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Employee's State Insurance

Employee’s State Insurance

Employee’s State Insurance

The Employee’s State Insurance Act, 1948 was introduced as a health insurance scheme that provides financial funds for the industrial workers in cases of sickness, maternity, and employment injuries in factories. The scheme is applicable to non-seasonal factories that use electricity and having 10 or more employees and for non-electricity factories having more than 20 employees. In this article, we look at the Employee’s State Insurance scheme in detail.

Scheme Objective

  • To improve the health and welfare of the insured employees.
  • To intervene in the recovery and re-employment for the disabled and the injured.
  • To appoint inspectors for the act.
  • To determine contribution and for verification purposes.

Applicability

The scheme is applicable under the following criteria:

  • All the factories and shops that have 20 or more employees.
  • Government specified enterprises.

The scheme is not applicable for

  • Seasonal factories that produce cotton ginning, cotton or jute pressing, ground nuts decoration, coffee manufacturing, indigo, lac, rubber, sugar, tea.
  • Factories, not more than seven months since started and have been employed in blending, packing or repacking tea or coffee, or in other processes as authorized by Central Government
  • Factories that are spared as seasonal from the provisions of the act.
  • Mines, the railway running sheds, government factories or establishments.
  • Indian naval, military or air force.
  • Other government notified enterprises.

Scheme Contribution

The funding for the scheme is made by the employers and by the employees. The employers have to contribute 4.75% of the payable wages whereas the employees have to contribute 1.75% of their wages. There is no requirement when the average daily wages in a wage period is equal to or less than Rs. 40. It is the employer’s responsibility to deposit his contribution as well as his employee’s contribution to the ESI account. All contributions have to be made properly and non-availability of funds cannot be accepted for non-availability of funds. There are no ways to ignore contribution, damages and interests. The employer has to register the factory or the enterprise within 15 days with the ESI Corporation, once the act is applicable to the company. In addition to this, the employer has to obtain the employer’s code number. This code number is issued by the regional office that has to be quoted in documents and correspondence.

Medical Benefit

Full medical care is provided to all persons registered under ESI and their family members – from the day the person enters insurable employment. There is no ceiling on expenditure on the treatment of an Insured Person or his family member. Medical care is also provided to retired and permanently disabled insured persons and their spouses on payment of a token annual premium of Rs.120/-.

Know more about benefits of ESI.

Sickness Benefit

Sickness benefit in the form of cash compensation at the rate of 70% of wages is payable to insured workers during the periods of certified sickness for a maximum of 91 days in a year. In order to qualify for sickness benefit, the insured worker is required to contribute for 78 days in a contribution period of 6 months. Workers suffering from malignant and long-term diseases can claim extended sickness benefit for upto two years at an enhanced rate of 80% of wages. Also, enhanced sickness benefit equal to full wage is payable to insured persons undergoing sterilization for 7 days/14 days for male and female workers respectively.

Maternity Benefit

Maternity benefit for confinement/pregnancy is provided for three months, which is extendable by further one month on medical advice at the rate of full wage subject to contribution for 70 days in the preceding year.

Disablement Benefit

From the day of entering insurable employment and irrespective of having paid any contribution, 90% of wage is payable so long as temporary disability continues. Permanent disablement benefit is payable at the rate of 90% of wage in the form of monthly payment, in case of permanent disablement based on the extent of loss of earning capacity as certified by a Medical Board.

Dependant Benefit

Dependant benefit is paid at the rate of 90% of wage in the form of monthly payment to the dependants of a deceased insured person, in cases death occurs due to employment injury or occupational hazards.

Funeral Expenses

An amount of Rs.10,000/- is payable to the dependents or to the person who performs last rites from day one of entering insurable employment.

Unemployment Allowance

Under the Rajiv Gandhi Shramik Kalyan Yojana, unemployment allowance is payable to an insured Person who become unemployed after being insured three or more years, due to closure of factory/establishment, retrenchment or permanent invalidity.  The applicable unemployment allowances provided are:

  • Unemployment Allowance equal to 50% of wage for a maximum period of upto one year.
  • Medical care for self and family from ESI Hospitals/Dispensaries during the period IP receives unemployment allowance.
  • Vocational Training provided for upgrading skills – Expenditure on fee/travelling allowance borne by ESIC.

Adjudication of Dispute and Claims

  • Employees Insurance Court
  • Institutions of proceedings, etc
  • Powers of employees’ Insurance Court
  • Reference to High Court
  • Appeal
  • Stay of payment during pending of appeal

Offences and Penalties

Depending on the offences committed by the employees, the penalty charges vary. They are given below:

  • If there is a false statement or false representation, then the employee shall be punished by imprisonment or with a fine of Rs. 2000, sometimes both.
  • If a person fails to pay any liable contribution, then the employee shall be punished with 3 years of imprisonment.
  • If a person engages with violations such as dismisses, discharges, punishing an employee, shall be punished with 4 years of imprisonment or with a fine of Rs. 4000, sometimes both.
  • If an employer does not obey an order given by the court, then the employer shall be punished with imprisonment and a fine of Rs. 1000 per day.

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