Employee State Insurance (ESI) Act 1948 – Benefits, Features and How To Apply
Under the Employee State Insurance Act (ESI Act), 1948, enrolled individuals can avail of benefits in the form of financial coverage during any untimely health-related eventuality. Under this scheme, eligible members can enjoy disability benefits, medical benefits, maternity benefits, unemployment allowance, etc.
This scheme is a godsend for employees who can enjoy financial coverage during medical emergencies.
Employee State Insurance Act 1948 – Constitutionality and Applicability
Prime Minister Pandit Jawaharlal Nehru rolled out the ESIC scheme on February 24, 1952. The primary purpose of the Employee State Insurance Act (ESI) is to offer social security to workers with regard to sickness, permanent or temporary disability or death during employment. The Employees State Insurance Act, 1948 provides provisions for a worker’s immediate dependents.
Under Section 2(12), this Act applies to all non-seasonal factories with 10 or more employees. This scheme extends to:
1. Under State Government:
- Cinemas
- Shops
- Restaurants
- Hotels
- Road and motor transport firms
- Educational institutions
- Private medical institutes
- Media organisations (including print)
- Contractual and casual employees from municipal bodies with 10 or more people in specific States or Union Territories.
2. Under Central Government:
- Restaurants
- Hotels
- Shops
- Road motor transport organisations
- Theatres and cinemas
- Media establishments (including print)
- Insurance firms
- Non-banking financial firms
- Airports
- Port trust
- Warehouses with 20 or more workers
Objectives of the Employee State Insurance Act 1948
Employees’ State Insurance Act, 1948, aims to offer financial benefits to enrolled workers during sickness, pregnancy, and any disability (permanent or temporary) due to employment injury.
Under the Employees’ State Insurance Act, the insured person and his/her dependents will receive cash benefits, medical relief, maternity cover, and compensation for fatal diseases or injuries. In addition, dependents of deceased workers will receive a pension.
Also Read: Employee State Insurance Corporation Scheme: Coverage Under ESIS
Key Features of the Employee State Insurance Act, 1948
Let’s delve into some of the key features of this Government-sponsored social security scheme.
- Currently, this scheme covers employees or workers with wages up to Rs. 21,000 per month. For persons with disabilities, the wage limit is up to Rs. 25,000 per month.
- As mentioned above, both an employee and his/her dependents can avail of the benefits under this scheme.
- The contribution rate is 3.25% from an employer’s end and 0.75% of an employee’s payable salaries to claim this benefit. Workers earning less than Rs. 137 as daily wage get exempted from paying their contribution.
- As per this scheme, State Governments will have to pay 1/8th of total medical expenses. This is up to Rs. 1,500 per head under this Act.
- Insured members can use these benefits even after taking premature retirement.
- Members under the VHS scheme can also avail themselves of these benefits.
- If you are unemployed, you can still receive benefits under the Employee State Insurance Act for up to 3 years. However, you will have to provide a retrenchment letter along with details regarding your last employment.
- Partial or complete disablement due to employment hazards gets covered.
- Female employees can extend their maternity leave to up to 26 weeks from the time of going into labour and receive a 100% salary payout for the period.
Benefits under the Employees State Insurance Act, 1948
1. Sickness benefits
Insured members can avail of compensation of up to 70% of their wages during periods of certified sickness. This facility is valid for 91 days during two consecutive benefit periods. In case of long-term ailments, you can enjoy up to 80% compensation rates for 2 years.
2. Medical benefits
Under medical benefits, you can get cover for surgical care, doctor’s consultation, ambulance charges, and medication. There is no limit on such expenses.
3. Disablement (temporary and permanent) benefits
Beneficiaries can avail about 90% of their salaries as compensation in case of temporary disability. These benefits are available from the 1st day of employment.
Under such circumstances, individuals will get paid for the loss incurred in their earnings during that period. But a disability should last for more than 3 days from the accident date.
4. Maternity benefits
Women employees can receive cash benefits due to health issues resulting from premature birth, miscarriage, pregnancy, confinement, and medical termination of pregnancy.
The maximum compensation period ranges between 6 to 12 months, based on the medical requirement. This period can get extended by 1 more month.
