Post-independence, when the working class sector formed the primary basis of India’s hope to grow and thrive industries, the Employees’ State Insurance Act, 1948 was notified by the Parliament.
This Act was introduced to protect the laborers and the workers in terms of finances and health. This was the first significant legislation that was implemented to garner social security for the workers.
This Act provided for the emergence of the ESIC (Employee State Insurance Corporation), which we will discuss in detail. Keep scrolling to know all vital information associated with ESIC.
Employee State Insurance Corporation (ESIC) is a statutory corporate body governed by the provisions of the Employee’s State Insurance Act, 1948.
This Act ensures the workers of an eligible organization from various health-related incidents such as sickness, maternity costs, disabilities, diseases contracted due to workplace hazards, an injury that leads to loss of earning capacity, and death due to employment.
The ESIC is the administrative body in charge of the ESI scheme in the country, which has its headquarters in New Delhi. Moreover, there are 23 regional and 26 sub-regional offices functioning throughout the country to ensure proper administration of the scheme.
Can all Employees Access ESI?
No, not all employees or organizations can access the benefits associated with an ESI scheme. To avail of ESIC benefits such as unemployment, disability, and sickness allowance, one has to meet the following eligibility criteria:
- As per Sec (2), 12 of the ESI Act, 1948, this scheme can be availed by employees of non-seasonal factories if the total employee strength is more than 10. (It covers both the unorganized and organized sectors).
- Employees working in establishments such as shops, cinema and preview theatres, medical institutions, restaurants and hotels, newspaper and educational establishments can also avail of the benefits of the ESI scheme. However, the employee strength needs to be more than 20 in this case.
- Employees who earn a salary of up to Rs. 21,000 will be eligible for the scheme. The limit was increased from Rs. 15,000 to Rs. 21,000 in 2016.
- For employees with disabilities, the wage limit is Rs. 25,000.
- To avail of the ESIC benefits, the employees have to draw a salary of up to Rs. 10,000.
Benefits and Key Features of ESIC scheme
The ESI scheme lets the employees enjoy a plethora of medical and sickness benefits. Moreover, it also supports the workers during financial hardships. Some of the benefits provided by the scheme include:
- Medical Benefits: The employee and his family members can avail of the medical benefits provided by ESIC right from day one of his services. Moreover, there is no ceiling set for the fund provided to the insured family for treatment.
- Maternity Benefits: When it comes to maternity benefits, ESI promises the following benefits to its employees:
- The entire salary for a period of 26 weeks or 6 months from the time one goes into labor.
- Complete salary for 6 weeks in case of miscarriage
- In cases of adoption, the entire salary is provided for 12 weeks.
- Sickness Benefit: Employees insured by the ESI scheme can claim 70% of their salary for a period of 91 days in case of sick leave. Moreover, the ESIC also ensures regular cash support during these trying times. However, to access this benefit, you should have been present in your workplace for 78 days in a contribution tenure of 6 months.
- Disability Benefit: The ESIC ensures financial benefits to the employees when facing injuries that lead to temporary or permanent disability. In the event of temporary disability, the employee is provided 90% of his salary as long as his disability continues. The salary allowances are determined after the Medical Board examines the percentage of disability in the case of temporary or permanent disabilities.
- Death Benefit: If, after investigation, it comes out that the employee has died in the workplace, the family of the worker will receive 90% of the salary every month.
The ESI scheme also provides benefits such as physical rehabilitation costs, vocation training expenses, funeral expenses, nursing home expenses, etc. To perform the last rites of the employee, the family or the person who performs the last rites is provided with Rs—15,000 as funeral expenses.
ESIC Contribution Rates
The contribution made towards the ESI consists of both the employees and the employers at given rates.
Presently, the contribution rate set for the employer is 3.25% of his salary, and in the case of the employee, the rate is 0.75%. The contributions have to be made every month. The present rates have been in effect since July 2019.
Note: In case if the employee earns an average of up to Rs. 176 in a day, he/she will not have to make any contribution. However, the employer will have to make contributions as per the specified rates for these employees.
Penalty Charges Associated with Late Payment or Non-Payment of Contributions
The ESIC is quite strict when it comes to penalty charges applicable on late or non-payment of ESIC contribution.
It levies a penalty of 12% interest p.a for each day the employer delays the contributions towards the ESI scheme. Moreover, as per the ESI Act, non-payment, fraudulent payments, or delayed charges can also lead to imprisonment for two years and a fined amount of Rs. 50,000.
Additionally, in many cases, the ESI may also reject the contributions made after the due date. This may lead the employer to not get the deduction benefits and, therefore, may pay income instead.
Points to Keep in Mind:
- Pehchan Card plays a significant role in a worker having access to the benefits of the ESI scheme. Therefore, it needs to be handled well. Also, if lost or damaged, it needs to be reported to the Brand Office or Dispensary as soon as possible.
- If the employer has had an ESI registration in the previous job, he needs to inform the new employer every time he switches a job.
- There are certain benefits provided by the ESI scheme depending upon the contribution period you have in your employment. Keep those in mind when you are planning to switch jobs.
- If an employee intends to stay at a different location for some time, he needs to get Form 105 signed by the employer. This will help him avail the ESI facilities in a different region.
- The employer needs to have the details associated with family members updated. For example, the worker should delete a member in death and add a member when born.
The Employee State Insurance Scheme has been in function for a long time. In all these times, it has helped the workers with medical, financial, and various allowances. However, if you want to avail of these benefits, you also need to have a good idea of the nitty-gritty associated with the scheme’s functioning.
Therefore, go through the details, and maybe, even if you do not fall into the eligibility list, you can help somebody get these benefits. And, for more information, you can always reach out to us!