This article will help you answer these questions and also provide more insight into workmen’s compensation policy / employer’s liability policy and its benefits.
Does your business need workmen’s compensation policy? The answer to this question is almost always ‘yes’. Every employer is expected or required to compensate their employees for any injury sustained in the course of their employment. It is therefore important for every employer to have Workmen’s compensation / Employer’s Liability policy as part of their business model.
What is Workmen’s Compensation Policy?
Workmen’s compensation policy is an insurance policy issued by an insurance company to provide indemnity to employers for all sums for which the employer may be liable in respect of injury to their employees by accident or disease under the Workmen’s compensation Act 1987 (PNDC Law 187). Employment and Labour issues in Ghana are regulated by the Labour Act, 2003 (Act 651). This Act consolidate all laws relating to labour, employers, trade unions and industrial relations. (Edwards 2003) described the relationship between employer and employee as a system where both parties have common and divergent interest, this is a situation where employer and employee communicate their requirement and views to one another in terms of agreement on work related issues. Examples of injuries covered are injuries caused by faulty equipment, trips and falls, burns or other injuries caused by fire, injuries caused by employee negligence etc.
Employers include the government, any statutory body or authority, any person or body of persons whether in corporate or not, the legal personal representative of a deceased employer. The labour Act 2003 (Act 651) Section 9C requires employers to ‘’take all practicable steps to ensure that their workers are free from risk of personal injury or damage to his or her health during and in the course of the worker’s employment or while lawfully on the employer’s premises’’ The employer is liable for personal injury to his workmen by accident arising out of and in the course of employment or any diseases.
A workman is any person under a contract of service with an employer whether by way of manual labour, clerical work or otherwise and whether such contract is expressed or implied, oral or in writing. The labour Act 2003 (Act 651) Section 10A state that an employee has the right to ‘’work under satisfactory, safe and healthy conditions’’
Workmen’s compensation Act 1987 (PNDC Law 187)
The primary legal authority for Workmen’s Compensation regime and administration in Ghana is the Workmen’s Compensation Law of 1987. The Act recasts the law in relation to compensation awarded to workers for personal injuries arising out of and in the course of their employment. The new enactment grew out of a study undertaken by the Tripartite National Advisory Committee on Labour. It repeals the Workmen’s Compensation Act 1963 (No. 174) and the 1966, 1968 and 1969 amendments thereto. Statutory Instruments made under those Acts remain in force until amended, varied or revoked in accordance with the provisions of the new law. Section 1 of the Act state that ‘’This Act applies to employees employed by the Republic as well as private persons, except in the case of persons in the Armed Forces’’. Section 2(1) also state that ‘’Where an employee sustains personal injury by accident arising out of, and in the course of employment, the employer is liable, subject to this Act, to pay compensation in accordance with this Act’’
Is there any difference between Workmen’s Compensation and Employer’s liability policy?
Workmen’s compensation policy provides cover for injury or illness at the workplace without the employee alleging any liability on the employer. Employers liability policy on the other hand is triggered when the employer is been sued for negligent by the injured employee. Employer’s liability covers all legal expenses.For example, if one of your workmen’s or employee get injured at the workplace, the Workmen’s compensation policy will cater for the employee’s injury. This will take place if the employee gives up their right to sue the employer in relation to their injury. There are cases where the employee will give up these benefits and sue the employer for damages if they believe the injury was caused by gross negligence or intentional harm by the employer. Employees will usually choose this option if they believe they can win the case and get more compensation. If such claims arise, employer’s liability which is usually built in the workmen’s compensation policy is triggered to cover for the cost of all legal defense. Both policies cover workplace injury but just a different aspect of it. The two policies complement each other and most insurance companies sell them as a non-separable package.
What details do insurance companies require in order to enable them issue a Workmen’s Compensation Policy / Employer’s Liability Policy?
The employer will need to complete a proposal form which will form the basis of the insurance contract. Main details required on the proposal form are:
- Full details on the number of employees (name, sex, position etc.). The employer must give full information on the number of employees in each employment class. The employment class can be clerical (bank staff) or non-clerical (construction workers).
- Their estimated annual earnings.
- Safety mechanisms in place to prevent accident and any other injuries at the workplace.
- Claims history or previous insurance history with any other insurance company.
Wages adjustment statement?
This is a statement sent by the insurance company in addition to the renewal notice to the employer at the end of every year. The statement will give information about the total number and class of insured employees, their wages and salaries paid to them in the past year. This is to enable any adjustment in premium to be made, either by imposing an additional premium or by refunding part of the premium paid at the commencement of the year.
What does workmen’s compensation / Employer’s liability policy cover?
Medical Expenses
The policy provides cover for medical bills for all injuries sustained by employees at the place of work. This include all emergency medical cares, prescriptions and cost of surgery. For example, if one of your electricians fall and breaks his legs at a customer’s house whiles fixing their air condition, workmen’s compensation will cover for their hospital bills.
