ESI stands for Employee State Insurance, which is governed by the ESIC i.e. Employee State Insurance Corporation. ESIC is an autonomous body that comes under the Ministry of Labour and Employment. ESI registration refers to the process of registering a business entity under the Employees' State Insurance Act, 1948. This process is completely online whereas the Indian workers are provide with the social security and health insurance scheme that provides medical benefit, maternity benefit, disablement benefit, sickness benefit, and also other benefits like free supply of physical aids, funeral expenses, and so forth.
Eligibility for ESI Registration
The ESI registration provides the benefit of medical, maternity, cash, disability, and dependent benefits to all employees. The eligibility criteria for ESI registration depends upon the number of employees in a company and also their monthly earnings as specified by the ESIC. Here are the some important eligibility criteria:
Minimum Employee Count
The ESI Act makes it compulsory for all establishments to have 10 or more employees to avail benefits of ESI registration scheme. However, in some states, the threshold limit is 20 or more employees to be a part of ESI registration. It is important to keep a track of the specific requirements applicable in your state.
Salary Limit
The ESI Act has set up a certain limit that is applicable to all employees in terms of monthly salary they are earning. In September 2021, the salary limit increased to ₹21,000 per month. It means that employees who are earning ₹21,000 or less per month as their salary are eligible for ESI registration coverage. It is important to note that in case the number of employees falls below the threshold criteria or the salary limit exceeds the prescribed limit, a registered entity must continue to comply with the ESI Act until the end of the contribution period which is usually of 6 months.
Employee and Employer Contribution
Under ESI registration scheme, the employer is required to contribute 4.75% of the total monthly salaries payable to its employees. However, the eligible employees are required to pay only 1.75% of their individual monthly salary in the ESIC funds. It is paid for every month of the year. The employees, who earn up to Rs100 /- per day, are totally exempted from paying their share of contribution to the ESI registration scheme.
Benefits of ESI Registration
There are various benefits for the employer and employee to have ESI Registration as some are hereinafter mentioned below:
Medical Benefits
ESIC provides comprehensive medical benefits to insured employees and their dependents. This includes access to medical care, treatment, and hospitalization services. Employees and their family members can have medical facilities at ESIC dispensaries, hospitals, and tie-up hospitals.
Maternity Benefits
Female employees covered under ESIC are eligible for maternity benefits, which include paid leave during pregnancy, childbirth, and postnatal care. The benefits cover a period of up to 26 weeks, with an extended period in certain medical situations.
Sickness Benefits
Through the ESI registration, all employees have been offered different form of sickness benefits. All these benefits are offered at a rate of 70% of the total salary of the employer. This amount is provided in case the sickness extends over three consecutive months or 90 days.
Cash Benefits
ESIC offers cash benefits to insured employees during periods of temporary or permanent disablement due to employment injury. The cash benefits provided include sickness benefits, maternity benefits, and disablement benefits. These benefits help employees receive financial support during times of illness, maternity leave, or disability.
Dependent Benefits
In the unfortunate event of an insured employee's death due to an employment-related injury or occupational disease, ESIC offers dependent benefits to the family members. This includes a monthly payment to the dependents of the deceased employee.
Disability Benefits
ESIC provides financial assistance to insured employees in case of partial or permanent disablement caused by an employment-related injury or occupational disease. The benefits vary based on the extent of disability and can be availed in the form of monthly payments.
Funeral Expenses
ESIC also provides financial assistance for funeral expenses in case of the insured employee's death. This benefit helps the family members with the costs associated with the last rites and funeral.
Reduced Employer Liability
By registering under ESIC, employers fulfill their legal obligation to provide social security and healthcare benefits to their employees. It helps reduce the employer's liability for medical expenses and compensation in case of employee injuries or illnesses.
Improved Employee Morale
ESI registration and the availability of comprehensive medical and cash benefits enhance the overall employee morale and well-being. Employees feel secure knowing that they and their families are covered under a social security scheme.
Documents required for filing of ESI Registration
The following documents are required:
- Required Registration certificate under the Shops and Establishments Act or the Factories Act as this document proves about the legality of establishment which is registered under the respective state law governing shops & establishments or factories.
- Memorandum and Articles of Association are required in case of a company. The copy of the Memorandum and Articles of Association outlines the company's structure and operating procedures.
- Certificate of incorporation is required in case of a company. A copy of the certificate of incorporation issued by the Registrar of Companies is required which shows the status of a company as a separate legal entity.
- The Permanent Account Number (PAN) card of the establishment as it is a unique identification number issued by the Income Tax Department. The copy of the PAN card for your establishment is required.
- Address proof of the establishment is required. It can be in the form of an electricity bill, telephone bill, rental agreement, or any other document which verifies the address.
- The comprehensive list of all the employees, including their names, addresses, and their respective salary details with other relevant information is required.
- The bank account details of the establishment, including the account number and IFSC code is also required.
Process of Obtaining ESI Registration
The process which needs to follow for ESI Registration is as below:
Step 1: Login to ESIC Portal
- The employer requires himself to register on the ESIC portal.
- The employer can register by a simple click on the ‘Sign Up’ icon on the ESIC portal under the ‘Employer Login’-option appears on the home screen.
- The employers need to fill in all the details after clicking on the ‘Sign up’ icon, and submit the form.
Step 2: Confirmation Mail
- After submitting the form to the portal the employer will receive a confirmation mail to the registered mail ID & on the mobile number entered at the time of signing-up.
- For registering as an employer and employee within the ESI registration scheme the email will contain its username & password details.
Step 3: Employer Registration Form
- After that with the username and password received in the mail, log in to the ESIC portal. This will land on the page having an option with the ‘Tab - New Employer Registration’. Click on It.
- Then after from the drop-down list select the icon ‘Type of Unit’ and click on the ‘Submit’ button. The ‘Employer Registration – Form will be displayed. Next the employer requires filling in the details.
- The Employer Registration Form concedes details pertaining to the unit of the employer, details of the employer and employees. After completing all the details, the employer needs to click on the ‘Submit’ button, once; now the complete form is filled and submitted on behalf of the employer.
Step 4: Payment for Registration
The ‘Payment of Advance Contribution’ page will be displayed after submission of the Employer Registration Form, where the employer is required to fill the amount that has to be paid. Now select the payment mode, by selecting the option the employer will need to pay the advance contribution for a time period of 6 months.
Step 5: Registration Letter
- The system will now generate the Registration Letter which is sent to the employer after the successful payment of 6 months advance contribution. Thereafter the 17 digit Registration Number will be generated by the ESIC department.
- The Registration Letter has now become a valid proof of ESI registration of the employer.
Penalty on Non-Compliance
Consequence of Non Payment
Non-payments, delayed payments, or false payments under ESI Act can become liable for an imprisonment for a period may extend up to 2 years and also a fine of up to Rs 5,000.
Consequence of Delay Payment
An employer who fails to pay their contribution within the specified time limit mentioned in the regulation must be liable to pay interest at the rate of 12% p.a. in respect of each day of delay or default in payment of contribution.
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