ASSIGNMENT ON

BENEFITS UNDER THE EMPLOYEE STATE INSURANCE ACT

SUBMITTED TO: - SUBMITTED BY: -

DR. SUGATO MUKHERJEE TANMAYA PUROHIT

ASSISTANT PROFESSOR STUDENT

SCHOOL OF LAW SCHOOL OF LAW

RAFFLES UNIVERSITY RAFFLES UNIVERSITY

INTRODUCTION

The Employee State Insurance Act, [ESIC] 1948, is a piece of social welfare legislation enacted
primarily with the object of providing certain benefits to employees in case of sickness,
maternity and employment injury and also to make provision for certain others matters
incidental thereto. The Act in fact tries to attain the goal of socio-economic justice enshrined
in the Directive principles of state policy under part 4 of our constitution, in particular articles
41, 42 and 43 which enjoin the state to make effective provision for securing, the right to work,
to education and public assistance in cases of unemployment, old age, sickness and
disablement. The act strives to materialise these avowed objects through only to a limited
extent. This act becomes a wider spectrum then factory act. In the sense that while the factory
act concerns with the health, safety, welfare, leave etc of the workers employed in the factory
premises only. But the benefits of this act extend to employees whether working inside the
factory or establishment or elsewhere or they are directly employed by the principal employee
or through an intermediate agency, if the employment is incidental or in connection with the
factory or establishment.

The Employee State Insurance act was promulgated by the Parliament of India in the year
1948.To begin with the ESIC scheme was initially launched on 2 February 1952 at just two
industrial centres in the country namely Kanpur and Delhi with a total coverage of about 1.20
lac workers. There after the scheme was implemented in a phased manner across the country
with the active involvement of the state government.

WAGE CEILING FOR COVERAGE

The monthly wage limit for coverage under the ESI act would be such as prescribed by the
central government in the ESI [central] rules, 1950. The existing wage ceiling for coverage
[excluding remuneration for over-time work] is Rs.6500 per month [rule 50 of ESI central
rules, 1950]. An employee who is covered at the beginning of a contribution period shall
continue to remain covered till the end of that contribution period notwithstanding the fact that
his wages may exceed the prescribed wage ceiling at any time after the commencement of that
contribution period. Wage ceiling for purpose of coverage is revised from time to time by the
central government on the specific recommendation of the corporation, at present the
corporation has recommended for the increase of the wage limit to Rs 10,000 and its
implementation is awaited.
BAR AGAINST RECOVERY OF COMPENSATION OR DAMAGES UNDER ANY OTHER
LAW

An insured person or his dependants shall not be entitled to receive or recover, whether from
the employer or any other person, any compensation or damages under the Workmen’s
Compensation act or Provident Fund act or any other law for the time being in force, in respect
of an employment injury sustained by the insured person as an employee under this act. If there
is any change in the provident fund act, it doesn’t affect the ESIC Act. The difference between
employee and insured person is that employee is the person who makes the contribution to the
scheme and get benefits and IP’s may or may not be the contributors to the scheme but are
entitled to the benefits by virtue of earlier contribution or insured employment.

COVERAGE

With the implementation of ESI scheme, at just two industrial centres in 1952, namely kanpur
and Delhi, there was no looking back since then in terms of its geographic reach and
demographic coverage. Keeping pace with the process of industrialization, the scheme today
stands implemented at over 679 centres in 25 states and union territories. The Act now applies
to 230 thousand factories and establishments across the country, benefiting about 8.30 million
family units of workers in the wage brackets. As of now, the total beneficiary population stands
at about 32 million.

ADMINISTRATION

The comprehensive and well-designed social security programme is administered by an apex

corporate body called the Employee State Insurance Corporation. It comprises members
representing vital interest groups that include, employee, employers, the central and state
government, besides, representatives of parliament and medical profession. The corporation is
headed by the union minister of labour, as its chairman, whereas, the director general,
appointed by the central government functions as its chief executive officer. A standing
committee constituted from amongst the members of the corporation, acts as an executive body.
The medical benefit council, constituted by the central government, is yet another statuary body
that advises the corporation on matters related to effective delivery services to the beneficiary
population. The corporation with its central headquarters at New Delhi, operates through a
network of 26 regional and sub- regional offices located in various state. The respective state
governments take care of the administration of medical benefit. Except in case of Delhi and
Noida, greater Noida areas of Uttar Pradesh, where, the corporation administers medical
facilities directly.

