Workers' compensation or workers' comp is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her employer for the
tort A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishable ...
negligence Negligence (Lat. ''negligentia'') is a failure to exercise appropriate and/or ethical ruled care expected to be exercised amongst specified circumstances. The area of tort law known as ''negligence'' involves harm caused by failing to act as ...
. The trade-off between assured, limited coverage and lack of recourse outside the worker compensation system is known as "the compensation bargain.” One of the problems that the compensation bargain solved is the problem of employers becoming insolvent as a result of high damage awards. The system of collective liability was created to prevent that and thus to ensure security of compensation to the workers. While plans differ among jurisdictions,
provision Provision(s) may refer to: * Provision (accounting), a term for liability in accounting * Provision (contracting), a term for a procurement condition * ''Provision'' (album), an album by Scritti Politti * A term for the distribution, storing and ...
can be made for weekly payments in place of wages (functioning in this case as a form of
disability insurance Disability Insurance, often called DI or disability income insurance, or income protection, is a form of insurance that insures the beneficiary's earned income against the risk that a disability creates a barrier for completion of core work func ...
), compensation for economic loss (past and future), reimbursement or payment of medical and like expenses (functioning in this case as a form of
health insurance Health insurance or medical insurance (also known as medical aid in South Africa) is a type of insurance that covers the whole or a part of the risk of a person incurring medical expenses. As with other types of insurance, risk is shared among m ...
), and benefits payable to the dependents of workers killed during employment. General damage for pain and suffering and
punitive damages Punitive damages, or exemplary damages, are damages assessed in order to punish the defendant for outrageous conduct and/or to reform or deter the defendant and others from engaging in conduct similar to that which formed the basis of the lawsuit. ...
for employer negligence are generally not available in workers' compensation plans, and negligence is generally not an issue in the case.

Origin and international comparison

Laws regarding workers compensation vary, but the Workers' Accident Insurance system put into place by Prussian Chancellor
Otto von Bismarck Otto, Prince of Bismarck, Count of Bismarck-Schönhausen, Duke of Lauenburg (, ; 1 April 1815 – 30 July 1898), born Otto Eduard Leopold von Bismarck, was a conservative German statesman and diplomat. From his origins in the upper class of J ...
in 1884 with the start of Workers' Accident Laws is often cited as a model for the rest of Europe and, later, the United States. After the early Prussian experiments, the development of compensation laws around the world was in important respects the result of transnational networks among policymakers and social scientists. Thus while different countries have their own unique history of workers' compensation, compensation laws developed around the world as a global phenomenon, with each country's deliberation on compensation laws being informed by deliberation in other countries.

Statutory no-fault compensation

Workers' compensation statutes are intended to eliminate the need for litigation and the limitations of common law remedies by having employees give up the potential for pain- and suffering-related awards in exchange for not being required to prove
tort A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishable ...
(legal fault) on the part of their employer. The laws provide employees with monetary awards to cover loss of wages directly related to the accident as well as to compensate for permanent physical impairments and medical expenses. The laws also provide benefits for dependents of those workers who are killed in work-related accidents or illnesses. Some laws also protect employers and fellow workers by limiting the amount an injured employee can recover from an employer and by eliminating the liability of co-workers in most accidents. In the United States, state statutes establish this framework for most types of employment, while federal statutes are limited to federal employees or to workers employed in some significant aspect of interstate commerce. The exclusive remedy provision states that workers’ compensation is the sole remedy available to injured workers, thus preventing employees from also making tort liability claims against their employers.

Common law remedies

In common law nations, the system was motivated by an "unholy trinity" of tort defenses available to employers, including contributory negligence, assumption of risk, and the fellow servant rule. Common law imposes obligations on employers to provide a safe workplace, provide safe tools, give warnings of dangers, provide adequate co-worker assistance (fit, trained, suitable "fellow servants") so that the worker is not overburdened, and promulgate and enforce safe work rules.J. Hood, B. Hardy, and L. Simpson. ''Workers' Compensation and Employee Protection Laws'' (St. Paul: West Academic Publishing, 2017). Claims under the common law for worker injury are limited by three defenses afforded employers: * The Fellow Servant Doctrine is that employer can be held harmless to the extent that injury was caused in whole or in part by a peer of the injured worker. *Contributory negligence allows an employer to be held harmless to the extent that the injured employee failed to use adequate precautions required by ordinary prudence. *Assumption of risk allows an employer to be held harmless to the extent the injured employee voluntarily accepted the risks associated with the work.

