In the West, workers' compensation grew out of labour movements and has its roots in the early European trade guilds. The core of workers' compensation is to replace income and provide medical coverage when the worker is injured on the job or falls ill as a result of the nature of the work. In recorded history, the recognition of workers' rights existed as far back as the Middle Ages as exemplified by the Peasants' Revolt in England in the 14th Century, which was precipitated by economic hardship consequent to the Black Death and high taxes. Although illegal at the time, notions of collective bargaining and labour unions were fermenting and occasionally erupting as Luddite riots during the Industrial Revolution in the 18th Century. A greater cohesion had to wait until the 19th Century to get underway, at which point the socialist ideas of Karl Marx were beginning to take hold. In the early 20th Century, workers' rights were enshrined in the International Labour Organization, which was later incorporated into the United Nations.
Common Law obligates the employer to provide a safe working environment, safe tools, and adequate assistance so as not to overburden the worker. Currently, workers' compensation is a type of insurance that balances workers' and employers' rights. Specifically, the worker receives benefits, typically wage replacement and medical costs, in exchange for relinquishing the right to sue the employer for negligence, regardless of the fault. Ideally, claims are adjudicated by an impartial workers compensation board that is financially independent and without ties to special interest groups.
Today, a workers compensation board encompasses worker safety in general and is present in most countries of the developed world under different formats. In some countries such as Japan and Brazil, the functions of a workers compensation board are taken over by the government. In Brazil, an independent workers compensation board is replaced by the government-run National Social Insurance Institute, which is a blanket social insurance covering all the standard benefits, plus unemployment insurance and health benefits. The system is financed by contributions from self-employed individuals, employees and employers according to a set schedule. As for Japan, the workers compensation board takes the form of a Labour Standards Office that manages a labour insurance consisting of unemployment insurance and accident insurance.
The German system, Workers Compensation Institute, has become a prototype for other European countries and is funded through employers with the government contributing on behalf of certain classes of individuals, such as students. Self-employed individuals can opt into the insurance by voluntary contributions. Germany enjoys a 90% return-to-work rate; however, weekly wage replacement and comprehensive medical benefits can continue until the individual becomes eligible for old age security. The success of Germany's workers insurance may be due to being paired with robust re-training and upgrading of vocational skills programmes.
Brazil, Japan and Germany are examples of workers' compensation that focusses on insurance. The United States, which is more litigious overall, has retained its employer protection focus. Each state has a board that oversees the operations of public and private entitles that provide workers' compensation. The individual states argued that obligating employers to purchase no fault workers' compensation insurance was a violation of the employers' recourse to due process of the law. In 1917, the Supreme Court of the United States decided that employer legal actions could proceed in the presence of compulsory workers' compensation legislation.
In most states, employees will receive medical benefits for job-related injuries and illness. However, if employers opt out of the insurance plan, and if an employee can prove negligence, an employee can sue and receive compensation that exceeds the benefits provided by workers' compensation. Non-subscribing employers reported a greater employee satisfaction with their compensation and less costs related to providing the compensation. That being said, under reporting of work-related injuries continues to be a problem in the United States. Employees fear that their employers may retaliate if the employee reports a work injury and make out-of-pocket payments for their medical bills or rely on private or public health insurance plans. Either way, the result is negative for the employee and the health insurer. Most workers' compensation disputes are now referred out of the trial system to administrative agencies and are resolved informally.
Similar to the United States, the United Kingdom placed the focus on the protection of the employer. There is no workers compensation board per se and all health matters related to work are governed by the Health and Safety Executive. With the exception of civil employees, all employees are covered under their employers' mandatory Employers Liability Insurance. To receive benefits, an employee must prove that the employer is legally obliged to pay compensation. By the end of the 19th Century, the law revised the obligation of the employee to solely proving that the injury or illness happened on the job.
For socialistic countries such as Sweden, 90% of the workers are covered under collective agreements and little regulation is applied to employers. The result is a balanced autonomy ideal for free negotiation on both sides. The workers compensation board is a compulsory national program that is closely tied into the national security program. Employees who are not covered under the no fault insurance can sue an employer for compensation. However, given the high enrollment in the national workers' insurance, this course is rarely taken.
In other parts of the world, a workers compensation board does not exist, or legislation regarding a worker's right to compensation is unevenly applied. Workers in quickly evolving economies, such as India and China, are particularly at risk as industries are by and large unregulated and health insurance often only provides coverage for in-hospital care. Indeed, for most of the world's workers, disability or injury can result in catastrophic medical bills and a descent into poverty for the household.
In summary, despite the good intentions of the International Labour Organization there is no global standardization with regard to a workers compensation board. The concept of workers compensation grew out of workers' coalitions and eventually became legislation that sought to achieve a balance between workers' and employers' rights. How the concept evolved in individual countries depended on the extent to which workers were able to organize and the degree to which the government supported the workers.