FINANCE

Like most of the social security schemes, the world over, ESI scheme is a self-financing health
insurance scheme. Contributions are raised from covered employees and their employers as a
fixed percentage of wages. As of now, covered employees contribute 1.75% of the wages,
whereas as the employers contribute 4.75% of the wages, payable to the insured persons.
Employers earning less than Rs 40 a day as daily wage are exempted from payment of their
share of contribution. The state government as per the provision of the act contributes 1/8 of
the expenditure on medical benefit within a per capita ceiling of Rs.600 per insured person per
annum. Any additional expenditure incurred by the state government, over and above the
ceiling, and not falling within the shareable pool, is borne by the state governments concerned.
The contribution is deposited by the employer in cash or by cheque at the designated branches
of some nationalised banks. The responsibility for payment of all contributions is that if the
employer with a right to deduct the employees share of contribution from employees’ wages
relating to the period in respect of which the contribution is payable.

CONTRIBUTION PERIODS AND BENEFIT PERIOD

Workers, covered under the ESI Act, are required to pay contribution towards the scheme on a
monthly basis contribution period means a six-month time span from 1 April to 30 October and
1 November to 31 March. Thus, in a financial year there are two contribution periods of six
months’ duration. Cash benefits under the scheme are generally linked with contribution paid.
The benefit period starts their months after the closure of a contribution period.

REGISTRATION

Simultaneously with his or her entry into employment in a covered factory or establishment,
an employee is required to fill in a declaration form. The employee is then allotted a registration
number, which distinguishes and identifies the person for the purposes of the scheme. A person
is registered once and only upon his entry in insurable employment.8 But recent SC’s
judgement in Balakrishna v ESIC has held that a worker covered under the act would be entitled
to benefit from the date of his employment and not from the date of registration after
contribution by the employer.
IDENTITY CARD

On registration every insured person is provided with a ‘temporary identification certificate’

which is valid ordinarily for a period of three months but may be extended, if necessary, for a
further period of 3 months. Within this period, the insured person is given a permanent ‘family
photo identity card’ in exchange for the certificate. The identity card serves as a means of
identification and has to be produced at the time of claiming medical care at the dispensary/
clinic and cash benefit at the local office of the corporation. In the event of change of
employment, it should be produced before the new employer as evidence of registration under
the scheme to prevent any duplicate registration. The identity card bears the signature/thumb
impression of the insured person. Since medical benefit is also available to the families of
Insured persons, the particulars of family members entitled to medical benefit are also given in
the identity card affixed with a postcard size family photo. If your identity card is lost, a
duplicate card is issued on payment as prescribed.

SOCIAL SECURITY BENEFITS

- QUANTUM, SCALE AND CONTRIBUTORY CONDITIONS

Employees covered under the scheme are entitled to medical facilities for self and dependants.
They are also entitled to cash benefits in the event of specified contingencies resulting in loss
of wages or earning capacity. The insured women are entitled to maternity benefit for
confinement. Where death of an insured employee occurs due to employment injury or
occupational disease, the dependants are entitled to family pension. Various benefits that the
insured employees and their dependants are entitled to, the duration of benefits and
contributory conditions therefor are as under -

1. Medical benefit
Full medical facilities for self and dependants are admissible from day one of entering
insurable employment. Whereas, the primary, outpatient, in patient and specialist
services are provided through a network of panel clinics, ESI dispensaries and hospitals,
super specialty services are provided through a large number of advanced empanelled
medical institutions on referral basis.
- Eligibility to medical benefit
a. From day one of entering insurable employment for self and dependants such as
spouse, parents and children own or adopted.
b. For self and spouse on superannuation subject to having completed five years in
insurable employment on superannuation or in case of having suffered permanent
physical disablement during the course of insurable employment.
c. The rate of contribution for superannuated/ disabled is Rs 1,220 per annum payable
in lump sum at the local office for availing full medical care for self and spouse.

