How to Calculate a Settlement

in a Workman’s Compensation
Injury?
/Group Insurance /How to Calculate a Settlement in a Workman’s Compensation Injury?
Workers’ compensation settlement is estimated in the following manner based on the incidence
which has led to the compensation:
Before the calculation of settlement under workmen compensation insurance policy following
points should be noted:
• Maximum monthly wage allowed for the calculation of compensation under the Act is Rs. 8000
• Workers from the age of 18 years and above are eligible for the compensation
• Relevant Factor is an age-based multiplier defined in Schedule IV of the Workmen Compensation
Act

1. Compensation in Case of Death:

• 60% of the Monthly Wage x Relevant factor as per the age of the worker
• Funeral expenses of Rs. 5000 is also payable
• The minimum amount payable is Rs. 140,000

2. Compensation in case of
Permanent Total Disability (PTD)
• 50% of the Monthly Wage x Relevant factor as per the age of the worker
• The minimum amount payable in this case is Rs. 120,000

3. Compensation in case of
Permanent Partial Disability (PPD)
• A percentage of the worker’s compensation will be payable under PPD. This percentage needs to be
estimated based on the “extent of the reduction in earning capacity” of the worker.
 4. Compensation in case of
Temporary Disability (Total or Partial)
• 25% of the Monthly Wage of the Worker payable every half month
• The compensation is payable if the worker is disabled for more than three consecutive days
• The maximum tenure for the compensation is five years
Relevant Factor Schedule IV of Workmen Compensation Act (now known as – Employee
Compensation Act)
Age is the completed years of age, of the workman or employee on the last birthday. The last
birthday is the latest birthday of the workman which is immediately preceding the due date of
compensation liability.
Age Factor Age Factor Age Factor Age Factor
16 228.54 29 209.92 42 178.49 55 135.56
17 227.49 30 207.98 43 175.54 56 131.95
18 226.38 31 205.95 44 172.52 57 128.33
19 225.22 32 203.85 45 169.44 58 124.7
20 224 33 201.66 46 166.29 59 121.05
21 222.71 34 199.4 47 163.07 60 117.41
22 221.37 35 197.06 48 159.8 61 113.77
23 219.95 36 194.64 49 156.47 62 110.14
24 218.47 37 192.14 50 153.09 63 106.52
25 216.91 38 189.56 51 149.67 64 102.93
26 215.28 39 186.9 52 146.2 65 or more 99.37
27 213.57 40 184.17 53 142.68
28 211.79 41 181.37 54 139.13

Read About: What type of medical expenses are covered under the workmen compensation
insurance policy?

Case on Settlement in Workman Compensation

Ramashankar Prasad was a part-time dump truck driver at R.J Construction Co. Last week, a lot of
large water pipes he was delivering fell on his vehicle and him, and he died on the spot.
Another worker was uploading the pipes from the truck, and Prasad was sitting beside him.
However, during the unloading, the pipes became unsettled, and they fell over the truck and on
Prasad who died due to internal head injuries. Being the sole breadwinner of the family, the death of
Ramashankar puts a question mark on the future of his family of four people, including his senior-
citizen mother. For relatives, also, the death of a 28-year old Ramashankar came as a blow. Fondly
called Rama by his friends, everyone was worried about the future of his family.
Luckily, R.J Construction Co. had a workman compensation policy which paid compensation to
Ramashankar’s family. When the matter reached to the HR department, they computed the eligible
compensation amount. At the time of the accident, he was earning Rs 8,000. So as per the act, he
was liable to get 50% of the Monthly Wage x Relevant factor as per the age. It means, his family
got Rs 8,47,160 (4,000×211.79).