Risks faced by contractual workers at your business premises you should worry about

Anyone working at a designated factory, warehouse, shop, or another office premise where he/she deals with machines, tools, and equipment, whether mechanical or electronic, is prone to the unique risks associated with the workplace. Also, these risks are not selective but apply to all kinds of workmen on the floor, be it, consultants, supervisors, managers, full-time workers or contractors.

Who is a Contractual Worker?

A contract worker is employed as contract labour/employee hired on a contract (usually from a third-party service provider). The person working is supervised and compensated by the said establishment (employer or organisation) in lieu of the services rendered.

Unlike full-time employees, a contract worker is providing service for a temporary job. The person (on contract) agrees to work with an organisation under pre-determined terms and conditions. This can be working for a stipulated time, a purposed task, or a functional role, depending upon the exact requirement of the employer (also a contractor in this case) and the skill set of the person hired.

It is a flexible option and gives the organisation the benefit of seeking specialized support without actually hiring a person. The appointed person is committed to completing the task as per the exact requirement of the contractor. Only then he/she will be paid for the services rendered. The contract can be renewed on an annual basis on defined terms and conditions.

Do You Employ Contractual Workers?

Traditionally, labour-intensive industries like automobile manufacturing, pharma, or FMCG, has been linked to the term contractual employees. However, it is no longer a term linked to only blue-collared jobs. Many new industries like software or telecom companies have come forward to hire specialists to do a job. There are even doctors, business managers, and chartered accountants, working on a contractual basis.

Take, for example, software engineers for an IT company. A contract employee will be required to work on the premise of the employer under a supervisor (of the company) to deliver the expected task. However, he/she is not a full-time employee, and therefore, poses a less financial burden on the organisation. Also, the work productivity is higher as the person is expected to work on a scheduled task.

Even though a contractual worker is employed on a temporary basis, the person is still exposed to a certain level of risks. A person is working under the same conditions as a full-time employee sometimes, and therefore, it is important to comprehend the risk factor. Together, the temporary workforce in India is over 40% of the total labour force.

What Are the Risks Faced by Contract Workers?

  • Life risk
  • Disability risk
  • Health risk
  • Personal injury or personal accident
  • Travel risks
  • Risk of contracting infections or suffering from a disease
  • Financial risk

Are You Liable as the Employer for Wellbeing of Contract Workers?

According to the Workers Compensation Act 1923, an employer has statutory obligations towards the contractual employees. Under the legal terms of Workers Compensation Act, the following is covered.

  • In the case of personal injury to a contractual worker, the employer (as defined in the Act) is liable to pay compensation except for injuries not occurring during the duty hours, or not recognised during employment.
  • All occupation diseases contacted by the contractual worker is recognised as injury. An occupational disease is defined as a disease peculiar to that job. Also, as per the clause of the act, the person should be working continuously with an organisation for at least six months.
  • The injury clause also covers partial or full disability.
  • Any contractual service recognised under the Act makes it legally obligatory for the employer/contractor to pay wages/salaries on time. Failing to do so is considered as a default, and a penalty is imposed on the defaulter.
  • Death risk of a contractual worker at workplace or conditions recognised as a course of employment.
  • Liability towards a contractual worker in case of insolvency of an employer.

Solution lies in Worker Compensation Insurance

Workmen Compensation Insurance is a policy to provide protection against any risk to an employee. An organisation (the insurer) has an option to cover contractual workers under this type of insurance cover. It makes it very affordable for an employer to cover any job risk.

Many insurance providers like Future Generali or Tata AIG provide worker compensation policy tweaked in favour of contemporary working conditions. The insurance coverage includes protection for occupational diseases (like in the case of pharma or hospitals, all employees are subject to the risk of contracting infections). A separate contract has to be signed to provide insurance benefit to contractual employees.

How to Buy?

Buying a proper insurance for your contractual employees will need comparing multiple policies from about 20 insurers offering the product in India. Best thing to do will be to connect with online insurance advisors like SecureNow, to benefit from their knowledge and experience in aiding corporates for their insurance needs.

These advisors not only offer quotes from multiple insurers, but they also assist in the management of policy and claim processing.