Know The Eligibility, Contribution, Benefits of the Employee State Insurance (ESI)
Know The Eligibility, Contribution, Benefits of the Employee State Insurance (ESI)

 

The Employee State Insurance (ESI) is a health insurance which is designed for Indian workers and incorporated in the 1948 ESI Act. It is a self-financing fund that is managed and supervised by the Employees’ State Insurance Corporation (ESIC) which is under the Ministry of Labour and Employment. This corporation is responsible for setting up hospitals and dispensaries which are with the assistance of the government and other private agencies. In 2009, the ESI Pehchan card was introduced where the employee who is a beneficiary of the scheme will be offered to cards one for his medical benefits and another for his dependents medical benefits.

WHO ARE ELIGIBLE UNDER THE ACT?

There are some criteria which one must meet to come under the ESI and these are:

  1. You are an employee of an establishment with 10 or more staff.
  2. You must have a minimum wage of Rs. 21,000 per month.

 

WHAT IS THE MONTHLY CONTRIBUTION FOR ESI?

It is the duty of the employer to submit both the Employee’s and the Company’s ESI share and it is mandatory that the employee and the employer contributes 1.75% and 4.75% of their gross salary respectively.

contribution is 4.75 %. Employees with an average daily wage of Rs. 137 are not permitted to contribute.

WHAT ARE THE CONTRIBUTION AND BENEFIT PERIOD OF ESI?

The contribution periods and benefits are as under:

Contribution period Benefit period in the Succeeding Year
April 1st to September 30th January 1st to June 30th
October 1st to March 31st July 1st to December 31st

 

HISTORY OF THE ESI SCHEME

A report on health insurance scheme for workers in factories and industries was provided by B. P. Adarkar in 1943 to the Government of India. The report provided the blueprint for the enactment of the 1948 Employment State Insurance Act.

The Act sought to promote an insurance scheme that will protect the interest and wellbeing of the workers in moments of sickness, permanent or physical disability, sickness, death and employment related injury.

The Act contains an attainable medical care for employees and their wards or dependents.

The ESI Corporation was initiated by the Central Government to supervise the scheme. Kanpur and Delhi became the first states in India to implement the scheme on February 24th, 1952.

The Act relieved the Employers of their burden and responsibilities to employees under Workmen’s Compensation Act of 1923 and the Maternity Benefit Act of 1961.

This Act allows the employees to enjoy their work benefits based on the ILO rules.

At first, the Act was intended to serve only workers in the factory but was later extended to accommodate all establishments with 10 members of staff and above.

 

HOW DOES THE ESI ACT FUNCTION?

The Employee State Insurance Act led to the establishment of the Employees State Insurance Corporation (ESIC) which is an oversight department of the Ministry of Labour and Employment. The Corporation has the legal rights to raise and manage funds through loans and the acquisition of landed properties which are vested within the corporation.

 

WHAT ARE THE KEY FEATURES AND BENEFITS OF ESI?

The ESI showcases attractive features and benefits that provides financial assistance during insolvency. The most outstanding benefits are:

  1. Medical Benefit: persons under this scheme will enjoy reasonable medical assistance which is effective from the very first day of the employment.
  2. Disability benefit: for employees who are disabled, it is the responsibility of the corporation to ensure that they are paid their full monthly wages during the time of the injury in the case of a temporary disability or the payment of the employee for the later part of his life in case of a permanent injury.
  3. Maternity benefit: This scheme assists the employee during child delivery by providing her with the total salary for 26 weeks from the inception of labour and 6 weeks in case of a miscarriage. If it is an adoption, a payment for a period of 12 weeks will be granted.
  4. Sickness benefit: the commission ensures that the employee is guaranteed of his constant income during a medical leave. The employee will be paid 70% of his daily wage during the medical leave which will last for 91 days.
  5. Unemployment allowance: Here the employee will be offered a monthly allowance for a period not later than 24 months if there is an involuntary loss of the job or a non-job-related injury.
  6. Dependent’s benefit: the ESI is responsible to the pay the employee’s relations their due entitlements if he dies from injuries sustained in workplace.

Other outstanding benefits of ESI are:

  1. Physical rehabilitation
  2. Funeral expenses
  3. Vocational training
  4. Confinement expenses
  5. Personal skills update under RGSKY

 

WHAT ARE THE DOCUMENTS REQUIRED FOR ESI REGISTRATION?

