Employee State Insurance Act 1948

What is ESI Scheme?

Employees’ State Insurance Scheme of India is a multi-dimensional Social Security
Scheme tailored to provide Socio-economic protection to the 'employees' in the
organized sector against the events of sickness, maternity, disablement and death
due to employment injury and to provide medical care to the insured employees and
their families.
• An Act to provide for certain benefits to the insured employees and his
dependent in case of
• sickness, medical
• maternity
• employment injury
• Disablement
• Funeral
• Dependents
• Unemployment allowances and to make provision for certain other matters in
relation there to.
• It provides social security in the form of insurance
Both the parties contribute some amount to this fund .
The ministry of Labor and Employment ,govt of India vide its notification dated
22.12.2016 has increased wage ceiling from existing limit of
15000 PM to 21000 per month with effect from 1.1.2017
• ) This Act may be called the Employees’ State Insurance Act, 1948.
• (2) It extends to the whole of India.
• (4) It shall apply, in the first instance, to all factories (including factories belonging
to the Government other than seasonal factories.
• The act has been extended to new class of establishments:
• Motor Transport undertakings
• Hotels
• Restaurants
• Cinemas,Newspaper,shop and educational /medical institutions employing 20 or
more persons.
• The Act can be extended to those establishments where less than 20 employees
are employed but 1 month prior notification is necessary for approval by state
govt to central govt
 employment injury
means a personal injury to an employee caused by accident or an occupational
disease
arising out of and in the course of his employment, being an insurable
employment, whether the accident occurs or the occupational disease is
contracted within or outside the territorial limits of India ;]

Permanent partial disablement

means such disablement of a permanent nature, as reduces the earning capacity
of an employee in every employment which he was capable of undertaking at the
time of the accident resulting in the disablement .
• sickness
• means a condition which requires medical treatment and attendance and
necessitates abstention from work on medical grounds ;

• temporary disablement
• means a condition resulting from an employment injury which requires medical
treatment and renders an employee, as a result of such injury temporarily
incapable of [doing the work which he was doing prior to or at the time of the
injury] ;
 Permanent total disablement
• means such disablement of a permanent nature as incapacitates an employee
for all work which he was capable of performing at the time of the accident
resulting in such disablement
 • Rate of contribution

