The Employee State Insurance Scheme of India is a multidimensional social system tailored to provide socio-economic protection to the worker population and their dependents covered under the scheme. It provides all medical facilities for self (contributor) and their dependents, which is admissible from day one of insurable employment.
Insured persons are also entitled to a variety of case benefits in times of physical distress due to sickness, temporary or permanent disablement or any medical condition which results in loss of earning capacity. Dependents of insured persons who die in industrial accidents or because of an employment injury or occupational hazard are entitled to a monthly pension called the dependant’s benefit.
What is the Employee State Insurance Act, 1948?
The Employee State Insurance Act, 1948 consists of certain health related eventualities of employment’s such as sickness, temporary or permanent disablement, maternity, occupational diseases and death due to the employment injury which may lead to total or partial earning capacity.
The Act has made provisions to counterbalance or negate such physical or financial distress by providing medical and financial aid to insured persons and their families.
The ESI scheme is administered by Employees State Insurance Corporation (ESIC), an autonomous body under the Central Government of India, and is governed by the Ministry of Labour and Employment, Government of India.
Employee State Insurance Act, 1948(ESI) applicabile For :
- The ESI Act applies to all non-seasonal power using factories employing 10 or more persons and non-power using factories and establishments employing 20 or more persons.
- The scheme was further extended to hotels, shops and other establishments with 20 or more employees.
- A provision has been introduced for those classes of establishment, which engage in hazardous or life-threatening activities. In these classes of establishment, ESI will be applicable even if only one worker is employed.
- Provisions for voluntary inclusion have also been introduced where an employer of a plantation may opt for ESI scheme by giving willingness to the ESI Corporation.
- Voluntary membership under ESI scheme can be taken even if the number of employees in an establishment is less 10. Where an employer and a majority of the employees of an establishment agree to be covered by ESI, then on an application made by the employer, the Director General of ESIC may allow the applicability of ESI to such establishments.
ESI coverage and contribution:
All employees, casual, temporary or contract workers whose gross earnings are less than Rs.21, 000 per month (with effect from 1st July 2019) are covered under the ESI Act, 1948.
Contribution to ESI is made both by the employer and the employee. The rate of contribution is:
- Employee’s contribution – 0.75% of the gross earnings.
- Employer’s contribution – 3.75% of the gross earnings.
A total of 4% has to be calculated and remitted by the employer.
If the employees have daily wages up to Rs. 137/-, then they are exempted to make the contribution. Employers will, however, contribute their own share in respect of these employees.
It is mandatory for employers to deduct the employee contribution from the wages and pay both the employer and employee contribution at the specified rate within 15 days of the end of the month. Referred branches of the State Bank of India and other banks are authorised to receive the contribution on behalf of ESIC.
There are two contribution periods, each of six months duration and two corresponding benefit periods as follows:
|Contribution Period||Benefit Period|
|1st April to 30th Sept||1st Jan of the following year to 30th June|
|1st Oct to 31st March of the following year||1st June to 31st December|
The due date for monthly contribution filing and payment of ESI returns is on or before the 15th of the following month, to the month to which the salary relates. E.g.: If ESI is deducted from the salary of Sept month, then the remittance has to be done on or before the 15th of Oct.
Eligibility check period:
If an employee is eligible for ESI i.e., if their salary is less than 21,000 and they are given an increment in the middle of the contribution period, then they will be eligible for ESI and its benefits till the end of that contribution period. Once that contribution period is over, they will not fall under ESI anymore.
The benefits under the Employee State Insurance scheme can be broadly classified as follows:
Primary Medical Care – These facilities are provided to the insured person and their family. There is free treatment, and it is also applicable to retired and permanent disabled persons and spouses. A token payment of Rs. 120 is required to be remitted annually for retired persons to avail this benefit.
Specialists and Diagnostic Services – It is provided for the insured person and their dependent’s families for specialist consultation which is provided at the specialist or diagnostic centre.
In-patient care – It is provided at the hospitals, which are constructed by the ESIC or reservation of beds, which is owned by the state government or local and private organisations. Basically, this scheme pays for these beds on the basis of occupied beds days.
Disablement Benefits – Under the disablement benefits, there are two categories –
- Temporary Disability Benefits – At the rate of 90% of wages, it is payable till disability continues.
- Permanent Disability Benefits – It is also payable at the rate of 90% of wages in the form of payment. And it depends upon the loss of earning capacity as certified by the medical.
Dependent Benefits – It is payable at the rate of 90% of wages in the form of monthly payments to the dependents of a deceased person in cases where death occurs due to employment injury or accident.
Maternity Benefits – An Insured Woman will get ESI benefits in case childbirth occurs. In case childbirth occurs at a place where necessary medical facilities under the ESI Scheme are not available, then benefits can be availed at Private medical care facilities with prior approval from the dispensary doctor. The maternity benefits are payable for 26 weeks, which can extend further one month on medical advice of the doctor at the rate of wages subject to contribution for 70 days in the prior two contribution periods.
Unemployment Allowance – Under the scheme of Rajiv Gandhi Shramik Kalyan Yojana, ESIC benefits are provided for an insured person who works in an organisation continuously for three years or more. If for some reason the factory is closed, is permanent invalid, or in retrenchment, the insured person is entitled to an allowance equal to 50% of wages up to two years, medical care facilities for self and family from ESI hospital/ dispensary and provided the vocational training for upgrade the skills and expenses will be borne by ESI.
Sickness Benefits – These benefits are provided in the form of cash compensation at the rate of 70% of wages paid to insured persons during the periods of certified sickness for 91 days in a year. For sickness benefit, the insured person needs to contribute for 78 days in a contribution period of 6 months.
Extendable Sickness Benefits – It is expandable up to 2 years for the 34 malignant and long-term diseases at an enhanced rate of 80 percent of wages.
Enhanced Sickness Benefits – Full wages are payable to insured persons undergoing sterilisation for 7 or 14 days for male and female employees.
Miscellaneous Benefits like –
Funeral Expenses – Rs.15,000 is payable to the person who performs the last service from day one of entering insurable employment or dependents.
Old age medical care facilities
Rehabilitation Allowance – It is for a permanently disabled Person for undergoing VR Training at VRS. And for physical disability due to employment injury.