You will have to contribute for at least 70 days in 2 successive contribution periods before your period of cash benefit.
5. Death benefits
In case of any death due to an accident during employment, a deceased member’s dependents can receive 90% of their salary. Parents and spouses can enjoy these benefits till their death. But children can avail themselves of the benefits till the age of 25 years.
6. Funeral expenses
In case of death, dependents can claim up to Rs. 10,000 to complete all final rituals of an expired employee.
7. Post-retirement benefits
After coverage for at least 5 years, you and your spouse can utilise various medical benefits even post-retirement.
You must pay Rs. 120 as a fee every year to avail of this benefit.
8. Provision for unemployed individuals
After being insured for at least 3 years, if you lose your job due to retrenchment, closure of workplace, or permanent disability, you can receive certain benefits under Rajiv Gandhi Shramik Kalyan Yojana.
These benefits will include medical assistance and an unemployment allowance of up to 50% of salary for at least 1 year.
Benefits for Family Members under the Employee State Insurance Act
The Employee State Insurance Act offers benefits to both the workers and their family members during loss of wages or disability. The dependents of the employee who are covered under ESI are:
- Spouse
- Minor Dependent Son Up to 25 Years
- Dependant Unmarried Daughter Up to 25 Years
- Dependant Infirm Son & Unmarried Daughter
- Dependant Parents
- Minor Brother and Sister (When there are no parents)
These are some of the benefits the dependents can avail as per the existing scheme:
- The spouse or the widowed mother of the worker can avail of a life-long pension equal to 90% of the average daily wage of the worker in case of the death or disability of the insured person. Male children can avail of this benefit up to the age of 25 years. A female child gets the benefit till her marriage.
- Dependents of the employee receive full medical care in case of any injuries or illnesses while they are at work. There is no ceiling on treatment expenditure from the day the worker enters insurable employment.
- All dependent family members of employees who registered themselves on the ESIC portal prior to their diagnosis or death due to COVID disease are entitled to receive the same benefits and on the same scale.
Do’s and Don’ts of the ESI Act
- You must protect your Pehchan Card (ESI Card) from theft or damage.
- Employees who are switching jobs must inform their current employer.
- Certain benefits depend on your length of service, so, after joining a new company, share your existing ESI number with your employer.
- You must take referral procedures seriously.
- Follow a doctor’s instructions carefully.
- To avail of all benefits under this scheme in another region, you must get Form 105 signed by your employer.
- Add or delete family members in your declaration in case of any demise in your family.
What are the Exemptions under the Employee State Insurance Act 1948?
Under this Act, employees with daily wages less than Rs 137 are not required to pay their contribution to the ESI Corporation. They are called ‘exempted employees’. However, the employer still needs to contribute his/her share to the corporation.
The employer is exempted from contributing to the wages paid to the employees with disability for a maximum period of 10 years from the starting date of the contribution period.
Mistakes You Must Avoid
- Ensure that no non-eligible persons get added to an employee’s Declaration Form to avail of medical treatment.
- As stated earlier, you cannot afford to lose or damage a Pehchan Card as it is a key to your social security.
- One must not fake injuries with the sole aim to utilise the benefits.
- Avoid procuring any forged doctor’s certificate.
- You do not need to pay for ESIC forms as they are available for free.
Who is Eligible under the Employee State Insurance Act?
As per the ESIC Act 1948, the scheme applies to all factories (except seasonal) and other establishments with 10 or more employees. The establishments covered under the ESIC scheme are:
- Shops
- Hotels or restaurants
- Cinemas and theatres
- Road motor transport establishments
- Newspaper establishments
- All private educational institutions and medical institutions
The monthly wage of the employees/beneficiaries under this scheme should not exceed Rs 21,000 and Rs 25,000 for disabled persons.
Also Read: Employee Stock Ownership Plan (ESOP) : Definition, Benefits, and Taxation
How to Register for the Employee State Insurance Act?
- Step 1: The employer must fill in employee details after downloading the ESI application form from the official portal www.esic.nic.in/
- Step 2: As an employee, you must submit the photos of the dependents, and the employer has to attest to the photograph.
