Sickness and Employment Injury Benefits Worldwide

Paid Sick Leave is "compensated working days lost due to worker sickness". Employment Injury insurance is a form of mandatory social insurance to compensate those employees who suffer from industrial injury or disease.

What is paid sick leave?

The Declaration of Philadelphia considers social security as a human right. .The International Covenant on Economic, Social and Cultural Rights also considers social security including social insurance as fundamental right (Art.9).  Social security includes the right to access and maintain benefits without discrimination when workers lack income due to old age, disability, work injury, maternity, sickness and death of a breadwinner. Different social security programs aim to provide support to those who are unable to fully protect themselves. In the case of sickness, social security is the continuation of salary or income replacement during the period of sick leave.

Paid Sick Leave is "compensated working days lost due to worker sickness". This definition has two components: leave from work and compensation for sickness in the form of income replacement.

What are ILO provisions on paid sick leave?

 ILO Conventions 102 and 130 provide for sickness benefit when a worker is unable to work due to a morbid condition involving suspension of earnings. Convention 102 provides for the minimum standards while convention 130 suggests a slightly higher standard of benefits. The table below provides a comparative analysis of benefits under the two conventions.

Types of Benefits

Convention 102

Convention 121

Periodic Payments

Sickness benefit: 45% of reference wage

Sickness benefit: at least 60% of reference wage

 

Conditions for benefit entitlement

Possibility to impose a qualifying period

Idem.

 Period of exposure may be prescribed for occupational diseases

Duration of benefits

  • Possibility of fixing a waiting period of 3 days
  • Benefits are granted throughout contingency
  • Possibility of limiting the duration of benefits to 26 weeks in each case of sickness
  • Idem

 

  • Idem

 

  • Possibility of limiting the duration of benefits to 52 weeks in each case of sickness

Why is paid sick leave important?

Paid sick leave saves money for the economy as a whole including employers, taxpayers and worker families.

1.         Paid sick leave/sickness benefit provides wage and job security to workers and it allows them to take the job and income-protected leave when they are sick. Non-provision of paid sick leave, sickness benefit and injury benefit amounts to work insecurity. In the times of crisis, job or income loss can cause a family to fall into poverty, so these paid sick days are required to keep workers and their families out of poverty.

2.         Paid sick leave allows workers to keep their jobs and increases worker loyalty. It also reduces turn-over and as a result turn-over related costs like advertising, interviewing and training new workers also decrease.

3.         Paid sick leave increases worker productivity by allowing workers to be absent, recover at home, seek medical help in time, and then return to work being more productive. It has been estimated in USA that presenteeism (where workers are required to be present at work and perform work at a lower productivity level) costs employers $160 billion a year which is twice the cost of absenteeism caused due to illness.

4.         Sick workers endanger the productivity of a business (by putting health and productivity of other workers and customers at risk) and community. Paid sick leave also helps in prevention of serious illnesses from developing. The spread of contagious illnesses like flu can be contained only when workers are provided paid sick leave. A research on 2009 H1N1 flu epidemic in USA shows that outbreaks lasted longer in workplaces with low provisions for paid sick leave.

5.         Research in USA has revealed that workers who are allowed paid sick leave are 28% less likely than others (who don't get sick leave) to get injured on job. Similarly, hourly workers have a much higher chance of getting injured on the job than salaried workers.

6.         Paid sick leave is also a pre-requisite for accessing medical benefits and is a tool against discrimination at workplace. In the absence of paid sick leave, sick workers are discriminated against in all matters of employment.

What are the usual provisions on paid sick leave on the global level?

As indicated earlier, there are two elements of paid sick leave: one is the length of leave; and other is the payment/income replacement during the period.

The period of paid sick leave ranges from (less than) seven days to more than one month (and up to two years). Most of the countries provide for a paid sick leave for one month and more.

As for the income replacement during the period of leave, replacement rates vary between lump-sums and up to 100% of wages. A majority of the countries provide income replacement of 50% or above, as required under C102.

What is employment injury benefit?

Employment injury benefit or workers' compensation system is the most prevalent social insurance scheme which originated in Germany. It is a form of mandatory social insurance to compensate those employees who suffer from industrial injury or disease.

Employment injury includes occupational accidents and diseases. According to article 32 of ILO Convention 102, following are considered as employment injury:

i.          Sickness/morbid condition

ii.         Temporary incapacity for work

iii.        Total or partial loss of earning capacity

iv.        Fatal injury where dependents suffer the loss of support due to the death of breadwinner

Employment injury cases include occupational accidents, occupational diseases, commuting accidents and occupational injuries.

The basic mandate of an employment injury scheme is :

i.          promoting the prevention of employment injuries;

ii.         Rehabilitation of those injured through establishing and operating health services and insurance facilities;

iii.        Fair compensation for medical care and income loss through viable worker compensation program;

iv.        Helping the employer in mitigating the undue economic burden (in the case of occupational accidents or diseases); and

iv.        Allowing workers to return to work

What are ILO Provisions on employment injury?

