compensation

compensation

[kom-puhn-sey-shuhn]
compensation, workmen's: see workers' compensation.

Program through which employers bear some of the cost of their employees' work-related injuries and occupational illnesses or disabilities. It was first introduced in Germany in 1884. In Britain and the U.S. in the late 19th century, there was a movement to secure the right of injured workers to compensation and to improve working conditions through court decisions, employer liability statutes, and safety codes. By the mid-20th century most countries in the world had adopted some sort of workers' compensation. Some systems take the form of compulsory social insurance; in others the employer is legally required to provide certain benefits, but insurance is voluntary. The system of workers' compensation serves as an economic incentive for employers to prevent accidents and illness among employees, since liability for medical costs and the income lost by placing workers in hazardous environments can easily exceed the costs of establishing safe working conditions.

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Form of social insurance designed to compensate workers for short-term, involuntary unemployment. It was created primarily to provide financial assistance to laid-off workers during a period deemed long enough to allow them to find another job or to be rehired at their original job. In most countries, workers who are permanently disabled or who have been unemployed for a long period of time are covered under other plans. In countries such as Canada and Britain, workers in any occupation may qualify for unemployment insurance; the U.S. denies coverage to certain workers, such as government employees and the self-employed. In most countries, benefits are related to earnings and are paid for a limited period of time. Funding may come out of general government revenues or from specific taxes placed on employers or employees.

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