The Employees’ State Insurance Corporation (ESIC) is a legal organization created under the ESI Act of 1948, whose main role is to manage the ESI for Employees. The ESI Scheme is a self-funded plan designed to protect employees included in the scheme from financial difficulties caused by sickness, disability or death resulting from work-related injuries.
The Employees State Insurance Act of 1948 oversees Employees’ State Insurance (ESI) for employees in India. ESI is a social security program intended to safeguard employees according to the rules of the ESI Act. Workers employed by a registered company are provided coverage to help them manage financial challenges resulting from health and other problems. ESI’s goal for employees is to enhance their lives by offering a range of financial and health-related advantages.
Key Features of ESI for Employees
The key features of ESI for employees are as mentioned below:
Medical Coverage:
ESIC offers affordable healthcare services to cover medical expenses. Employees are safeguarded from the very beginning of their employment.
Maternity Benefits:
Beneficiaries can receive 100% of their daily wages for up to 26 weeks during maternity leave, which can be extended by a month based on medical recommendations. Miscarriage entails a 6-week benefit, while adoption grants a 12-week benefit.
Disability Support:
Temporary disability qualifies employees for a 90% monthly payment until they recover. In cases of permanent disability, a lifelong 90% monthly payment is provided.
Sickness Allowance:
During sick leave, employees can receive 70% of their daily salary for up to 91 days, available for two consecutive periods.
Unemployment Aid:
Involuntary job loss or permanent incapacity due to an accident entitles individuals to a maximum of 50% of the average monthly pay for 24 months.
Dependents Assistance:
In the event of work-related illness or injury, the program extends financial support to dependents, providing them with monthly compensation evenly distributed among beneficiaries.
Comprehensive Coverage:
Employees, including dependents, are covered from the outset of employment.
Funeral Expenses:
ESIC offers a funeral expense allowance of Rs. 15,000, benefiting the dependents or the person conducting the last rites.
Confinement Charges:
If required medical treatment under the scheme is unavailable at the location of confinement, eligible individuals can claim confinement costs.
Vocational Rehabilitation:
Depending on the insured’s needs, ESIC provides Vocational Rehabilitation (VR) training, particularly for those who are permanently disabled.
Physical Rehabilitation:
In cases of occupational injury-induced disability, ESIC offers physical rehabilitation based on necessity.
Elderly Medical Care:
Upon reaching retirement age or due to permanent disability forcing work cessation, insured individuals and their spouses are entitled to Rs. 120 per year.
Scope of Applicability of ESI for Employees
The scope of applicability of ESI for employees is as mentioned below:
Factories:
The ESI Act applies to non-seasonal factories that employ a minimum of 10 employees.
Expansion by State Governments:
State governments have extended the Act’s coverage under Section 1(5) to include various establishments:
- Shops
- Hotels
- Restaurants
- Cinemas (including preview theatres)
- Road-motor transport undertakings
- Newspaper establishments
- Private medical institutions
- Educational institutions
- Contract and casual employees of municipal corporations/municipal bodies (in certain states/UTs where the state government is the appropriate authority)
Central Government Extension for ESI for Employees:
The Central Government has further broadened the coverage for ESI for employees to include the following establishments where the Central Government is the appropriate authority:
- Shops
- Hotel chains
- Eateries
- Road motor transport establishments
- Cinemas (including preview theatres)
- Newspaper establishments
- Insurance business establishments
- Non-banking financial companies
- Port trusts
- Airport management
- Warehousing establishments employing 20 or more individuals
Pay Ceiling for Coverage under ESI Scheme:
Starting from January 1, 2017, the pay ceiling for coverage under the Act is Rs. 21,000/- per month (Rs. 25,000/- per month for Persons with Disabilities). This ensures that individuals within this income range are included in the ESI scheme, granting them access to its benefits and protection.
Contribution Rates under the ESI Scheme
The ESI contribution consists of contributions from both the employer and the employee, with rates established in advance. These rates are subject to change and may be adjusted periodically.
Current Contribution Rates under ESI Scheme
The current contribution rates under ESIC scheme are as follows:
- The employer’s contribution is set at 3.25% of the wages paid.
- The employee’s contribution is 0.75% of their wages, applicable for each wage period. Usually, the wage period spans a month.
