Employees State Insurance Corporation is a government-sponsored agency governed by the ESI Act of 1948. It is responsible for the administration of the ESI scheme. The ESI system is a worker welfare scheme that protects employees from financial emergencies caused by medical illness or death.
The Employees’ State Insurance Act has several parts that give medical benefits and insurance to employees working in factories registered with the ESI Corporation. As the commencement of a genuine social security programme in India, this is an attractive potential from both an employee and a legal standpoint. The headquarters of the ESIC are in New Delhi. Furthermore, it operates 23 regional and 26 sub-regional offices throughout the states. Aside from that, it has over 800 local offices across India to ensure that the ESI scheme is implemented smoothly.
Applicability of ESI Scheme
The scope and applicability of the Employees’ State Insurance Scheme are explained based on specific criteria:
Coverage of Establishments and Expansion:
The ESI Act extends its coverage to non-seasonal production facilities that employ ten or more workers. Additionally, the state government has broadened the ambit of Section 1(5) of the Act to include various establishments. Furthermore, this expansion includes Municipal Corporations/Municipal Bodies in select State/Union Territories when they employ ten or more workers.
Extended Inclusion by the Central Government:
The Central Government has enlarged the purview of Section 1(5) of the Act to include several additional categories of establishments, thereby enhancing the coverage under the ESI Scheme. These categories include:
- Newspaper establishments
- Restaurants
- Hotels
- Port Trust
- Insurance Businesses
- Non-Banking Financial Companies
- Airport Authorities
- Warehouses with a workforce of 20 or more employees
Current Wage Threshold under Employees State Insurance Corporation:
As of now, the wage threshold for establishments falling under the ESIC Act is set at Rs 21,000 per month. This threshold is Rs 25,000 per month for individuals with disabilities. This criterion serves as a vital determinant for the applicability of the ESI Scheme to eligible establishments.
ESIC Contribution Rates as per ESIC Act
The Employees’ State Insurance Corporation (ESIC) contribution rates, which were reduced effective from July 1, 2019, are outlined as follows:
| Particulars | Rate before 2019 (%) | Reduced Rate in 2023 (%) |
| Employer Share | 4 | 3.25 |
| Employee Share | 1 | 0.75 |
| Total | 5 | 4 |
Important Highlights of the ESI Scheme
The key highlights that characterise the Employees’ State Insurance (ESI) Scheme are as follows:
Comprehensive Medical Care:
The ESI scheme offers complete medical care to registered workers during periods of incapacity due to illness, restoration of health and reestablishment of working capacity.
Financial Aid for Wage Loss:
In cases of illness, maternity or work-related injuries leading to salary loss, the scheme provides financial aid to workers to compensate for the wage loss during their absence.
Inclusive Family Medical Facilities:
The scheme extends medical facilities to the family members of the registered worker as well. Approximately 3.14 crore workers are covered under the scheme, benefiting a total of 13.3 crore beneficiaries.
Dual Benefit Categories:
The benefits within the scheme are broadly classified into two categories:
- Cash Benefits: Including maternity, illness, temporary and permanent disablement, rehabilitation allowance, funeral expenses, medical bonus and vocational rehabilitation.
- Non-Cash Benefits: Provided through medical facilities.
Contributory and Self-Financing Nature:
The ESI scheme operates on a contributory and self-financing model. Funding primarily derives from monthly contributions by both employers and workers. The contribution amount is a fixed percentage of the wages paid.
Exemption for Lower-Wage Employees:
Employees with a daily wage of approximately Rs 137 are exempted from contributing to their share. Employers are responsible for contributing on their behalf.
Timely Contribution Payment:
Employers must remit their share and deduct workers’ contributions from wages, depositing the funds with the Employees’ State Insurance Corporation (ESIC) within 15 days from the end of the relevant calendar period.
Payment Methods:
Contributions can be made either electronically or through authorised public sector banks, ensuring efficiency and adherence to payment deadlines.
Roles and Objectives of Employees State Insurance Corporation under Employees’ State Insurance Act, 1948
The Employees’ State Insurance Act of 1948, widely known as the ESI Act, is a significant post-independence legislative milestone in India. Enacted by the Parliament, this act is an innovative endeavour for social security of workers. Its far-reaching implications extend to safeguarding the well-being of employees and enhancing their quality of life. The objectives of Employees State Insurance Corporation under the Act are:
Scope and Purpose:
The ESI Act 1948 extends its protective mantle to workers across various sectors, including factories, business establishments and diverse organisations such as hotels, road transport, cinemas, newspapers, educational institutions, medical establishments and shops. It covers scenarios where ten or more individuals are employed, ensuring that a considerable range of workers is included.