By nation


As Australia experienced a relatively influential
labour movement The labour movement or labor movement consists of two main wings: the trade union movement (British English) or labor union movement (American English) on the one hand, and the political labour movement on the other. * The trade union movement ...
in the late 19th and early 20th century, statutory compensation was implemented very early in Australia. Each territory has its own legislation and its own governing body. A typical example is Work Safe Victoria, which manages Victoria's workplace safety system. Its responsibilities include helping employees avoid workplace injuries occurring, enforcing Victoria's occupational and safety laws, providing reasonably priced workplace injury insurance for employers, assisting injured workers to return to the workforce, and managing the workers' compensation scheme by ensuring the prompt delivery of appropriate services and adopting prudent financial practices. Compensation law in New South Wales has recently (2013) been overhauled by the state government. In a push to speed up the process of claims and to reduce the amount of claims, a threshold of 11% WPI (whole person impairment) was implemented for physical injuries and 15% for psychiatric injuries Workers' compensation regulators for each of the states and territories are as follows: * Australian Capital Territory – Work Safe Act * New South Wales – State Insurance Regulatory Authority (formerly WorkCover NSW) * Northern Territory – NT Work Safe * Queensland – The Workers' Compensation Regulator (formerly Q-COMP) * South Australia – ReturnToWork SA (from 1 July 2015) * Tasmania – WorkCover Tasmania * Victoria – WorkSafe Victoria * Western Australia – WorkCover WA Every employer must comply with the state, territory or commonwealth legislation, as listed below, which applies to them: * Federal legislation – Safety, Rehabilitation and Compensation Act 1988 *New South Wales – Workers Compensation Act 1987 and the Workplace Injury Management and Workers Compensation Act 1998 *Northern Territory – Work Health and Safety (National Uniform Legislation) Regulations *Australian Capital Territory – Workers Compensation Act 1951 *Queensland – Workers Compensation and Rehabilitation Act 2003 *South Australia – Workers Rehabilitation and Compensation Act 1986 *Tasmania – Workers Rehabilitation and Compensation Act 1988 *Victoria – Workplace Injury Rehabilitation and Compensation Act 2013 *Western Australia – Workers Compensation and Injury Management Act 1981


The National Social Insurance Institute (in Portuguese, – INSS) provides insurance for those who contribute. It is a public institution that aims to recognize and grant rights to its policyholders. The amount transferred by the INSS is used to replace the income of the worker taxpayer when he or she loses the ability to work due to sickness, disability, age, death,
involuntary unemployment Involuntary unemployment occurs when a person is unemployed despite being willing to work at the prevailing wage. It is distinguished from voluntary unemployment, where a person refuses to work because their reservation wage is higher than the pre ...
, or even pregnancy or imprisonment. During the first 15 days, the worker's salary is paid by the employer. After 15 days, the salary is paid by the INSS, as long as the employee is unable to work. Although the worker's income is guaranteed by the INSS, the employer is still responsible for any loss of working capacity, temporary or permanent, when found negligent or when its economic activity involves risk of accidents or developing labour-related diseases.


Workers' compensation was Canada's first social program to be introduced as it was favoured by both workers' groups and employers hoping to avoid lawsuits. The system arose after an inquiry by Ontario Chief Justice William Meredith, who outlined a system in which workers were to be compensated for workplace injuries if they gave up their right to sue their employers. It was introduced in the various provinces at different dates. Ontario and Nova Scotia were first and second in 1915, Manitoba in 1916, British Columbia in 1917, Alberta and New Brunswick in 1918, and Saskatchewan adopted the program in 1930. It remains a provincial responsibility, and thus the rules vary from province to province. In some provinces, such as in Ontario's Workplace Safety and Insurance Board, the program also has a preventative role ensuring workplace safety. In British Columbia, the occupational health and safety mandate (including the powers to make regulation, inspect and assess administrative penalties) is legislatively assigned to the Workers' Compensation Board of British Columbia ( WorkSafeBC). In most provinces, the workers' compensation board or commission remains concerned solely with insurance. The workers' compensation insurance system in every province is funded by employers based on their payroll, industry sector, and history of injuries (or lack thereof) in their workplace (usually referred to as "experience rating").


The German worker's compensation law of 6 July 1884, initiated by Chancellor
Otto von Bismarck Otto, Prince of Bismarck, Count of Bismarck-Schönhausen, Duke of Lauenburg (, ; 1 April 1815 – 30 July 1898), born Otto Eduard Leopold von Bismarck, was a conservative German statesman and diplomat. From his origins in the upper class of J ...
,Holborn, Hajo: ''A History of Modern Germany – 1840–1945'':
Princeton University Press Princeton University Press is an independent publisher with close connections to Princeton University. Its mission is to disseminate scholarship within academia and society at large. The press was founded by Whitney Darrow, with the financial ...
; 1969; pp. 291–93.
was passed only after three attempts and was the first of its kind in the world. Similar laws passed in Austria in 1887, Norway in 1894, and Finland in 1895. The law paid indemnity to all private wage earners and apprentices, including those who work in the agricultural and horticultural sectors and marine industries, family helpers and students with work-related injuries, for up to 13 weeks. Workers who are totally disabled get continued benefits at 67 percent after 13 weeks, paid by the accident funds, financed entirely by employers. The German compensation system has been taken as a model for many nations.


