What is Employees’ State Insurance Corporation (ESIC)?
ESIC (Employees’ State Insurance Corporation) is an autonomous organization under Ministry of Labor and Employment, India, that is responsible for managing the Employees’ State Insurance (ESI) scheme. ESIC is a statutory body that administers the ESIC scheme. It is a social security scheme offered by the government of India to provide socio-economic protection to employees.
It aims to protect them by providing medical care and health benefits for injury, sickness, maternity, and death. As it is a self-financing scheme, employees who make regular contributions to the scheme from their wages can avail themselves of these benefits. The fixed contribution rate for ESIC is 0.75% of an employee’s wages and the employers’ contribution is 3.25%. Medical care is provided to insured employees and their families.
All factories and organizations covered under the Employees’ State Insurance Act, that employ more than 10 employees and pay wages of Rs.21,000 must enroll with the ESIC and contribute regularly. Employees earning less than Rs.137 per day as daily wages are exempt from this scheme.
What is Employees State Insurance Act, 1948?
The Employee State Insurance Act, 1948 is a law that provides social security. In 1943, Professor B.P. Adarkar was appointed by the government to create a report on industrial workers’ health insurance scheme. This report became the foundation for the ESI Act.
This Act visualized a social insurance scheme that would protect workers in the eventuality of sickness, maternity, disablement, injury, and death which can take away the earning capacity of workers. It also covered insurance to the workers’ immediate family members. Following the declaration of the ESI Act, the Central Government established the ESIC, and it became applicable to not only factory workers but all establishments covered by the Act.
What are the benefits of ESI?
Employees’ State Insurance offers 6 main benefits to employees who enrolled with the ESIC and make monthly contributions. Under section 46 of the ESI Act, the 6 benefits of ESI are:
- Sickness benefit
Sickness benefit is 70% of a worker’s wages. Insured employees can draw this compensation benefit if they fall sick, and it covers 91 days (about 3 months) in a year. To use this benefit, a worker must have worked for 78 days during the contributing period.
Extended sickness benefit: Sickness benefits can be extended up to 2 years at an increased contribution rate of 80% which is applicable for 38 long-term diseases.
Enhanced sickness benefit: The above rate is enhanced to 100% if the insured employee is undergoing sterilization for family planning up to 7 days for Vasectomy and 14 days for Tubectomy.
- Disablement benefit
Disablement benefit can be divided into:
Temporary disablement: For temporary disablement, ESIC provides monthly compensation until the injury lasts. The contribution rate is 90% of a person’s wages. Employees can claim this benefit even if they haven’t made their contribution.
Permanent disablement: For permanent disablement, the Medical Board determines the compensation amount depending on the extent of the injury/disability.
- Maternity benefit
Maternity benefit is payable for 26 weeks of pregnancy. This period can be extended by a month at the rate of full wages, considering that the person has contributed for 70 days.
- Medical benefit
There is no limit on expenditure on the medical treatment of the insured employee. This benefit is extended to the insured’s immediate family members. Medical care is also provided to retired employees or those who are permanently disabled on an annual premium of Rs.120.
- Dependents’ benefit
This compensation is made to the deceased employees’ dependents in cases where the death occurs due to employment injury or work hazards.
- Other benefits
Other benefits include the following:
- i) Funeral expenses
This compensation is made to the deceased’s dependents or the person who is responsible for performing the last rites. The amount of compensation payable is Rs.15,000.
- ii) Confinement expenses
If the confinement occurs in a place where the necessary medical facilities listed under the ESI scheme are not available, then an amount is payable to the insured woman or person.
iii) Vocational and physical rehabilitation
Vocational rehabilitation benefits are provided to those insured employees who are permanently disabled and are undergoing rehabilitation training. Physical rehabilitation refers to the case of physical disablement due to injury at the workplace.
- iv) Old age medical care
Employees who are retiring due to old age/infirmity, under Voluntary Retirement Scheme, and unemployment due to permanent injury, can claim this benefit. The compensation amount in this benefit is Rs.120 per month.
When is ESI Registration Required?
Factories or any other establishments in Indian states and UTs that are listed under the ESIC Act, 1948 and employ more than 10 workers must enroll themselves for the ESI scheme. Also, those in Maharashtra, Chandigarh, and other states covered by the ESIC, employing 20 employees must register for ESI scheme.
This scheme does not apply to those who earn more than Rs.21,000 and is applicable to workers earning below Rs.21,000 per month and must compulsorily register itself with ESIC. In the case of workers with temporary or permanent disability, the maximum wage limit is Rs.25,000.
This scheme is also not applicable to workers whose daily wages are under Rs.137. However, an employer’s contribution backs up such wages. The revised employee’s contribution is 0.75% of their wages and for employer’s it is 3.25%
How to apply for ESI registration?
Entities must register themselves within 15 days from the date of applicability. For eligible entities, it is mandatory to apply. There are two modes of registration: manual and online. The registration for ESIC has completely shifted online. It does not require any submission of physical documents before or after registration.
Following are the steps to register any establishment with the ESIC:
Step 1: Go to the ESIC official website click on the sign-up option
Step 2: Enter the following details:
Company name
Employer name
State and region
Email address (will be the username)
Contact details
Step 3: Click on the checkbox and tap on submit
Step 4: Check the email from ESIC enclosing the username and password
Step 5: Visit the ESIC website and enter the username and password details
Step 6: Click on ‘New Employer Registration,’ and select the type of unit
Step 7: On the new page, enter the name of the unit along with the necessary postal addresses
Step 8: Enter if the building is owned/hired, nature of business, PAN, and other details before clicking on ‘Next’
Step 9: On the next page, enter information related to commencement of factory, license, constitution, owners and their designations, and click on ‘Next’
Step 10: Enter the total number of employees working and those earning less than Rs.21,000 and date of joining of the first 10 or 20 employees. Click on ‘Employee Declaration Form’
Step 11: Select employees who are and are not registered, then click on ‘Continue’
Step 12: Enter the information of IP and click on submit.
Step 13: Confirm that all details have been entered and click on ‘Close’
Step 14: On the new page, select the ESI branch office and inspection division and click on the checkbox to confirm that all information entered is correct
Step 15: Click on ‘Pay Initial Contribution’ before clicking on ‘Submit.’ Save the challan number for future reference and click on ‘Continue’ to complete the payment process
Once the payment has been completed, the system generated ESI Registration Letter, or C-11, will act as proof of registration of the company with the ESIC.
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