“ESI stands for Employees State Insurance is a scheme commence by the Government of India under the Jurisdiction of Ministry of Labour & Employment with providing integrated social security and social protection to workers and their dependents of the establishment.”
The Employee State Insurance (ESI) is a social security and self-financing scheme which benefits the employees by providing them with various health benefits. ESI Scheme gives benefits to both employees and their families. The benefits provided by the ESI scheme include sickness benefit, disablement benefits, medical benefit, reimbursement of the funeral expenses, and several other benefits. However, to benefit from the ESI scheme's benefits, the employer who has the employees count of more than ten employees (in some states the prescribed limit is extended to twenty employees) who are earning a maximum salary of Rs 21,000 p.m., are required to obtain ESI Registration.
The Employee State Insurance (ESI) Act of 1948 works as the governing law for the ESI scheme. Hence, the ESI scheme is governed and regulated by the provisions of the ESIC Act, 1948.The Employee State Insurance Corporation or ESIC is an autonomous body formulated by the Ministry of Labour and Employment. In India, all the activities concerning to ESI scheme are regulated by this independent body.
Any non-seasonal factory or establishment having more than 10 employees (in some states it is 20 employees) who have a maximum salary of Rs. 21,000/- has to mandatorily register itself with the ESIC within 15 days from the date of its applicability. Under this scheme, the employer needs to contribute an amount of 3.25% of the total monthly salary payable to the employee whereas the employee needs to contribute only 0.75% of his monthly salary every month of the year. The only exemption to the employee in paying his contribution is whose salary is less than Rs. 176/- per day.
The following establishments employing 10 or more persons attracts ESI coverage:
In some states the minimum employees required for coverage is for 20 or more. A few State Governments have not extended scheme to include Medical & Educational Institutions.
Sickness benefits are provided to the employee at the rate of 70% of his salary in case such sickness continued for exceeding 91 days in a year, and the same is also certified.
Medical benefits are provided to the insured person along with his family members. Full medical care is provided to all persons registered under ESI and their family members – from the day the person enters insurable employment. There is no ceiling on expenditure on the treatment of an Insured Person or his family member. Medical care is also provided to retired and permanently disabled insured persons and their spouses on payment of a token annual premium of Rs.120/-.
Maternity benefits are provided to the women in the form of paid leaves. Maternity benefit for confinement/pregnancy is provided for three months, which is extendable by further one month on medical advice at the rate of full wage subject to contribution for 70 days in the preceding year.
90% of the salary of the insured person is given to the family of a deceased employee, in case such death occurred while in employment.
Funeral expenses are provided in case of death of any employee covered under ESIC. An amount of Rs.10,000/- is payable to the dependents or to the person who performs last rites from day one of entering insurable employment.
Medical care and benefits are provided after retirement or in old age.
In case there is any permanent disablement to the insured person, 90% of his salary is provided as a monthly payment in the form of insurance benefit.
An insured person having insurance for more than three years is provided unemployment benefits which become unemployed. Under the Rajiv Gandhi Shramik Kalyan Yojana, unemployment allowance is payable to an insured Person who become unemployed after being insured three or more years, due to closure of factory/establishment, retrenchment or permanent invalidity. The applicable unemployment allowances provided are:
The rates are revised from time to time, currently (w.e.f. 01.07.2019). The employee’s contribution rate is 0.75% of the wages and that of employer’s is 3.25% of the wages paid/payable in respect of the employees in every wage period. Employees in receipt of a daily average wage up to Rs.137/- are exempted from payment of contribution. Employers will however contribute their own share in respect of these employees.
An Employer is liable to pay his contribution in respect of every employee and deduct employee’s contribution from wages bill and shall pay these contributions at the above specified rates to the Corporation within 15 days of the last day of the Calendar month in which the contributions fall due.