Exemption for Low-Income Employees under ESI for Employees
Employees with a daily average income of approximately Rs 176 are exempted from contributing their share. However, it’s important to note that the employer is still responsible for contributing their share on behalf of these employees.
Steps to Register for ESIC Scheme
The steps for registering under ESIC scheme are mentioned below:
Step 1: Access the ESIC Portal
- Visit the ESIC Portal: Begin by accessing the official ESIC website.
- Employer Login: Click on the ‘Employer Login’ option on the homepage.
- Sign Up: On the subsequent screen, click the ‘Sign Up’ button.
- Fill the Form: Complete the required form with accurate details and submit it.
Step 2: Confirmation Email
- Confirmation Email: After submitting the sign-up form, you’ll receive a confirmation email on the provided email address and phone number.
- Login Information: This email will contain login credentials for employer and employee registration on the ESIC portal.
Step 3: Fill out the Employer Registration Form-1
- Log In: Log in to the ESIC portal using the ‘Employer Login’ option and the provided username and password.
- New Employer Registration: Select ‘New Employer Registration’ from the relevant tab.
- Unit Type Selection: Choose the appropriate ‘Type of Unit’ from the drop-down menu and submit.
- Complete Form-1: Fill out the ‘Employer Registration – Form 1’ with details about your unit, employer, establishment and employees. After completion, click ‘Submit.’
Step 4: Registration Fee Payment
- Advance Contribution Payment: After submitting Form-1, you’ll be directed to the ‘Payment of Advance Contribution’ page.
- Payment Details: Enter the required payment amount and select the preferred payment method.
Step 5: Registration Letter
- Confirmation of Payment: Once the advance contribution payment (for six months) is successful, you’ll receive a system-generated Registration Letter (C-11) from the ESIC department.
- Legal Proof of Registration: This Registration Letter (C-11) contains a 17-digit Registration Number and serves as legal proof of your employer registration with ESIC.
ESI Payment and Return Filing Deadlines under ESI Scheme
The employers are responsible to pay own contribution as well as the employees’ contribution to the ESIC on a monthly basis and it should be noted that the due date for doing these is the 15th of the subsequent month.
ESI Return Filing deadline under ESI Scheme:
The ESI return filing deadline is as given below:
| Period of Return | Due Date of Filing Returns |
| April to September | 11th November |
| October to March | 11th May |
Employers are required to submit their returns within these timeframes to ensure compliance with ESIC regulations.
However, it’s worth mentioning that these deadlines can be subject to extensions or modifications through official notifications issued by the relevant authority. Employers should stay informed about any such updates to avoid penalties and ensure accurate and timely submission of their ESI contributions and returns. It is advisable to always refer to official notices and guidelines to stay updated on any changes to the deadlines.
Penalties for Late or Non-Payment of ESI Contributions under the ESI Scheme
There are certain penalties for late or non-payment of ESIC contributions, as per the ESIC Act, including:
· Late Payment Interest:
If an employer fails to make timely payments for ESI contributions, they will be liable to pay simple interest at a rate of 12% per annum for each day of payment delay.
· Legal Consequences:
For delayed, false or non-payment under the ESI Act, legal consequences include:
- Imprisonment of up to 2 years.
- Fine of up to Rs 5,000.
· Impact on Tax Deduction:
Contributions that are submitted after the statutory time would not be eligible for deduction benefits, according to the IT Act. Employers will be unable to claim a tax deduction for contributions made after the due date and they will be compelled to pay IT on those payments.
Final Thoughts
The Employees’ State Insurance Corporation (ESIC) plays a vital role in ensuring the well-being and financial security of employees across various sectors. With a comprehensive range of benefits, ranging from medical coverage to maternity, disability and unemployment support, the benefits under ESI for employees safeguards employees and their dependents from various uncertainties. The scheme’s applicability to a diverse range of establishments, its online registration process and the defined contribution rates reflects its adaptability and modern approach.
Employers must adhere to deadlines for contributions and return filing to avoid penalties, as non-compliance can lead to both financial implications and legal outcomes. In a broader context, ESIC’s mission to provide a safety net for employees highlights the significance of social security measures in promoting a healthier, more stable workforce and contributing to the overall socio-economic development of the nation.
For more information on everything you need to know about ESI for employees, connect with our team of professionals at StartupFino.