Compensation for temporal incapacity
The policy provides periodic payment of lump sum for employees who are temporary incapacitated (whether total or partial) as a result of injuries sustained at the workplace. The periodic payment shall be the difference between the monthly earnings the employee was earning at the time of the accident and the monthly earnings which the employee is earning or is capable of earning in any other suitable employment or business after the accident.
Compensation for Permanent total incapacity
Where permanent total incapacity results from the injury the amount of compensation shall be a sum of money equal to ninety-six months’ earnings according to the workmen’s compensation Act 1987 (PNDC Law 187).
Legal cost
Employer’s liability policy provides cover for all legal cost. This include all damages in respect of judgement delivered by a court of competent jurisdiction for injuries suffered by an employee as a result of the employers negligent.
What are the general exclusions under Workmen’s Compensation / Employer’s Liability policy?
Workmen’s Compensation / Employer’s Liability policy like any other general insurance policies have exclusions. Exclusions refers to cases which are not covered under the policy. The most common exclusions applicable to workmen’s compensation policy are listed below:
- Death or injury by accident or disease directly attributable to; war invasion act of foreign enemy hostilities (whether war be declared or not).
- Self-inflicted injuries caused by the employees or with the knowledge of the employer
- The policy does not cover employees of any contractor employed by the insured or the policy holder.
- Any claim arising from an event known to the employer or business owner prior to inception of the insurance policy
How do I buy Workmen’s compensation / Employer’s liability insurance policy?
The most common channels available to purchase workmen’s compensation policy is through the direct insurer or an intermediary (broker or agent).
- Buying the policy directly from the insurance company
Employers can buy their workmen’s compensation policy by directly contacting the insurance companies.
- Buying the policy through an insurance broker or agent
Employers can also purchase travel insurance policy through insurance brokers or agents. Insurance brokers are independent intermediaries who can assist you to purchase your insurance package from any insurance company of your choice. Most corporate organizations use the services of insurance brokers due to the technicalities surrounding the policy and the extra professional services they provide.
How much does workmen’s compensation policy cost?
The cost of purchasing workmen’s compensation policy depends on the category of work your business is engaged in and your total annual salary. Premiums are expected to be high for employees engaged in dangerous activities such as construction or mining than an office worker. For example, the minimum premium that will be payable for a non-clerical employee with an annual salary of GHS 100,000.00 will be GHS 1,477.00
How do I make a claim under a Workmen’s Compensation / Employer’s Liability?
The claims process for Workmen’s compensation or employer’s liability insurance policy is a little bit different from other general insurance policy. Employers or employees need to follow the following steps in making a claim under this policy.
- Claim notification:
Claim notification is the first step to be taken by the employer / employee in the event of an employee injury. They are required to notify both the insurance company and the labour office. In Ghana, the labour office is the body responsible for the computation of employee benefits or compensation in the event of workplace injury.
- Completion of claims and medical report form.
The employer or employee is required to complete and submit a claim and medical report form issued by their insurance company and the labour office respectively. The medical report form is supposed to be completed by a medical practitioner. The report is expected to provide information on the medical disability rate and the degree of incapacity of the injured employee.
- Claims assessment and computation of compensation
Claims assessment and benefits computation are performed by the labour office. The labour office considers the extent to which the employees impairment affect his or her earning ability, ability to return to work or do any similar job and his or her physical ability in determining the amount of compensation. The degree of incapacity could be 65%, 70%, 90% or 100%. The labour office issues a computation sheet to be presented to the insurance company for payment. The computation sheet is submitted together with the claim and medical report form.
- Claims payment
Claims payment is the last stage in the claims management process of every insurance company. Claims are paid by taking into consideration the Highest Executive Salary (HES). The current Highest Executive Salary in Ghana is GHS 15,681.12. Claims is paid by taking into consideration the highest executive salary. The mode of claims payment can be cheque, bank transfer or mobile money.
Conclusion
Employers have the ultimate responsibility to cater for all injuries sustained by employees at the place of work. Having an insurance policy to cover workplace injury is very important if even it is not mandatory in the jurisdiction which your business operate. Every business should do well to include this type of policy in their business model. Workmen’s compensation / Employer’s Liability insurance policy provides peace of mind to both the employer and the employee in the event of accident or illness. Majority of non-life insurance company in Ghana underwrite this policy. Employers can either patronize the policy directly from their trusted insurers or rely on their intermediaries for any professional advice.
Reference
https://www.ilo.org/dyn/natlex/natlex4.detail?p_isn=3823&p_lang=en
https://www.jstor.org/stable/41218143
https://www.expert.ai/blog/emerging-trends-in-workers-compensation-necessitate-claims-automation
Edwards, P. (2003) The Employement Relationship in the Field of Industrial Relations: Theory and Practice in Britain. Oxford: Blakwell
Ghana’s 1992 Constitution.
Ghana Labor Act, 2003 (Act 651).
(1987)Workmen’s Compensation Law, (P.N.C.L. 187) of 1987