What is a Workers' Compensation Fund?

Article Details
  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 17 March 2019
  • Copyright Protected:
    Conjecture Corporation
  • Print this Article

A workers' compensation fund is a fund the government administers to provide payouts to people injured on the job, or to family members in the case of people who die at work. Depending on how the government structures the system, the fund may provide stopgap insurance to make sure that people receive compensation even if their employers do not carry workers' compensation insurance, or it may be a primary source of funding for workers' compensation claims. Monies for the fund come from payments employers are legally obligated to make, and in some cases may come from employee wages.

The government pools contributions to the fund and has the authority to make investments to help the fund grow. This ensures that enough money will be available when someone makes a claim against the fund, providing coverage for people who need financial assistance as a result of workplace injuries and deaths. If an employer carries workers' compensation insurance, the compensation comes primarily from that insurance. In cases where companies rely on the workers' compensation fund, people must apply to the government for financial assistance.


Coverage available through a workers' compensation fund varies. Some offer payments for a limited period of time only and the requirements for receiving compensation are strict. The government conducts investigations to make sure claims are actually valid, checking for signs that an injury was not acquired on the job, or for indicators that a person is not as severely injured as he claims. In the case of death, usually the fund provides a lump sum payout to the closest surviving relative.

Law about workers' compensation fund management can be quite different between jurisdictions. Companies operating in different nations, states, and provinces should check with an attorney to determine what kinds of legal requirements are present, and find out about steps they need to take in order to provide adequate and appropriate coverage to their personnel. Special insurance products may be available to help employers meet gaps in insurance coverage without overinsuring.

In cases where a workers' compensation fund is paid for through payroll deductions, employees can ask to see a statement, showing how much money was taken from their pay, and how the employer calculates the size of the deduction. Employees can also ask for verification to confirm that the money was actually sent to the fund, instead of being held back by the employer. Fraudulent withholding, where companies keep money they deduct, is a violation of the law and can result in severe penalties.



Discuss this Article

Post your comments

Post Anonymously


forgot password?