Feb 25

Employee State Insurance Corporation Scheme

Team Antworks

A workforce was developing in the country, dedicated to ensure that industry in India begins to grow and thrive. To ensure that these workers were protected in terms of health and finances, the Parliament implemented the Employees’ State Insurance Act, 1948 (ESI Act). It was the first major legislation that was meant to garner social security for workers. The ESI Act encompasses health-related eventualities which workers are exposed to on a daily basis. This could include any type of sickness, temporary or permanent disability, maternity, diseases contracted from a workplace, death due to employment, and any type of injury that results in the loss of wages or earning capacity. He ESIC Act acts as a financial safety net for workers against these ailments.

Who are Eligible for ESI?

To come under the vast umbrella of benefits offered by the Employee State Insurance Corporation (ESIC), an individual should meet certain criteria that has been set by the committee. The ESI scheme is applicable to

An individual who is employed in a non-seasonal factory that has more than 10 employees. This criteria applies under Section 2 (12) of the Act.
With effect from 1 January 2017, the wage limit of an employee is set at Rs.21,000 per month for him/her to come under the coverage of the ESI scheme.

ESI Coverage:

This scheme has also been made extended to hotels, shops, cinemas and preview theatres, restaurants, newspaper establishments, and road-motor transport undertakings. This scheme has also been extended to the Private Educational and Medical institutions that have employed 10 or more people. This is applicable in certain states and union territories only.

The ESI scheme has been implemented are-wise throughout the country. This scheme has been implemented in stages in every state in India except Arunachal Pradesh and Manipur. The scheme has also been enacted in all union territories except for Daman and Diu, Dadra and Nagar, and Lakshadweep Islands.

The ESI scheme has been notified in a total of 325 complete districts out of a total of 393 districts. Out of these notified districts, 89 districts implemented the scheme partially.

Coverage (as on 31 March 2016)	Particulars
No of Employees	1.89 crore
No. of Insured Person Family Members	2.13 crore
Total No. of Beneficiaries	8.28 crore
No. of Employers, etc.	7.83 lakh
No. of Insured Women	3.78 lakh

Coverage (as on 31 March 2017)	Particulars
Total No. of Beneficiaries	12.37 crore
No. of Insured Person Family Members	3.19 crore

Key Features and Benefits of ESI:

There are a number of attractive features and benefits that are offered by the Employee State Insurance Corporation. Not only does it provide medical benefits but it also comes with a level of financial security in times of financial hardship like unemployment, etc. Some of these are listed below:

Medical Benefits: The Employee State Insurance Corporation takes care of an individual’s medical expenses by providing reasonable medical care. This cover comes into effect from day one of the individual’s employment.
Disability Benefit: In case an employee is disabled, ESIC ensures that the employee is paid their monthly wages for the period of the injury in case of a temporary disablement or for the remainder of the employee’s life in case of a permanent disablement.
Maternity Benefit: ESIC helps an employee welcome their baby to a household which has been showered with benefits. ESIC provides a total of 100% of the average daily wages for a period of to 26 weeks from the time of going into labor and 6 weeks in case of a miscarriage. 12 weeks of pay is provided in the case of an adoption.
Sickness Benefit: ESIC ensures that there is a flow of cash coming into the employee’s household during the medical leave. 70% of the average daily wages of an employee is paid during the medical leave for a maximum period of 91 days in two successive benefit periods.
Unemployment Allowance: ESI provides a monthly cash allowance for a maximum period of 24 months in case of permanent invalidity due to a non-employment injury or due to involuntary loss of employment.
Dependent’s Benefit: In case the employee meets with an untimely death due to an injury at the place of employment, ESIC will provide monthly payments apportioned among the surviving dependents.

Other benefits that are offered with ESI are:

Confinement Expenses
Funeral Expenses
Physical Rehabilitation
Vocational Training
Skill Upgradation Training under Rajiv Gandhi Shramik Kalyan Yojana (RGSKY)

When is ESI registration required?

When a company employs 10 or more employees, it is mandatory for that company or any other entity to with the ESIC. An employee who earns less than Rs.21,000 per month contributes 1.75% of his/her salary towards the ESI whereas the employer pays 4.75% towards the ESI making a total of 6.5%. The company or establishment can apply for an ESI registration within 15 days from the time the ESI Act becomes applicable to that company or establishment.

Documents Required for ESI Registration:

The following documents are needed when registering a company or establishment with ESIC:

Certificate of Registration (in case of a private limited company) of the company or establishment
License or a registration certificate which can be obtained under the Shops and Establishment Act or the Factories Act
Certificate of Registration for every entity and for the commencement of production of factories
Detailed list of employees along with their monthly compensation
List of partners, shareholders, and directors of the company or establishment
The company’s bank statements along with sufficient evidence about the commencement of operations
Address proof and PAN Card of the business establishment or company

Procedure for ESI Registration:

An individual should follow the procedure listed below to initiate the ESI Registration of a company or establishment:

The company can apply for ESI registration by duly filling up and submitting the Employer’s Registration Form (Form-1).
The employee can also access the PDF format of the form that is available on the website. Dully fill up the form and submit the same to ESIC on the official website.
Once the application and documents have been verified, a 17 digit registration number will be provided to the organization. Once the company or organization has received their 17 digit number, they can file their ESI filings.
Employees who are registered under the ESI scheme will receive an ESI card after they have submitted a form along with their photographs as well as details about their family members.
Any new changes like the additions of employees, etc. will have to be intimated to the ESI.

Documents required for ESI Returns are listed below: