Workers' Compensation definition

Workers’ compensation is an insurance product which covers an employee’s salary and medical benefits should they be injured in the course of their jobs. The cover is provided in return for the employee giving up their right to sue the employer for negligence over the injury suffered.

The benefits provided typically include remuneration for future and past economic loss, weekly or monthly payments to replace salaries, life insurance should the worker die, and medical payments to cover expenses following the injury.

There are typically no provisions for mental distress, pain and suffering from the injury or punitive damages for employer negligence.

In some countries employers are required by law to have a suitable workers’ compensation policy, although this will often depend on the industry and the degree of risk that employees face in their jobs e.g. workers in a rock quarry are more likely to suffer a serious injury than those in an office.