Employee Employer
0.75 % of employees wages 3.25% of employees wages

• The rate of contribution has been reduced from 6.5% to 4 % of the wages.
• The employers contribution is being reduced from 4.75% to 3.25% and
• employees from 1.75% to 0.75% effective from 1st July 2019
 Establishment of Employees’ State insurance Corporation
• (1) With effect from such date as the Central Government may, by notification in
the Official Gazette, appoint in this behalf, there shall be established for the
administration of the scheme of employees' state insurance in accordance with
the provisions of this Act a Corporation to be known as the Employees' State
Insurance Corporation.
• (2) The Corporation shall be a body corporate by the name of Employees' State
Insurance Corporation having perpetual succession and a common seal and shall
by the said name sue and be sued.
• Corporation's power to promote measures for health, etc. of insured persons
• The Corporation may, in addition to the scheme of benefits specified in this Act,
promote measures for
• the improvement of the health and welfare of insured persons and
• for the rehabilitation and re-employment of insured persons who have been
disabled or injured and
• may incur in respect of such measures expenditure from the funds of the
Corporation within such limits as may be prescribed by the Central Government.
 Constitution of Corporation
• The Corporation shall consist of the following members, namely:-
• (a) a Chairman to be [appointed] by the Central Government;
• (b) a Vice-Chairman to be [appointed] by the Central Government;]
• (c) not more than five persons to be [appointed] by the Central Government,
• (d) one person each representing each of the [States] in which this Act is in force]
to be [appointed] by the State Government concerned;
• (e)one person to be [appointed] by the Central Government to represent
the [Union Territories];
• (f) ten persons representing employers to be [appointed] by the Central
Government in consultation with such organizations of employers as may be
recognized for the purpose by the Central Government;
• (g) [ten] persons representing employees to be [appointed] by the Central
Government in consultation with such organizations of employees as may be
reorganized for the purpose by the Central Government;
(h) two persons representing the medical profession to be [appointed] by the
Central Government in consultation with such organization of medical practitioners
as may be recognized for the purpose by the Central Government
(i) three members of Parliament of whom two shall be members of the House of
the People (Lok Sabha) and one shall be a member of the Council of States (Rajya
Sabha) elected respectively by the members of the House of the People and the
members of the Council of States; and
(j) the Director-General of the Corporation ex-officio.]
• Medical Benefit Council
• (1) The Central Government shall constitute a Medical Benefit Council consisting
of-
• (a) the Director General, Health Services, ex officio, as Chairman;
• (b) a Deputy Director General, Health Services, to be [appointed] by the Central
Government;
• (c) the medical commissioner of the Corporation, ex officio;
• (d) one member each representing each of the [States (other than Union
Territories) in Which this Act is in force] to be [appointed] by the State
Government concerned;
• (e) three members representing employers to be [appointed] by the Central
Government in consultation with such organizations of employers as may be
recognized for the purpose by the Central Government;
• (f) three members representing employees to be [appointed] by the Central
Government in consultation with such organizations of employees as may be
recognized for the purpose by the Central Government; and
• (g) three members, of whom not less than one shall be a woman, representing
the medical profession, to be [appointed] by the Central Government in
consultation with such organizations of medical practitioners as may be
recognized for the purpose by the Central Government.
• Duties of Medical Benefit Council
• The Medical Benefit Council shall-
• (a) advise [the Corporation and the Standing Committee] on matters relating to
the administration of medical benefit, the certification for purposes of the grant
of benefits and other connected matters;
• (b) have such powers and duties of investigation as may be prescribed in relation
to complaints against medical practitioners in connection with medical treatment
and attendance; and
• (c) perform such other duties in connection with medical treatment and
attendance as may be specified in the regulations.
•
Employees’ State Insurance Fund
• (1) All contributions paid under this Act and all other moneys received on behalf
of the Corporation shall be paid into a fund called the Employees' State Insurance
Fund which shall be held and administered by the Corporation for the purposes
of this Act.
• (2) The Corporation may accept grants, donations and gifts from the Central or
any [State Government,] local authority, or any individual or body whether
incorporated or not, for all or any of the purposes of this Act.
•
All employees to be insured
• Subject to the provisions of this Act, all employees in factories or establishments
to which this Act applies shall be insured in the manner provided by this Act.
 Benefits
• Periodical payments to any insured person in case of his sickness certified by a
duly appointed medical practitioner
• Periodical payments to an insured woman in case of confinement or miscarriage
or sickness arising out of pregnancy, confinement, premature birth of child or
miscarriage
• Periodical payments to an insured person suffering from disablement as a result
of an employment injury
• Periodical payments to such dependants of an insured person
• medical treatment for and attendance on insured persons
• payment to the eldest surviving member of the family of an insured person who
has died, towards the expenditure of Rs 10000 on the funeral of the deceased
insured person.
Sickness benefit
Sickness benefits represent periodical payments to an insured person incase of her
sickness certified by a duly appointed medical officer practitioner.
A person shall be qualified to claim sickness benefit for sickness occurring during
any benefit period if the contributions in respect of him were payable for not less
than 78 days in the corresponding contribution period.
A person who has entered into insurable employment for the first time has to wait
for nearly 9 months before becoming eligible to sickness benefit because his
corresponding benefit period starts only after that interval.
Maternity benefits
The insured women shall be entitled to periodical payments incase of
confinement or miscarriage or sickness arising out of pregnancy.
ESIC provides 100% of average daily wages in cash up to 26 weeks in confinement
and 12 week in case of miscarriage, during maternity leave and 12 weeks for
commissioning mother and adopting mother.
• (a) a person who sustains temporary disablement for not less than three days
(excluding the day of accident) shall be entitled to periodical payment [at such
rates and for such period and subject to such conditions as may be prescribed by
the Central Government];
• (b) a person who sustains permanent disablement, whether total or partial, shall
be entitled to periodical payment [at such rates and for such period and subject
to such conditions as may be prescribed by the Central Government] :
Funeral expenses
Funeral expenses are in the nature of a lump sum payment made to defray the
expenditure on the funeral of deceased insured person. Amount of funeral
expenses will be as per Rules made in this behalf ,which is presently 10,000.
Such amount is paid either to the eldest surviving member of the family or to the
person who actually incurs the expenditure on the funeral.
• UN-EMPLOYMENT ALLOWANCE
• LOSS OF JOB DOESN'T MEAN LOSS OF INCOME
• ESIC Provides monthly cash allowance for a duration of maximum 24 months in
case of involuntary loss of employment or permanent invalidity due to non-
employment injury.