The documents required for registering for ESI include:

  1. Certificate of registration for a private company.
  2. License which is as provided in the Factories Act or the Shops and Establishment Act.
  3. Entity’s certificate of registration including the prove of commencement of production.
  4. List of employees along with their wage scale.
  5. Bank statement of the company including its evidence of commencement of production.
  6. PAN card and proof of location of the enterprise.

 

WHAT ARE THE PROCEDURE FOR THE REGISTRATION OF ESI?

The following are the procedure that should be followed when you are registering for an ESI:

  1. The Employer’s registration form 1 should be duly filled.
  2. The PDF format of the form which is available on the ESI’s website can be accessed by the employee.
  3. On the verification of the application, a 17-digit number will be sent to the number mobile number which was provided by the company. The company can proceed to file for ESI once the number is received.
  4. An ESI card will be awarded to the company that has completed the registration and must have submitted the photograph and details of its family members.
  5. If the company employs an additional staff, then the commission should be notified.

 

WHAT ARE THE DOCUMENTS REQUIRED FOR ESI RETURNS?

The following documents are required to file ESI returns:

  1. Form 6
  2. Attendance register
  3. Register of wages
  4. Inspection book
  5. Register of accidents on the workplace
  6. Monthly challans and returns filed for ESI

 

WHAT ARE THE DO’S AND DON’TS OF THE ESI SCHEME?

As an employee, there are some principles you should follow to ensure a smooth ESI Scheme. These include:

  1. Your Pehchan Card which is your visa to the scheme should be protected from damage, loss and theft.
  2. Ensure that any loss card is reported to the branch office of the ESI.
  3. Ensure to report to the branch office if you had changed jobs.
  4. The more benefit you will have depends on the length of your contribution. This implies that you should register under the same ESI number on switching your job.
  5. Procedures that involve referrals should not be taken lightly.
  6. Ensure that you adhere strictly to the doctor’s instructions.
  7. Make sure that your employer has signed your Form 105 if you intend to move from the station to another, this will assist you in benefitting from the scheme in other regions.

 

WHAT YOU SHOULD DO TO AVOID MISTAKES AS AN EMPLOYEE UNDER THE ESI SCHEME?

  1. You are not to add any non-eligible individual to your declaration Form.
  2. The Pehchan card should be handled with care to avoid any defect to it.
  3. As an employee, you should avoid acts that can lead to injuries or any deliberate attempt to be injured to claim your benefits.
  4. Avoid any fake report from the doctor.
  5. Never approach touts for favours.
  6. ESIC form are supplied free from the branches, never pay for it.
  7. Endeavor to update you family member’s information that concerns both death and birth.

 

WHAT IS THE COVERAGE OF THE ESI?

  1. The ESI scheme includes hotels, cinemas, shops, restaurants, theatres newspaper and motor transport agencies.
  2. The scheme covers medical and private educational institutions with a staff strength of 10 and above although it is only applicable in some states.
  3. The scheme is yet to be kick started in the state of Manipur and Arunachal Pradesh.
  4. The scheme is yet to be implemented in Union territories of Nagar, Dadra, Daman, Diu and the Lakshadweep islands.
  5. Only 89 out of the total of 325 districts that has been notified under the scheme that has had a 100% implementation.

 

FREQUENTLY ASKED QUESTIONS UNDER ESI

  1. Is it possible to transfer the benefits granted to the insured to another?

In a situation where the employee meets an unexpected death or injury while on duty, his benefits will be transferred to his immediate dependents.

  1. What is the ESI Code?

This is a unique 17-digit identification number which is offered a staff of the organization which is covered by the ESI scheme. The number is generated after the employee must have satisfied the necessary requirements for the registration.

  1. Can a factory or an establishment that has once been covered under the scheme to go out after its number of employee must have fallen below the approved limit?

On coming under the coverage of the Act, a company or establishment becomes a life time beneficiary. if the number of employees in the establishment falls below the minimum prescribed limit, it will not affect her position as a beneficiary of under the Act.

  1. If the monthly salary of an employee rises above the Rs. 21,000 limits, will such an employee be out of the coverage and the monthly deductions ceased?

In a situation that the employee’s monthly wage exceeds Rs. 21000, then the employer will only be covered for the month of the contribution. The deductions shall be made based on the new earnings of the worker.

  1. What is the standard mode for the payment of the contributions?

It is expected the company files its monthly contributions to the ESIC through its official website. Another way of making contributions is by net banking.

  1. Can any interest be accrued on a delayed payment?

An interest rate of 12% per annum is charged on any person who fails to make his or her monthly contribution within the time for the payment.

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