Employment injury benefits are specified in the C102 "Social Security (Minimum Standard) Convention" and the C121 "Employment Injury Benefits Convention". ILO has also adopted  Convention No.187 and Recommendation No.197 on “Promotional Framework for Occupational Safety and Health” in order to bring down the toll of occupational injuries and diseases. Like ILO Convention 130, C121 provides for higher benefits as indicated in the table below.

Types of Benefits

Convention 102

Convention 121

Medical care

General practitioner care, specialist care at hospitals for in-patients and out-patients, the essential pharmaceutical supplies as prescribed and hospitalisation where necessary.

Idem. In addition:

dental care,  nursing care, maintenance in hospitals, dental, pharmaceutical and other medical or surgical supplies, emergency treatment of persons sustaining a serious accident and follow-up treatment of those whose injury is slight and does not entail discontinuance of work.

 

Periodic Payments

  • Incapacity of work: 50% of reference wage
  • Total disability/invalidity: 50% of reference wage
  • Survivors’ benefit: 40% of reference wage
  • Incapacity of work: 60% of reference wage
  • Total disability/invalidity: 60% of reference wage
  • Survivors’ benefit: 50% of reference wage

Condition for benefit entitlement

Prohibition on fixing a qualifying period to avail employment injury benefits

Idem. Period of exposure may be prescribed for occupational diseases

Duration of benefits

  • No waiting period except in case of temporary incapacity
  • Benefits are granted throughout contingency
  • Possibility of fixing a waiting period
  • Benefits are granted throughout contingency

What is the linkage between OSH and employment injury insurance?

As indicated above, the basic features of employment injury insurance are prevention of accidents and fair compensation (in case accidents have occurred). Accidents related costs (prevention + rehabilitation) can be reduced only when the incidence of these accidents can be reduced. Unless, an organization implements an OSH policy in line with Convention 155 and 187, occupational accidents/diseases and related costs can't be reduced.

Government can also use experience rating system (as used in USA) which will require employers to spend more and more on prevention activities. A successful prevention program can help reduce the number of beneficiaries as well as different employment injury related payments like disability benefit, survivors' benefit, etc.

What are different types of schemes providing protection in the case of employment injury?

Article 71 of the C102 provides that the "the cost of the benefits and their administration shall be borne collectively by way of insurance contributions or taxation or both in a manner which avoids hardship to persons of small means and takes into account the economic situation of a Member country and of the classes of persons protected".

It appears that putting direct liability on the employer to provide for employment injury related benefits would not be in conformity with this Convention. Yet, employment injury insurance schemes are financed through employer contributions because of the link between workplace risk and prevention.

 The following types of employment injury insurance schemes (as well as other social security benefits) exist worldwide:

i.          Social insurance (these employment related systems base benefits on the length of employment. Benefits are financed through contributions made by employers, workers or both)

ii.         Social assistance (These social pension programs provide benefits to individuals who qualify a means test. Benefits are financed through general revenues)

iii.        Universal (These programs provide flat-rate cash benefits to citizens/residents irrespective of income level, length of employment or means. Benefits are financed through general revenues as well as contributions from employers and workers)

iv.        Employer liability (As required under the Labour Codes, employers are required to provide specified payments or services directly to their employees. In the case of employment injury, employers have to provide benefits to the workers as required under the law.)

v.         Mandatory Private Insurance (individuals are required under the law to purchase insurance directly from a private insurance provider)

The most common system worldwide is Social insurance system and it is most prevalent in Europe, Latin America, Middle East and Africa. Social Assistance system is found only in CIS (former Soviet republics) states and Western Europe. Universal Programs are found only in CIS states, Asia and the Pacific as well as Western Europe. Employer liability system is most prevalent in Asia and the Pacific. As for the mandatory private insurance system, it is found in North America, Latin America & the Caribbean and Western Europe. Compared worldwide, employer liability system is second to the social insurance system.

The table below shows data on employment injury benefits and their financing in Labour Rights for Women (LRW) countries.

Country

Type of Employment Injury Benefit System

Employer Contribution

Employee Contribution

Government Contribution

Egypt

Social Insurance

Yes

No Contribution

No Contribution

Guatemala

Social Insurance

Yes

Yes

Yes

India

Social Insurance

Global Contribution under Sickness

Global Contribution under Sickness

Global Contribution under Sickness

Indonesia

Social Insurance

Whole Cost

No Contribution

No Contribution

Kenya

Employer liability

Whole Cost

No Contribution

No Contribution

Pakistan

Social Insurance

Global Contribution under Sickness

Flat rate amount

No Contribution

Paraguay

Social Insurance

Global Contribution under old-age

Global Contribution under old-age

Global Contribution under old-age

Peru

Social Insurance

Yes

No Contribution

No Contribution

South Africa

Employer liability

Whole Cost

No Contribution

No Contribution

Source: World Social Security Report 2010/11: Providing coverage in times of crisis and beyond by ILO, Geneva

References

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