• DEPENDANTS' BENEFIT
• THOSE WHO DEPEND ON YOU ALSO HAVE US TO DEPEND ON
• ESIC provides monthly payment apportioned among dependants in case of death
due to employment injury.
• DISABLEMENT BENEFIT
• DISABILITY DOESN'T MEAN INABILITY TO EARN
• ESIC provides continuous monthly payment till injury lasts for temporary
disablement and for whole life for permanent disablement.
Example
Let us say Mr. X with wages of Rs. 18,000 works in a factory unit. The contribution
will be as follows:
Employee Contribution - 0.75%*18,000 = 135
Employer Contribution - 3.25%*18,000 = 585
So a total contribution of Rs. 720 will be made. The responsibility of deducting the
contribution and depositing the same is on the employer.
The employer must deposit the amount within 15 days of the end of the calendar
month in which the deduction is made.
The same can be deposited online or to authorised designated branches of SBI or
other designated branches..
• When calculating ESI, the elements that comprise an employee’s gross salary include
• Basic Pay,
• Dearness Allowance,
• City Compensatory Allowance,
• House Rent Allowance, Attendance & Overtime Pays,
• Meal Allowance, Uniform Allowance, Incentives and other Special Allowances.

• If the Gross Salary of an employee is INR 15,000,

• The Employee’s share of contribution would be: 0.75/100 * 15,000 = INR 112.5
• And, the Employer’s share of contribution would be: 3.25/100 * 15,000 = 487.5
• Hence, the total ESI contribution would be: 112.5 + 487.5 = INR 600
• Employer not to dismiss or punish employee during period of sickness, etc.
• (1) No employer shall dismiss, discharge, or reduce or otherwise punish an
employee during the period the employee is in receipt of sickness benefit or
maternity benefit,

• Constitution of Employees' Insurance Court

• (1) The State Government shall, by notification in the Official Gazette, constitute
an Employees' Insurance Court for such local area as may be specified in the
notification.
Matters to be decided by ESI court
1. Adjudication of disputes
2. Adjudication of claims
ESIC -The system ensures that the workers and his family do not suffer in case of
unseen, unfortunate circumstances.
• Registration and Filing of Returns :
Employer require registration with ESIC with following detail
• PAN card of the business.
• Address proof of business,
• The license obtained under Shop and Establishment Act or Factories Act.
• Basic documents required as per the nature of entity - Articles of Association,
Memorandum in case of a company, partnership deed in case of a partnership
and Limited Liability Partnership.
• Details of all directors, partners, and shareholders.
• Details of all employees along with their salary information.
• Bank details.
ESIC will verify all the details and issue a 17 digit unique number. This unique
number is required for all filings.
log In to official website that is www.esic.nic.in for submitting return . All the
employee detail to be verify and up to date before filing return . Bank detail to be
filled and return to be submitted.
• After that, the employer can go to the 'List of Actions' and 'Generate Challan’.
- The challan must be downloaded and documented for future reference and
inspections.
• The employer needs to pay ESI return on a half-yearly basis, and the due dates
are also fixed as follows:
• The due date for ESI return filing is 11th November for the period of return April
to September.
• The due date for ESI return filing is 11th March for the period of return October
to March.
• The website also offers various actions that the employer can take like modify
employee details, report accidents, add new employees, and so on.
• The contributions towards employee state insurance is very beneficial to
employees, and hence the provisions for nonpayment or delayed payment are
very stringent.
• Payment due date of ESI Act 1948
Contribution shall be paid in respect of an employee in a bank duly authorized by
the Corporation within 15 days of the last day of the calender month in which the
contribution falls due for any wage period.
• Consequences of Non-Payment or Late Payment of Employees'
Contribution
Criminal Breach of trust' is punishable under IPC Section(s) 406, 409 and also
an offence u/s 85 (b - g) of ESI Act.
Non-payments, delayed payments, or falsifying payments under ESI Act may
attract imprisonment for a period extending up to 2 years and fine up to Rs
5,000.

simple interest at the rate of 12% per annum in respect of each day of delay or
default in payment of contribution.

Penal provisions:- Less than 2 month -5%, 2 to 4 month – 10 % , 4 to 6 month –

15% , 6 month and above – 25%