- Step 3: After filling out a Pehchaan application form, take this form to the nearest ESIC office, where the fingerprints and photos will be documented.
- Step 4: Within 30 days, you will receive 2 sets of cards through a courier or by visiting the nearest ESI branch.
What is the Mode of Payment of Contributions under the ESI Act of 1948?
The ESI scheme is contributory in nature. The insurance fund contribution payable to the ESIC comprises the employer’s contribution and the employee’s contribution at a specified rate which are revised from time to time. The current contribution rates, with effect from 01.07.2019, are as follows:
| Employee | 0.75% of the wages |
|---|---|
| Employer | 3.25% of the wages |
The employers are liable to pay their contribution as well as the employee’s contribution (deducted from their wages) within 15 days of the last day of a calendar month.
Employers can make their contributions online through the ESIC portal. Here are the steps to make an ESIC e-payment.
- Visit the ESIC e-Challan payment page and log in. If you are not registered yet, click on the ‘Employer Sign Up’ option to get your login credentials.
- After logging in, enter the employer code and other necessary information.
- To make a payment, click on the challan number link.
- Note down the challan number for future reference and click on ‘Continue’.
- Select the payment mode through which you wish to make the payment.
- Once the payment is successful, you can save the receipt for future reference.
The ESIC has also authorised designated branches of the State Bank of India and some other banks to receive offline payments.
Documents required for ESI Registration
1. Document copies required to be submitted by the employer for ESI Registration are:
- PAN of company/partnership/firm
- Registration or Incorporation Certificate
- Bank Statement
- All licences issued by the establishment
- A cancelled cheque
- Electricity Bill
- Rent/lease agreement
- PAN and voter id of directors/partners
- Board Resolution Statement
- List of all employees employed directly by the company or by the contractor.
The employers also need to furnish some details about their employees for successful registration. If it’s an employee who is already registered under ESIC, the employer needs to provide the employee’s insurance number and date of appointment.
2. For registration of new employees:
- Name of the employee
- Name of the employee’s father/husband
- Date of Birth
- Address
- Date of appointment
- Bank Account Details
- Details of nominees
- Details of the previous employer
- Details of the new employer such as employer code no., insurance no., name, address and contact no.
Complaints & Redressal of Public Grievances under the Employee State Insurance Act, 1948
The ESI Corporation has set up an organised system for the speedy redressal of public grievances. Grievances can be reported both online and offline to the Public Grievance Officer.
- For any ESIC-related complaints or suggestions, contact 91-11-23231354, 91-11-23235781. E-mail: [email protected]
- For issues related to online applications, you can raise a service ticket on http://www.esic.in/
- For Medical related queries and advice, you can contact Toll-free numbers 1800-11-3839/1800-11-2526
Final Word
The Employee State Insurance (ESI) Act provides a range of benefits to workers. It also offers a financial safeguard to the families of an injured or deceased employee while at work. Social security schemes and insurance plans are thus of utmost importance in our daily lives. Individuals failing to comply with the eligibility of this scheme can alternatively opt for a health insurance policy from institutions such as Navi. Navi provides a wide range of benefits from 10,000 plus network hospitals, daycare treatments, pre and post-hospitalisation charges and health cover up to 1 crore. Monthly Premium starts from just INR 241. Download the Navi App today!
FAQs
Ans: Pehchan Card is the other name for an ESIC card.
Ans: In case of the demise of employees while at work, the benefits will get transferred to their dependents.
Ans: The records needed are:
Employee Wage Master
Books of Accounts
Accident Register in Form 11
Inspection Book
Ans: Yes, it is mandatory for an eligible employee to register with the ESI scheme. Employees who earn more than Rs. 21,000 per month are exempted from paying their contribution to the scheme.
Ans: The ESIC code number is a unique 17-digit identification number provided to every employer who is registered with the ESI scheme.
– The format of the employer code number is as follows:
– The first 2 digits represent the current region in which the company is established.
– The next 2 digits represent the parent region (headquarters).
– The next 6 digits represent the company’s unique code.
– Next 3 digits represent the number of branches of the company.
– The last four digits represent the nature of the business.
Employees also get a unique identification number after successful registration. That number is known as the Employee Insurance Number.
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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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