The Workmen's Compensation Act 1923http://labour.gov.in/sites/default/files/TheWorkmenAct1923(1).pdf was introduced on 5 March 1923. It includes Employer's liability compensation, amount of compensation. Workmen Compensation Insurance covers employees under Workmen Compensation Act, Fatal Accident Act and common law.


In Italy workers' compensation insurance is mandatory and is provided by INAIL.


Workers' accident compensation insurance is paired with
unemployment insurance Unemployment benefits, also called unemployment insurance, unemployment payment, unemployment compensation, or simply unemployment, are payments made by authorized bodies to unemployed people. In the United States, benefits are funded by a comp ...
and referred to collectively as labour insurance. Workers' accident compensation insurance is managed by the Labor Standards Office.


The Workmen's Compensation Act, 1952 is modelled on the United Kingdom's Workmen's Compensation Act 1906. Adopted before Malaysia's independence from the UK, it is now used only by non-Malaysian workers, since citizens are covered by the national social security scheme.


The Mexican Constitution of 1917 defined the obligation of employers to pay for illnesses or accidents related to the workplace. It also defined social security as the institution to administer the right of workers, but only in 1943 was the Mexican Social Security Institute (IMSS) created. IMSS manages the Work Risks Insurance in a vertically integrated fashion, including registration of workers and firms, collection, classification of risks and events, and medical and rehabilitation services. A reform in 1997 defined that contributions are related to the experience of each employer. Public sector workers are covered by social security agencies with corporate and operative structures similar to those of IMSS.

New Zealand

In New Zealand, all companies that employ staff and in some cases others, must pay a levy to the
Accident Compensation Corporation The Accident Compensation Corporation (ACC) ( mi, Te Kaporeihana Āwhina Hunga Whara) is the New Zealand Crown entity responsible for administering the country's no-fault accidental injury compensation scheme, commonly referred to as the ACC sche ...
, a
Crown entity A Crown entity (from the Commonwealth term '' Crown'') is an organisation that forms part of New Zealand's state sector established under the Crown Entities Act 2004, a unique umbrella governance and accountability statute. The Crown Entities Act ...
, which administers New Zealand's universal no-fault accidental injury scheme. The scheme provides financial compensation and support to citizens, residents, and temporary visitors who have suffered personal injuries.

United Kingdom

Great Britain followed the German model.
Joseph Chamberlain Joseph Chamberlain (8 July 1836 – 2 July 1914) was a British statesman who was first a radical Liberal, then a Liberal Unionist after opposing home rule for Ireland, and eventually served as a leading imperialist in coalition with the ...
, leader of the Liberal Unionist party and coalition with the Conservatives, designed a plan that was enacted under the Salisbury government in 1897. The Workmen's Compensation Act 1897 was a key domestic achievement. It served its social purpose at no cost to the government, since compensation was paid for by insurance which employers were required to take out. The system operated from 1897 to 1946. It was expanded to include industrial diseases by the Workmen's Compensation Act 1906 and replaced by a state compensation scheme under the National Insurance (Industrial Injuries) Act 1946. Since 1976, this state scheme has been set out in the UK's Social Security Acts. Work related safety issues in the UK are supervised by the
Health and Safety Executive The Health and Safety Executive (HSE) is a UK government agency responsible for the encouragement, regulation and enforcement of workplace health, safety and welfare, and for research into occupational risks in Great Britain. It is a non-dep ...
(HSE), who provide the framework by which employers and employees are able to comply with statutory rules and regulations. Employer duties enforced by the HSE include protecting the health and safety of workers at workplace, risk assessment and training of workers. If an employer fails to fulfil these responsibilities, resulting in injury to an employee, then the employee has a legal right to make a workers' compensation claim against the employer and to sue their employer. With the exception of the following, all employers are obliged to purchase compulsory Employer's Liability Insurance in accordance with the Employer's Liability (Compulsory Insurance) Act 1969. The current minimum limit of indemnity required is £5,000,000 per occurrence. Market practice is to usually provide a minimum £10,000,000 with inner limits to £5,000,000 for certain risks, e.g. workers on oil rigs and acts of terrorism. These employers do not require Employer's Liability Insurance: * local authorities (other than parish councils) * joint boards or committees whose members include members of local authorities * police authorities * nationalised industries or their subsidiaries * certain bodies which are financed out of public funds * employers of crews on offshore installations, ships or hovercraft, if they are covered instead with a mutual insurance association of ship owners or ship owners and others * a health service body or NHS Trust "Employees" are defined as anyone who has entered into or works under a contract of service or apprenticeship with an employer. The contract may be for manual labour, clerical work or otherwise, it may be written or verbal and it may be for full-time or part-time work. These persons are not classed as employees and, therefore, are exempt: * persons who are not employees (for example independent contractors who are not the employees of the person engaging them) * people employed in any activity which is not a business (such as domestic servants) * people who are related to the employer – husband, wife, father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother sister, half-brother or half-sister * people who are not normally resident in the United Kingdom and who are working there for fewer than 14 consecutive days. Employees need to establish that their employer has a legal liability to pay compensation. This will principally be a breach of a statutory duty or under the tort of negligence. If the employer is insolvent or no longer in existence, then compensation can be sought directly from the insurer under the terms of the Third Parties (Rights against Insurers) Act 2010. For the history of worker's compensation in the UK, see Workmen's Compensation Act 1897 and following acts.

