What is "workers' compensation"?

Workers' compensation is a vital aspect of employment law that refers to a specific form of insurance designed to provide wage replacement and medical benefits to employees who suffer from work-related injuries or illnesses. This insurance is essential as it protects workers by ensuring they receive the necessary medical care and financial assistance during their recovery periods without the burden of filing lawsuits against their employers for negligence.

The focus of workers' compensation is specifically on the relationship between workplace injuries and the compensation system, making it distinct from other options like pension plans or health insurance programs that serve different purposes. By offering a structured process for injured employees to receive support, workers' compensation also helps employers by limiting their liability and providing a predictable cost model for workplace injuries.

Understanding the core function of workers' compensation underscores its importance within employment law and labor relations, highlighting how it fosters a safer work environment and aids in employee welfare.