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Workers’ compensation can be termed as insurance for the employees that offers monetary benefits and medical care for the human resources in case of any illness or injury caused by their job. The cost of compensation has been paid by the employers so that it can benefit the employees in the event of any medical emergency within the workplace. Most of the organizations have offered wage replacement reimbursement, medical treatment settlement, vocational rehabilitation and other benefits to the employees to secure their workplace accidents and risks (Williams, 2009). Apart from the compensation offered to employees, several other compensation programs have been designed for the workers so that organizational employees must be prevented from work-related infirmity and damage expenses.
Workers’ Compensation is considered to be a part of the budget that is presented in the overhead cost of an organization. It is the type of variable cost that must be considered by the employers while preparing the budget. Irrespective of employees’ self-insurance, an employer must prepare their budget after considering the workers compensation to have a controllable variable cost (Mayers & Smith, 2010). The cost associated with its borne by the employers as a part of their overhead are discussed in the point given below:
Workers Insurance: The Company pays the premium amount for the life insurance of the workers. It is a type of worker compensation that must be adjusted for the overhead costs.
Medical expenses: The medical expenses are paid in case of illness and health problems of the workers. The medical expenses must be considered while preparing the budget.
Accidental expenses: Accidental benefits are provided to the employee in case of any harm occurred to the worker in the workplace. It is the part of the employee compensation plan.
Leave expenses: The workers are provided with paid leaves that lead to loss of production and extra payment for the employers.
Other expenses: Most of the reputed companies provide their employees with additional facilities like education compensation, travel expenses, accommodations and others that are considered as a part of the overhead expenses.
References
Mayers, D., & Smith, C. (2010). Compensation and Board Structure: Evidence From the Insurance Industry. Journal Of Risk And Insurance, 77(2), 297-327. http://dx.doi.org/10.1111/j.1539-6975.2010.01352.x
Williams, C. (2009). Workmen's Compensation and the Handicapped. The Journal Of Insurance, 26(2), 13. http://dx.doi.org/10.2307/250670