United States

In the United States, some form of workers' compensation is typically compulsory for almost all employers in most states (depending upon the features of the organization), with the notable exception of
Texas Texas (, ; Spanish: ''Texas'', ''Tejas'') is a state in the South Central region of the United States. At 268,596 square miles (695,662 km2), and with more than 29.1 million residents in 2020, it is the second-largest U.S. state by bo ...
as of 2018. Regardless of compulsory requirements, businesses may purchase insurance voluntarily, and in the United States policies typically include Part One for compulsory coverage and Part Two for non-compulsory coverage. In many states, employers that can prove they have sufficient funds to cover their workers' compensation liabilities are allowed to engage in self-insurance, a term meaning forgoing the purchase of insurance. By 1949, every state had enacted a workers' compensation program. In most states, workers' compensation claims are handled by
administrative law judge An administrative law judge (ALJ) in the United States is a judge and trier of fact who both presides over trials and adjudicates claims or disputes involving administrative law. ALJs can administer oaths, take testimony, rule on questions of ev ...
s, who often act as triers of fact. Workers' compensation statutes which emerged in the early 1900s were struck down as unconstitutional until 1911 when Wisconsin passed a law that was not struck down; by 1920, 42 states had passed workers' compensation laws.

See also

* Advocates for Injured Workers (AIW) * '' Albro v. Agawam Canal Co.'' *
Compensation of employees {{no footnotes, date=April 2010 Compensation of employees (CE) is a statistical term used in national accounts, balance of payments statistics and sometimes in corporate accounts as well. It refers basically to the total gross (pre-tax) wages paid ...
* Experience modifier * Federal Employers Liability Act (US) * History of the United States (1865–1918): Labor and management * Independent medical examination *
Labor power Labour power (in german: Arbeitskraft; in french: force de travail) is a key concept used by Karl Marx in his critique of capitalist political economy. Marx distinguished between the capacity to do work, labour power, from the physical act of w ...
Labour law Labour laws (also known as labor laws or employment laws) are those that mediate the relationship between workers, employing entities, trade unions, and the government. Collective labour law relates to the tripartite relationship between employee ...
List of United States federal legislation This is a chronological, but still incomplete, list of United States federal legislation. Congress has enacted approximately 200–600 statutes during each of its 115 biennial terms so that more than 30,000 statutes have been enacted since 1789. A ...
* List of US workers' compensation insurers *
Living wage A living wage is defined as the minimum income necessary for a worker to meet their basic needs. This is not the same as a subsistence wage, which refers to a biological minimum, or a solidarity wage, which refers to a minimum wage tracking labor ...
* National Council on Compensation Insurance * Scaffold Law (New York) * Subpoena duces tecum * Transferable Skills Analysis * Uninsured Employer * Workers' compensation employer defense * Worker's compensation Germany * Workingmen's Compensation Act (Kern–McGillicuddy Act) (US)


External links

United States Department of Labor

at the U.S.
National Institute for Occupational Safety and Health The National Institute for Occupational Safety and Health (NIOSH, ) is the United States federal agency responsible for conducting research and making recommendations for the prevention of work-related injury and illness. NIOSH is part of the C ...
* This contains a detailed survey of the basis and international applications of the concept as of the early 20th century. {{DEFAULTSORT:Workers' Compensation Actuarial science Labour law United States labor law Social programs Trade unions Types of insurance de:Unfallversicherung