Workers Compensation Law in Ghana and the role of insurance companies under the new insurance law

Lesions in the workplace have important legal and financial implications for both employees and employers. In Ghana, the legal framework that governs workers compensation is mainly established under the Workers’ Compensation Law, 1987 (PNDCL 187), which guarantees that employees suffering from occupational injuries or diseases related to work are properly compensated.

Complementing this framework is the Insurance Law, 2021 (Law 1061), which introduces reforms to strengthen the insurance sector and improve the administration of compensation claims.

This article provides an in -depth analysis of the legal framework that governs the compensation of workers in Ghana, the evolving role of insurance companies and the impact of the new insurance law. It also examines key judicial interpretations and highlights emerging challenges and opportunities in the implementation of these laws.

Understand the Workers Compensation Law, 1987 (PNDCL 187)

The Workers’ Compensation Law, 1987, imposes a legal obligation on employers to compensate employees for work -related injuries or occupational diseases. Unlike customary law claims, which require proof of negligence, the law operates on a basis of strict responsibility, which guarantees that compensation is payable regardless of the failure.

Key provisions of the law

1. Scope of coverage

• The law applies to all categories of workers, including informal and temporary employees.
• It also covers occupational diseases specified under the first schedule of the law.

2. Employer responsibility

• Employers are required to compensate for temporary or permanent disability employees, medical expenses and fatal injuries. The benefits extend to the dependents of the deceased workers.
  • The amount of compensation is calculated based on employee profits and the scope of disability.

The intersection of the workers’ compensation and insurance law

Given the financial burden of compensation claims, employers generally ensure insurance coverage to comply with their obligations under the Workers’ Compensation Law. Insurance companies, therefore, play a fundamental role in the compensation process.

Role of insurance companies

1. Provide workers compensation insurance

• Employers are required to obtain insurance policies that cover their legal responsibility under the law.

2. Claims management and compensation disbursement

• Insurers evaluate claims, facilitate payments and collaborate with the workers’ compensation commissioner to guarantee compliance.

3. Risk mitigation and security support in the workplace

• Insurance companies often carry out risk assessments and provide recommendations to improve safety in the workplace, thus reducing the incidence of work -related injuries.

4. Dispute resolution and legal support

• Insurers can participate in liquidation negotiations or participate in legal procedures where compensation claims are disputed.

Despite the critical role of insurance to guarantee timely compensation, delays in claims processing have historically been a concern. The Insurance Law, 2021, introduces reforms to address these challenges.

The Insurance Law, 2021 (Law 1061) and its impact on workers’ compensation insurance

The Insurance Law, 2021, which replaced the Insurance Law, 2006 (Law 724), introduces significant reforms aimed at strengthening regulatory supervision, improving financial stability and improving consumer protection within the Ghana insurance sector.

Key reforms under the law

1. improved regulatory supervision

• The National Insurance Commission (NIC) receives extended execution powers, including the authority to sanction non -compliant insurers.

2. Increased capital requirements

• Insurers are required to maintain greater capital reserves, ensuring their ability to comply with compensation obligations.

3. Consumer protection mechanisms

• The law requires insurers to process and pay claims within the specified deadlines, reducing undue delays.
  • A Protection Fund for policy holders has been established to safeguard workers in case of insurer’s insolvency.

4. Corporate governance standards

• Insurers must adopt solid government structures, improving transparency and responsibility for claims processing.

5. Inclusive Insurance Promotion

• The law encourages the development of microinsurence products to extend the coverage to workers in the informal sector, which are often excluded from traditional insurance schemes.

These reforms reinforce the effectiveness of the workers’ compensation system by ensuring that insurance suppliers comply with their obligations quickly and efficiently.

Judicial perspectives on workers compensation in Ghana

The Ghanaian courts have played a crucial role in the interpretation and application of the provisions of the workers’ compensation law. Notable cases include:

1. Republic v. National Labor Commission; Former ghana part of End (2007-2008) scgLR 1078

• The Supreme Court emphasized that compensation obligations under the law are mandatory and non -discretionary.

2. Mensah v. Ghana Ports and Harbors Authority (2003-2004) SCGLR 738

• The Court ruled that casual and temporary workers have the right to compensation, reinforcing the broad scope of the law.

3. Ajei v. Ashanti Goldfields Corporation Ltd. (2001-2002) SCGLR 741

• The strict responsibility principle was reaffirmed, and the court argued that the negligence of an employer (or lack of it) is irrelevant for compensation claims.

4. Owusu v. Ghana Railway Corporation (1999-2000) SCGLR 310

• The court argued that the dependent on deceased workers have the right to compensation, which underlines the welfare objectives of the law.

These judicial decisions highlight the commitment of the courts to maintain workers’ rights and provide clarity about the obligations of employers and insurers.

Challenges and practical considerations

Despite the comprehensive legal framework, several challenges persist in the implementation of workers’ compensation laws:

1. Employer’s inasido

– Some employers do not ensure the required insurance coverage, leaving vulnerable workers in case of injuries in the workplace.

2. Delays in claims processing

• Prolonged claims processed by insurers may result in delays in compensation payments, which causes financial difficulties for affected workers.

3. Limited awareness among workers

• Many employees, particularly in the informal sector, do not know their rights under the law, which limits their ability to seek compensation.

Address these challenges

1. Strengthening of regulatory supervision

• The NIC and the workers’ compensation commissioner must improve monitoring and application to guarantee compliance with employers and insurers.

2. Public education and awareness campaigns

• Greater efforts are needed to educate workers about their rights and employers on their obligations under the law.

3. Improved dispute resolution mechanisms

• Efficient mechanisms to solve disputes over compensation claims can guarantee timely payments and reduce litigation costs.

Conclusion

The Workers’ Compensation Law, 1987, and the Insurance Law, 2021, provide a robust legal framework to compensate for injuries to the workplace in Ghana. The reforms introduced by virtue of the Insurance Law, 2021 improve transparency, responsibility and regulatory compliance, ensuring that insurance suppliers comply with their obligations quickly and efficiently.

However, challenges such as breach of the employer, delays in claims processing and limited consciousness among workers must be addressed to fully carry out the objectives of these laws. A collaboration effort that involves regulators, employers, insurers and legal professionals is essential to strengthen the workers ‘compensation system and maintain workers’ rights.

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The author, Harry Ernest Boakye oforih, Esq, is an insurer, lawyer and professor of Ghana Insurance College. He is currently the managing director of Imperial General Assurance.

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