2. Sickness benefit [cash]

Sickness benefit is payable to an insured person in cash, in the event of sickness
resulting in absence from work and duly certified by an authorised insurable medical
officer/ practitioner.
a. The benefit becomes admissible only after an insured has paid contribution for at
least 78 days in a contribution period of 6 months.
b. Sickness benefit is payable for a maximum of 91 days in two consecutive
contribution period. [one year]
c. Payment is to be made by the local office within 7 days of certificate of sickness at
a standard rate, which is not less than 50% of the wages.

[The logic behind fixing of 78 & 91 days of contribution is based on certain statistics
worked by the corporation to give cash benefits. But the officials in the corporation
don’t know how it is fixed.]

3. Extended sickness benefit [cash]

Extended sickness benefit is payable to insured persons for the period of certified
sickness in case of specified 34 long-term diseases that need prolonged treatment and
absence from work on medical advice.
a. For entitlement to this benefit an insured person should have been in insurable
employment for at least 2 years. He/ she should also have paid contribution for a
minimum of 156 days in the preceding 4 contribution periods or say 2 years.
 b. ESI is payable for a maximum period of 2 years on the basis of proper medical
certification and authentication by the designated authority.
c. Amount payable in cash as extended sickness benefit is payable within 7 days
following the submission of complete claim papers at the local office concerned.

4. Enhanced sickness benefit [cash]

This cash benefit is payable to insured persons in the productive age group for
undergoing sterilisation operation, viz., vasectomy/tubectomy.
a. The contribution is the same as for the normal sickness benefit. • Enhanced sickness
benefit is payable to the IP’s for 14 days for tubectomy and for seven days in case
of vasectomy.
b. • The amount payable is double the standard sickness benefit rate that is, equal to
equal to full wages.

5. Maternity benefit [cash]

Maternity benefit is payable to insured women in case of confinement or miscarriage
or sickness related thereto.
a. For claiming this an insured woman should have paid for at least 70 days in 2
consecutive contribution periods i.e. 1 year.
b. The benefit is normally payable for 12 weeks, which can be further extended up to
16 weeks on medical grounds.
c. The rate of payment of the benefit is equal to wage or double the standard sickness
benefit rate.
d. The benefit is payable within 14 days of duly authenticated claim papers.

6. Disablement benefit [cash]

Disablement benefit is payable to insured employees suffering from physical
disablement due to employment injury or occupation disease.
a. An insured person should be an employee on the date of the accident.
b. Temporary disablement benefit at 70% of the wages is payable till temporary
disablement lasts and is duly certified by authorised insurance medical officer.
 c. In case of permanent disablement, the cash benefit is payable is payable for life.
Amount payable is worked out on the basis of earning capacity determined by a
medical board.
d. Disablement benefit is payable within one month of submission of the complete
claim papers.

7. Dependants benefits [cash]

Dependants benefit [family pension] is payable to dependants of a deceased insured
person where death occurs due to employment or occupational disease.
a. A widow can receive this benefit on a monthly basis for life or till remarriage. • A
son or daughter can receive this benefit till 18 years of age.
b. Other dependants like parents including a widowed mother can also receive the
benefit un under certain condition.
c. The rate of payment is about 70% of the wages shareable among dependants in a
fixed ratio.
d. The first instalment is payable within a maximum of 3 months following the death
of an insured person and thereafter, on a regular monthly basis.

8. Other benefits
A. Funeral expenses – On the death of an insured person subject to a maximum of a
Rs. 2,500 payables at the local office.
B. Vocational rehabilitation – In case of disabled insured persons under 45 years of
age with 40% or more disablement.
C. Free supply of physical aids and appliances such as crutches, wheelchairs,
spectacles and other such physical aids.
D. Preventive health care’s services such as immunization, family welfare services,
HIV/AIDS detection, treatment etc.
E. Medical bonus – Rs. 250 is paid to an insured woman or in respect of the wife of an
insured person in case she does not avail hospital facilities of the scheme for child
delivery.