How Much Compensation for Death at Work Can Employees Recover?
When an employee dies due to an accident arising out of and in the course of employment, compensation is payable
In India, the workplace death compensation is governed by law. While most families are unaware of the actual legal entitlement they receive, the compensation amount depends on factors such as age, wages, and statutory guidelines notified by the government.
In many cases, employers also secure additional protection through workers’ compensation insurance to ensure claims are settled smoothly. Here is a brief explanation of the legal meaning of compensation for death at work, including the amount payable, who receives it, and why insurance matters.
What Does “Compensation for Death at Work” Mean?
When an employee dies due to an accident arising out of and in the course of employment, compensation is payable.
The Employees’ Compensation Act, 1923, imposes legal obligations for compensation in the event of death at work. This Act makes employers legally liable to compensate the deceased worker’s dependents. The Employee Compensation Commissioner oversees this process.
Many employers also secure workers’ compensation insurance under their larger business insurance portfolio so that the insurer funds this legal payout and not a sudden heavy loss directly from the company’s own accounts.
How Much Compensation is Payable for Death at Work?
The formula mentioned in the Act for calculating the compensation payable for death at work is:
Compensation = 50% of monthly wages x Relevant age factor
So, a worker earning ₹25,000/month who dies at age 40 (age factor: approx. 184.17)
Compensation = 50% of 25,000 (₹12,500) × 184.17 = ₹23,02,125
This is the legal base amount payable.
Additionally, funeral expenses as per the Act are payable on top of the main compensation.
The Employees’ Compensation Act, 1923, does not only specify compensation for death. It also defines how much compensation must be paid for partial injuries and permanent disabilities.
Permanent total disability: 60% of monthly wages × Relevant Age Factor
Permanent partial disability: 40% of monthly wages x Relevant Age Factor
Who is Eligible to Receive the Death Compensation in India?
According to the Act, the dependents of the employee are entitled to receive the death compensation. The dependents defined under the Act include spouse, minor children and dependent parents.
If the employee had already nominated a person in the company records, that nominee becomes the primary receiver of compensation. If there is no nomination, the nominee is decided based on the dependency evidence.
Importance of Workmen’s Compensation Death Benefits
Covers the Expenses
Workplace death leads to immediate expenses, including medical bills, documentation fees and funeral costs. The workmen’s compensation benefits ensure coverage for these expenses.
Financial Support for Dependents
A sudden death eliminates the household's primary income source. Compensation replaces income legally.
Financial Stability
Compensation payouts help families maintain continuity of home expenses, children’s education and EMIs. This is why many companies secure workers’ compensation insurance to ensure that no delays occur during the settlement process.
Choose Comprehensive Workmen’s Compensation Plans with TATA AIG
For employers, securing the right business insurance is a necessity. It is risk protection and responsible governance.
TATA AIG offers workers’ compensation insurance as part of its business insurance portfolio to help employers ensure that, in the unfortunate event of an employee's death at work, compensation is released quickly and legally, without the added stress of litigation for the family. TATA AIG supports Indian employers in keeping their workforce protected, compliant and financially safeguarded.