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ESI registration

What is ESI registration?

The employee state insurance (ESI) is managed and regulated by the Employee State Insurance Corporation which is an autonomous body under the Ministry of Labour and Employment, Government of India. The ESI scheme was started for the Indian Employees that provided monetary, medical, and other benefits from the employer to the employee.

Currently any factor or employment or any establishment that has employed over 10 employees with a minimum salary of Rs. 21,000 has to mandatorily register itself with the ESIC.

Eligibility

Who is eligible to obtain ESI registration in India?

To be eligible for ESI registration is to have more than 10 workers. In some regions, ESI registration is possible for establishments only if there are more than 20 employees. Here are some other criteria that need to be satisfied for obtaining ESI registration.

  • An employee whose gross salary is up to Rs. 21,000 per month can avail of this with the help of the employer.
  • The establishment is registered with the EPFO.
  • The total contribution to ESI is 6.5% of the gross salary and it can be further divided as:
    • 4.75% by the employer
    • 1.75% of the employee
  • For industrial units where there are chances of occurrence of injury or health issues all the employees with a salary less than Rs.21,000 compulsorily need to get ESI registration.

Documents required for obtaining ESI registration

For obtaining ESI registration in India here is the list of documents that is to be submitted by the employer along with the application:

  • Registration Certificate of the Shops and Establishment Acts.
  • Factories Act
  • Address proof of Principal place of business
  • Copy of PAN Card
  • Bank statement (Latest)
  • Memorandum and Articles of Association or the partnership deed or trust deed depending on the nature of the entity.
  • Certificate of Commencement registration no

The monthly pay sheet is also required for computing the contribution amount for each employee for ESI filings.

Definition of Factory under ESI Act

A Factory is any premise where ten or more than ten persons are employed or were employed for wages on any day of the preceding twelve months, and, in any part of which a manufacturing process is being carried with or without the aid of power. In case within the same premises of a factory, several departments are situated and the departments are engaged in the work in connection with or incidental to a manufacturing process of the factory, they would fall apart from the factory.

This definition of a factory under the ESI includes a seasonal factory that is working for a period of not exceeding seven months in a year and is engaged during that period in any process related to blending, packing, or repacking of tea or coffee or other manufacturing processes that are process notified by the central government.

Mines are not included in this definition under the definition, subject to the operation of Mines Act,2952 or a railway running shed.

Hence, if the number of persons working in the factory premises is ten or more the premise is factory irrespective of the consideration of whether they are paid wages or not. Also, all people working in the factory need not be employed in the manufacturing process.

Definition of Establishment under ESI Act

Under the ESI Act, an establishment is an organized body of men or women or an institution, It is not necessary for an establishment confined to a particular premise or place. If an establishment employs 20 or more persons, it will be required to obtain ESI registration in India. Hence, the establishments employing less than 20 employees who are drawing less than Rs.21,000 a month as a wage should not get ESI registration.

Shops must also be registered under the ESI Act. The supreme court has defined a shop as any premises where economic activities leading to sale or purchase are carried on. Thus, the essential ingredient for determining a shop is that services are rendered to the customer. So service providers like advertisement agencies, liaison offices, consultancy services, real estate services will need to get ESI registration in India.

In this educational institution, hospitals, dispensaries, offices of auditors and solicitors, chartered accountants, and private commercial hospitals are excluded.

Benefits of ESI registration in India

What are the advantages of getting ESI registration in India?

ESI registration allows the employees to enjoy a lot of benefits under the Employees State Insurance corporation scheme.

Medical Aid- From the very first day of employment the registered ESI members and the family members enjoy the benefits of complete medical care and insurance. Retired members and permanently disabled insured persons and their spouses can also avail medical care on payment of an annual premium of Rs.120.

Maternity benefit- Pregnant women can avail of maternity benefits that are payable up to twenty-six weeks. This maternity leave period can be extended on medical advice by 30 days at the rate of full wage subject to contribution for 70 days in the preceding year.

Disablement benefit- From the day of the employees irrespective of having done any contribution, 90% of the wage is payable as long as the temporary disability continues. Permanent disablement benefit is payable at 90% of the wage as a monthly payment.

Sickness benefits- Absent at work due to illness is allowed for a maximum of 91 days per year along with 70% of the monthly wages.

Dependent benefits- In case of the sudden demise of an employee during the employment, the dependents of the deceased employee will receive 90% of his or her monthly salary.

Funeral expenses- The family members of the deceased employees are entitled to an additional amount of Rs.10,000 for the funeral expenses.

Confinement expenses- Confinement expenses can be availed in case of confinement of an insured woman or wife of the employee with no medical facilities under the ESI scheme.

Here are some need-based benefits:

Vocational Rehabilitation: Permanently physically challenged employees who are insured are entitled to vocational rehabilitation training at VRS.

Physical Rehabilitation: Can be availed by the employees in case of physical disablement or injury or hazards due to employment.

Old Age Medical Care: By the annual payment of Rs.120 medical care benefits can be availed for the ESI employees or for those who are opting for VRS/ERS. The members who retiring on account of permanent disability can also avail themselves the same.

Extended Sickness Benefits: Insured employees who are suffering from chronic diseases can avail of the extended sickness benefit up to 2 years, the sick leave of 91 days should be expired.

Enhanced Sickness Benefit: Enhanced sickness benefit was an encouragement measure for ESI employees to undergo vasectomy or tubectomy for the welfare of the family. Extension of this benefit can be availed in case there are post-operative complications.

Frequently Asked Questions

What is the ESI scheme?

The ESI scheme is a comprehensive social security scheme that is designed to accomplish the task of socially protecting the employees in the organized sector against the event of sickness, maternity, disablement, and death due to employment injury.

What is the salary limit in ESI?

The existing wage limit for coverage under the ESI Act is Rs. 21,000 per month w.e.f from 1.01.2017.

Is ESI calculated on basic salary?

The ESI Scheme will be calculated on the gross salary of 21,000 if the salary is above 21,000 the ESI will still be constant.

Who is not eligible for ESIC registration?

The ESIC scheme does not cover the workers or the employees that earn more than Rs.21,000 per month and in the case of a person with disabilities, the maximum wage is Rs. 25,000

Is the family of the employee covered ESIC?

The employee insured person and the family are entitled to avail medical benefits from the very first day of his or her joining the insurable employment.

Is ESI registration mandatory?

Yes, the statutory responsibility of the employer under section 2A of the Act read with the regulation 10-B to register their Factory/ Establishment under the ESI Act within 15 days from the date of applicability to them.

Who is eligible for ESIC registration?

The ESI act 1948 is an establishment that has more than ten employees in the organization and has a maximum salary of Rs.21,000 per month should mandatorily apply for the ESI registration under the ESI Act within 15 days.

Can a person have 2 ESI registration?

The contributions that are paid on insurance numbers cannot be transferred to another number. Because all the insurance numbers are unique and are issued to a person. The ESI number is just like the PSN which cannot be transferred. The ESIC is also advised to continue the same number even if the person is changing employers.

What is the contribution of the employee by ESIC?

From the total of 6.5% for ESI contribution, only 1.75% is deducted from the salary of the employee whereas the rest is contributed by the employer.

What are the incentives by the government for ESI members?

The government had introduced various health care benefits for poor families. The families that are covered under the NHPS scheme will be able to access medical facilities for medical treatment and their dependents.

Can the ESI registration be done online?

Yes, IndiaFilings has been providing ESI registrations across India online. All you need to submit is the documents required.

Last updated: July 01, 2021

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