now rests on.
The Workmen's Compensation Act you're thinking of was retired in 2025 — the liability didn't disappear, it moved into the Code on Social Security, 2020.
There is a particular phone call every founder dreads — a worker hurt on the job, a frightened family, and underneath it the question nobody wants to ask aloud: who pays for this? Usually the answer is “our insurance.” Sometimes it isn't — because the cover they relied on was never built to carry a work-injury liability. This guide is about closing that gap.
The short version
- Workmen's (now employee's) compensation insurance funds the compensation you owe when a worker is hurt, disabled or killed on the job.
- The Act you may know as the 1923 Act is now folded into the Code on Social Security, 2020 — in force 21 November 2025, Central Rules 8 May 2026.
- The liability is mandatory; buying a policy isn't separately compulsory for every employer — but it funds a duty you can't escape.
- Group health and ESIC are not substitutes — each covers something different.
What is workmen's compensation insurance?
Workmen's (now Employee's) Compensation insurance is an employer-liability cover that funds the compensation an employer must pay an employee for a work-related injury, disability, occupational disease or death. It is bought by the employer, not the worker, and sits on the employer's side of the table — it pays your statutory liability so a single workplace accident doesn't become a balance-sheet event.
The product is still written as a “Workmen's Compensation” or “Employee's Compensation” policy. What changed is the statute behind it.
The law changed — it's now the Code on Social Security, 2020
The most important thing to know in 2026 is that the Act most guides still quote is no longer the live law. The Code on Social Security, 2020 subsumed and repealed the Employee's Compensation Act, 1923; its Chapter VII (Employee's Compensation) came into force on 21 November 2025.
The Code on Social Security (Central) Rules, 2026 were notified on 8 May 2026. If a page tells you your duty rests on “the 1923 Act” and stops there, it is describing a world that ended in 2025. Commencement differs by appropriate government (central vs state sphere) — counsel to confirm wording. Primary source: indiacode.nic.in.
Do you need it? Liability versus insurance
The liability is mandatory and the insurance usually isn't — but the second exists because of the first. Under Chapter VII an employer is liable to pay compensation for a work-related injury, listed occupational disease or death. Skip the policy and that liability simply lands on you directly.
We go deeper in is workmen's compensation insurance mandatory in India?
What a policy covers (and what it doesn't)
A policy generally covers death, permanent and temporary disablement, and listed occupational diseases arising out of and in the course of employment, plus the legal costs of defending a claim. It does not cover injuries unconnected with work, or those caused by drink, drugs or a wilful safety breach.
The full picture is in what a workmen's compensation policy covers.
| Typically covered | Commonly excluded |
|---|---|
| Death and dependants' compensation from a work-related accident | Injury where no disablement exceeds three days |
| Permanent total, partial and temporary disablement | Injury under the influence of drink or drugs |
| Medical / occupational disease — Third Schedule | Wilful disregard of a safety rule or guard |
| Legal / defence costs before the competent authority | Injuries unconnected with employment; war or allied perils |
| Contractor and PAN-India workforce (extensions) | Anything outside the declared wages and named / unnamed basis |
WC versus ESIC versus group health
These three are not interchangeable. ESIC is a mandatory contributory scheme for lower-wage staff in covered establishments; employee's compensation steps in for those outside ESIC; group health pays medical bills but does not discharge your statutory work-injury liability. The same injury can't be claimed under both ESIC and employee's compensation.
We lay it side by side in workmen's compensation vs ESIC vs group health.
What it costs to get it wrong
The real expense of a missing or mis-built policy is rarely the premium you saved — it's the claim that doesn't pay, or the liability that arrives uninsured. A policy only works if the claim is reported, documented and filed properly and on time; that effort is where our Red Carpet claims team puts its weight.
How a claim actually runs — and what derails one — is in how a workmen's compensation claim works.
More in this guide: arrange workmen's compensation cover · whether it's mandatory · how it differs from ESIC and group health · what a policy covers · what drives the premium · how a claim works.
Frequently asked questions
Is workmen's compensation insurance still called that?
The cover is commonly still called a Workmen's Compensation or Employee's Compensation policy. The underlying law is now the Code on Social Security, 2020 (Chapter VII).
Is it the same as the Employees' Compensation Act, 1923?
That Act — renamed from the Workmen's Compensation Act in 2010 — has been repealed and subsumed into the Code on Social Security, 2020.
Is the insurance legally compulsory?
The liability to compensate is statutory; the insurance is how most employers fund it. It is not separately compulsory for every employer the way motor third-party cover is.
Does my group health policy already cover this?
No. Group health pays medical bills; it does not discharge the statutory compensation you owe for a work injury.
Who is the cover for?
The employer. It pays the employer's legal liability to an injured worker or their dependants.
What happens when you talk to us
A 20-minute video call with a Growth Advisor — no obligation, and no quote pushed. It opens with a five-minute video from our founder on how the benefits stack works and why Ethika exists; the rest is your questions. You'll leave with an honest read on your current cover and claims experience, and a straight answer on whether we can genuinely help — even if you never become a client.
20 minutes with a Growth Advisor. No obligation.
A note on this page. Everything here is general information, not insurance, legal, financial or tax advice, and nothing is an offer. For advice about your situation, talk to us.