Usually means: Eligibility for compensation under law.
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We found 5 dictionaries that define the word compensability:

General (4 matching dictionaries)
  1. compensability: Merriam-Webster
  2. compensability: Collins English Dictionary
  3. compensability: Wiktionary
  4. compensability: Dictionary.com

Business (1 matching dictionary)
  1. compensability: Merriam-Webster Legal Dictionary

(Note: See compensable as well.)

Definitions from Wiktionary (compensability)

noun:  The characteristic of being compensable; the ability to be compensated.

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