EMPLOYEES STATE INSURANCE
Employees' State Insurance (ESI): Understanding its Benefits for Indian Workers
The Employees State Insurance Scheme is an integrated measure of social insurance that is designed to accomplish the task of protecting employees against the impact of incidences of sickness, maternity, disablement, and death due to employment injury and provide medical care to insured persons and their families.
(1) The ESI act applies to all factories including factories belonging to the government.
(2) The act does not apply to seasonal factories.
(3) In the case of factories belonging to the government, the act shall not apply if the employees are given similar or superior benefits under the ESI act.
Under these provisions enacted by the Appropriate Government, the act shall extend to the following types of establishments if they employ 20 or more persons:
(i) Shops and Commercial establishments,
(ii) Hotels and restaurants,
(iii) Cinemas including preview theatres,
(iv) Newspaper establishments,
(v) Road transport undertakings etc.
An establishment to which the ESI Act applies shall continue to be governed by the act even if the number of persons employed falls below the limit specified.
An employee whose wages/salary (excluding overtime remuneration) exceeds Rs 21,000 is covered under the act.
(a) What are the exemptions under the ESI Act?
(b) Who is required to get registered under the ESI Act?
(c) What are the advantages of registering an establishment to the employers under the ESI Act?
(d) What are the contributions under the ESI Act?
The provisions of this act do not apply to factories or establishments under the control of the central /state government.
The employees working with Public Sector Undertakings(PSUs)[51%or more of paid-up shares are held by the central / state government] receive social security benefits that are substantially similar or superior to the benefits provided under the act.
Every factory to which the act applies shall be registered within 15 days or such period as specified.
Procedure for Registration of factories:
(1) The employer of a factory to which the act applies has not been allotted the Employer’s code number or has ceased to apply for registration, shall furnish to the regional office within 15 days a declaration of registration.
(2) The employer shall be responsible for the correctness of all the particulars and information.
(3) If the employer fails to register, the regional officer may direct the employer to furnish the Employer’s registration form within the specified time.
(4) The employer to whom the ESI corporation has issued the code number shall within 15 days furnish a declaration.
(5) Upon receipt of the completed Employer&rsquo's Registration form, the regional office, if satisfied, allows the Employer&rsquo's code number and shall inform the employer of that number.
(6) The employer shall enter the Employer&rsquo's code number on all the documents prepared.
ADVANTAGES OF REGISTERING AN ESTABLISHMENT TO THE EMPLOYERS:-
(a) Employers are free from all their liabilities of providing medical benefits to their employees and their families in kind or the form of a fixed cash allowance.
(b) Employers are granted exemptions related to the applicability of the Maternity benefit act and Employees compensation act in respect of employees covered under the ESIC scheme.
(c) Employers are not responsible in times of physical distress of their employees or workers such as employment injury, sickness, or physical disablement thereby resulting in loss of wages since the responsibility of paying cash benefits shifts to the ESI Corporation.
Contribution means the sum payable to the corporation by the principal employer in respect of employees and includes any amount payable by or on behalf of the employees.
Currently, the contribution is payable as follows:-
(a) The employee’s contribution is 1.75% of wages.
(b) The employer’s contribution is 4.75% of wages.
Example: If the gross salary of Mr.A is INR 15,000,
The employee’s share of contribution would be 15000 X 1.75% = 262.5
The employer’s share of contribution would be – 15000 X 4.75%= 712.5
The total ESI contribution is- INR 975/-
PROVISION FOR PAYMENT OF CONTRIBUTION:-
(1) The contribution payable under the act shall comprise the employer’s contribution and shall be paid by the corporation.
(2) The contribution shall be paid at such rates as prescribed by the central government.
(3) All contributions shall be payable for the wage period.
(4) The contributions payable of each wage period shall fall due on the last day of the wage period.
(5)If any contribution is not paid by the principal employer within the prescribed period then the employer shall be liable to pay a simple interest of 12% till the date of actual payment.
BENEFITS AVAILABLE TO THE EMPLOYEES UNDER ESI ACT:-
(i) Periodical payments in case of sickness certified by a medical officer.
(ii) Periodical payments to an insured person in case of confinement or miscarriage or sickness arising out of pregnancy
(iii) Periodical payment to an insured person suffering from disablement as a result of employment injury.
(iv) Periodical payment to dependents of the insured person.
(v) Medical treatment and attendance of the insured person.
(vi) Payment of funeral expenses on the death of the insured person at a prescribed rate.