As promised last week, we would like to explore the liability insurance covers further, and today we will start with Workman Compensation Insurance.

Why is Workmen Compensation Insurance compulsory? Over 130 countries, including Lesotho, have compulsory workmen’s compensation programmes. In most of the cases, it is a public scheme backed by statutes. Workmen’s compensation is an economic bargain between workers and employers underwritten by the government in terms of which injured workers are guaranteed statutory benefits financed by employers. In return, the workers forego their common law right to sue the employer for damages.

In other words, Workmen Compensation is an ex-ante contract between employers and workers in terms of which prescribed benefits are paid for accidents and diseases arising out of and in the course of employment. Both parties have something to gain from this arrangement-employers are relieved of the uncertainty that comes with the possibility of being sued in delict. At the same time, workers are assured of compensation as the need to prove fault on the part of the employer is dispensed with. The employers transfer the liability risk to the insurance companies who then issue an insurance policy contract.

 History of Workmen Compensation In Lesotho The origin of the legislation back dates to 1948 which was repealed and replaced by the Workman Compensation in 1977. The Act No.13 of 1977 became effective on 10th of October of 1977. The law relates to compensation of workers who suffer injuries, contract industrial diseases and death of in the course of their duties that. The Act compels the employer to insure his x-rays-P3TVFAGworkers for liability which he may arise under the provisions of the Act. Like any other pieces of legislation, it has been other regulations promulgated to amend limits and definitions over time. To curb losses and ensure socio-economic growth, government make use of namely the private system model, insurance companies are contracted by employers and workman’s compensation is insured under the free market principle.


What is covered under the Workmen Compensation Insurance? Insurance compensates employees for injuries whilst at work and the contracting of the fifteen identified occupational diseases.

The goals of workmen’s compensation are broadly two-fold. The first goal is to ensure the proper delivery of rights and fair benefits to injured workers. This entails preventing injuries, providing temporary benefits, rehabilitating injured workers, and securing the standard of living of victims and their dependents.

 Another broad goal of workmen’s compensation is to minimize the costs of running these programmes. One of the reasons why the common law has proved problematic as a mechanism for compensating injured workers is the need to prove fault. All that an injured employee has to show to access compensation under Workman Compensation is that his/her injury or disease arose out of employment and that it was accidental. In terms of the accidental injuries, it covers the death, permanent incapacity, temporal incapacity and medical expenses related to the injuries are also covered. Funeral expenses related to death are also paid. The Act regulates all this type of compensation, and we will not cover that in this article.

Are there consequences of not having this insurance in place? The Act details the penalty and fine for the employer who does not comply  and is fined M300 or twelve months imprisonment or both. The monetary value is on the low side, and this doesn’t deter would-be offenders. The flip side is that a consequence is that because the awards are legislated in the event of the loss as the employer, you will still have to pay. This does not matter whether you are a small to medium-sized business.

What is the role of regulators for this type of insurance? The labour commissioner as the regulator has a role to play in terms of enforcement of the regulations, and this will ensure that all employers that are supposed to cover their employees comply and ensure covers are in place.  This is possible through regular inspections for the companies. Experience in other jurisdiction they made sure that the insurance companies issues certificates that are displayed within the reception areas and visible to walk in inspectors. It is worth exploring for the ministry of labour to ensure they enforce. When one looks at the reported collections in the income tax levels and premium levels from the Workman Compensation, there is a mismatch which points out to several employees not covered with the Workman Compensation.  The fines should be deterrent enough, and the courts should adopt the most deterrent option. A penalty of M300.00 to an offender like a conglomerate is almost nothing compared to the potential exposure of employees and dependencies. 

What are the alternative solutions for those that are not covered? TheWorkmen’s compensation programmes do not cover everyone, and this gap should be addressed by the authorities and the insurance companies as well.  The domestic workers, casual workers and the uniformed forces are not covered. So indeed, there is a gap that needs to be closed, especially the vulnerable groups like domestic workers. It is essential to come with public funds even if it is designed as a public scheme or model. On the hand, insurance companies may need to come up with products that cover these gaps.

Furthermore, there are gaps from the Act, and Personal Accident insurance can cover some of the gaps. An example is if the employee is injured whilst at home or on his or her way to work. Your insurance broker will be essential in advising you of the gaps.

What are the steps to be taken for the claim by an employee? The employee has to report the incident to the employer and who then, in turn, complete a standard WC9 form and send it to the labour commissioner. An insurance claim form should also be completed and documents relating to the injury, disease or death.  A doctor will examine the employee at the cost of the company. The results of the examination are shared with the labour commissioner, who then compute the amounts payable. All the submissions are time-bound, especially the reporting by the employer. If there is a breach, the employer is requested to submit an explanation.

What is the role of the Medical Board?  It is not always that the insurance company and the employer are in agreement with the awarded disability. The mechanism by the Act is such that there is an independent board which becomes the final determination of the case. The board review the degree and duration of incapacity and medical expenses.

Market challenges and achieving the broad objective of Workmen Compensation? The medical board has prolonged cases for review, and some claims end up spanning for more than five years.

The delays have to be resolved so that the objectives are achieved. The regulator may need to consider expanding the size of the board from the current three to say seven. Furthermore, incentives the performance of such a board critical in terms of case closure rate. The existing structure could have been adequate for cases in early 90, but the number of cases has ballooned. 

All employers should comply with the legislation and ensure that all employees that are covered by the Act are indeed covered. This will be the scheme sustain for a more extended period, and the social safety net is guaranteed.

▀ Amon Rupiya is an experienced insurance practitioner qualified with a Masters in Insurance and Risk Management. He writes in his personal capacity and views does not represent the company he is working for. Please note that the content provided in this article is intended as an overview and as general information only. Before making any decisions based on the information provided in this article, please use your discretion and seek advice from an insurance broker or agent. Feedback and questions send email to