Essential Benefits and Medical Cover:
This landmark legislation embodies the culture of social security, providing essential benefits and medical coverage to the workforce. It offers a safety net for both workers and their dependents, offering support during unexpected challenges encountered in the workplace.
Inclusivity and Wage Criteria:
Under the ESI Act, employees engaged in the aforementioned categories and earning monthly wages up to Rs. 21,000 are eligible to join in this social security scheme. This criteria-driven approach ensures the scheme’s inclusivity and accessibility to a broad spectrum of workers.
Preserving Human Dignity:
The overarching goal of the ESI Act is to preserve human dignity during periods of crisis. It stands as a safeguard against destitution, deprivation and social degradation that can occur for workers due to unforeseen circumstances. Through this act, individuals are empowered with the means to deal with such adversities with a sense of security and resilience.
Features and Benefits of Employees’ State Insurance Scheme (ESIS):
The features and benefits that characterise the Employees’ State Insurance Scheme (ESIS) administered by the Employees State Insurance Corporation (ESIC) are as follows:
Medical Coverage:
•Reasonable and Affordable Healthcare: The scheme extends coverage for insured individuals’ medical expenses through accessible and cost-effective healthcare facilities.
• Immediate Coverage: Workers and employees are covered from the very beginning of their employment tenure.
Maternity Support:
• Extended Maternity Benefits: Beneficiaries can avail 100% of daily wages for up to 26 weeks during maternity leave, extendable by an additional month based on medical advice.
• Varying Scenarios: In cases of miscarriage, a 6-week benefit applies, while adoption-related leave offers a 12-week benefit.
Disability Protection:
• Temporary Disablement: Workers facing temporary disablement receive 90% of their monthly wage until recovery.
• Permanent Disablement: Those with permanent disability can receive 90% of the monthly wage throughout their lifetime.
Sickness Compensation:
• Cash Flow during Medical Leave: The scheme offers financial support during medical leave, providing 70% of the daily wage for up to 91 days, which can be taken in two consecutive periods.
Unemployment Safeguard:
• Protecting Against Loss of Non-Employment: Involuntary non-employment or permanent invalidity due to injury results in 50% of the average monthly wage for a maximum of 24 months.
Dependent Assistance:
• Support for Dependents: In instances of illnesses or injuries occurring while at work, dependents receive monthly payments equitably distributed among them.
Comprehensive Coverage:
• Immediate Inclusion: Workers and employees, along with their dependents, are covered from their first day of employment.
Funeral and Confinement Costs:
• Financial Support for Funeral Expenses: ESIC provides Rs. 15,000 towards funeral costs, benefiting the dependents or individuals conducting the last rites.
• Confinement-Related Support: When required medical care under the scheme is unavailable at the confinement location, the insured or dependent can access confinement costs.
Vocational and Physical Rehabilitation:
• Vocational Rehabilitation: Permanently disabled individuals receive Vocational Rehabilitation (VR) training, aligning with their needs.
• Physical Rehabilitation: Customised assistance, particularly for employment-related injuries leading to disability, is offered for physical rehabilitation.
Old Age Medical Care:
• Retirement and Permanent Disability: Retirees, those under voluntary retirement or early retirement or individuals leaving work due to permanent disability receive an annual payment of Rs. 120 for themselves and their spouse.
Final Thoughts
The Employees State Insurance Corporation (ESIC) plays a major role in administering the objectives of the ESI scheme, established under the ESI Act of 1948. This landmark legislation represents a significant post-independence progress towards social security for workers. The ESIC extends medical cover and essential benefits to employees across diverse sectors, such as factories, hotels, cinemas and educational institutions, including establishments with ten or more workers.
The ESI scheme’s offerings are comprehensive, providing for workers’ diverse needs. It covers medical expenses from the commencement of employment, provides maternity benefits, safeguards against disability-related income loss, offers sickness and unemployment compensation, extends coverage to dependents and more.
For more information on Employees State Insurance Corporation: Roles and Objectives, connect with our experts at StartupFino.
