EMPLOYEES’ STATE INSURANCE

DEFINITION:-ESI Scheme is a self-financing, integrated and health insurance scheme. The scheme isenacted to provide Social Security to workers and their dependents. This is to provide certain benefits to employees in case of contingencies like sickness, maternity and employment injury, and Death or Disablement due to an employment injury or Occupational hazard).

ESIC is an autonomous corporation under Ministry of Labour and Employment. It is a legal entity which can raise loans. It can acquire both movable and immovable property and all incomes from the property with the Corporations. The corporation can set up hospitals either independently or in collaboration with state govt. or other private entities, but most of the dispensaries and hospitals are run by concerned state governments.

APPLICABILITY:-

Factories/Establishment using power and Employing ten (10) or more persons.

 Non-seasonal and non-power using factories/establishments employing twenty (20) or more persons

(However, vide a notification shops and establishments employing 10 or more employees are coverable under the Act wef 10.02.2011).

Employees of the Factories and Establishments in receipt of wages not exceeding Rs.15000 /- Per month are covered under the Act (draft notification issued on 06th Oct, 2016 to raise the ceiling upto to Rs. 21 K).

 Since coverage under the ESI Act is by area based notifications, the area in which an institution is located needs to be notified for coverage in the act.

 A Chartered Accountant’s office/firm too.

 However, apprentices are not deemed to be employees under the Act.

WAGES: All remuneration paid/payable in cash to an employee, if the terms of the contract of employment, were fulfilled and includes any payment in r/o any period of authorized leave, lock out, strike which is not illegal or layoff and other additional remuneration, paid at intervals not exceeding two months, but does not include :-

Any contribution paid by the employer to any pension fund or Provident Fund.

 Any traveling allowance or the value of any traveling concession.

 Any sum paid to defray special expenses entailed on him by the nature of his employment or

 Any gratuity payable on discharge.

CONTRIBUTIONS: The Scheme is primarily funded by monthly contribution raised from Insured Employees and their employers. The contributions are payable such as:-

1. Employees’ Contribution = 1.75%,
2. Employers’ Contribution = 4.75%
3. TOTAL (1+2) = 6.50%

Employees in receipt of an average daily wage of Rs. 137/- or Less, are exempted from Payment of their share of contribution (w.e.f. 14.06.2016), but are entitled to all social security benefits under the Scheme.

Vide notification dated 06.10.2016, reduced contribution is applicable in r/o newly covered areas for the initial 24 months of coverage. In such case it will be 1% & 3 % in r/o Employee and Employer contributions respectively.

CONTRIBUTION & BENEFIT PERIODS: Means a six month time span from 1st Apr-30th Sep. and 1st Oct.-31st March. Cash benefits under the scheme are generally linked with contributions paid. The benefit period starts three months after the closure of a contribution period. The two type of periods are:-

Contribution Period 1st April to 30th Sep. 1st October to 31st March
Benefit Period 1st Jan. to 30th June 1st July to 31st Dec.

MAJOR USED TERMS:

I.P. – Insured Person (The employee).

C.P. – Contribution Period/s –Two Half Yearly Contribution Period (Apr-Sep & Oct-Mar).

B.P. – Benefit Period – The period for which the employee/family is taking benefit/s (medical, cash,disablement, maternity, dependents, funeral etc).

COMPLIANCES:

The Compliances under the ESI Act have been made online mandatorily over the past few years and all employers are required to file salary details online.

All Employers have been issued unique User-Ids and Passwords to logging on the ESIC portal. For New Registrations, a temporary user ID can be generated by the Establishment itself, which on allotment of code number is suspended and a new Id and Password is issued.

BENEFITS:Medical Benefit, Disablement Benefits, Dependent’s Benefit, Maternity Benefit