Employees' State Insurance Act, 1948 envisaged an integrated need based social insurance scheme that would protect the interest of workers in contingencies such as sickness, maternity, temporary or permanent physical disablement, death due to employment injury resulting in loss of wages or earning capacity. the Act also guarantees reasonably good medical care to workers and their immediate dependents.

Applicability

Under Section 2(12) the Act is applicable to non-seasonal factories employing 10 or more persons.

Under Section 1(5) of the Act, the Scheme has been extended to shops, hotels, restaurants, cinemas including preview theaters, road-motor transport undertakings and newspaper establishments employing 10* or more persons.

Further under section 1(5) of the Act, the Scheme has been extended to Private Medical and Educational institutions employing 10* or more persons in certain States/UTs.

*Note: However in some States threshold limit for coverage of establishments is still 20 Employees of the aforesaid categories of factories and establishments. These State Governments/UTs are in the process of reducing the same.

The existing wage limit for coverage under the Act is Rs. 21,000/- per month ( w.e.f. 01/01/2017).

Contribution

E.S.I. Scheme being contributory in nature, all the employees in the factories or establishments to which the Act applies shall be insured in a manner provided by the Act. The contribution payable to the Corporation in respect of an employee shall comprise of employer's contribution and employee's contribution at a specified rate. The rates are revised from time to time. Currently, the employee's contribution rate (w.e.f. 1.1.97) is 1.75% of the wages and that of employer's is 4.75% of the wages paid/payable in respect of the employees in every wage period. Employees in receipt of a daily average wage upto Rs.100/- are exempted from payment of contribution. Employers will however contribute their own share in respect of these employees.

Collection of Contribution

An employer is liable to pay his contribution in respect of every employee and deduct employees contribution from wages bill and shall pay these contributions at the above specified rates to the Corporation within 21 days of the last day of the Calendar month in which the contributions fall due. The Corporation has authorized designated branches of the State Bank of India and some other banks to receive the payments on its behalf.

Contribution Period and Benefit Period

There are two contribution periods each of six months duration and two corresponding benefit periods also of six months duration as under.

Contribution period Corresponding Cash Benefit period

 

Contribution Period Cash Benefit Period

1st April to 30th Sept.1st Jan of the following year to 30th June

1st Oct to 31st March of the year following.1st July to 31st December.

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The section 46 of the Act envisages following six social security benefits :-

(a) Medical Benefit: Full medical care is provided to an Insured person and his family members from the day he 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/- .

1. System of Treatment

2. Scale of Medical Benefit

3. Benefits to Retired IPs

4. Administration of Medical Benefit in a State

5. Domiciliary treatment

6. Specialist consultation

7. In-Patient treatment

8. Imaging Services

9. Artificial Limbs & Aids

10. Special Provisions

11. Reimbursement

(b) Sickness Benefit (SB): Sickness Benefit in the form of cash compensation at the rate of 70 per cent 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.

1. Extended Sickness Benefit (ESB): SB extendable up to two years in the case of 34 malignant and long-term diseases at an enhanced rate of 80 per cent of wages.

2. Enhanced Sickness Benefit: 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.

(c) Maternity Benefit (MB) : Maternity Benefit for confinement/pregnancy is payable 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.

(d) Disablement Benefit

1. Temporary disablement benefit (TDB) : From day one of entering insurable employment & irrespective of having paid any contribution in case of employment injury. Temporary Disablement Benefit at the rate of 90% of wage is payable so long as disability continues.

2. Permanent disablement benefit (PDB) :  The benefit is paid at the rate of 90% of wage in the form of monthly payment depending upon the extent of loss of earning capacity as certified by a Medical Board

(e) Dependants' Benefit (DB): DB paid at the rate of 90% of wage in the form of monthly payment to the dependants of a deceased Insured person in cases where death occurs due to employment injury or occupational hazards.

(f) Other Benefits:
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.
Confinement Expenses: An Insured Women or an I.P.in respect of his wife in case confinement occurs at a place where necessary medical facilities under ESI Scheme are not available.

In addition, the scheme also provides some other need based benefits to insured workers. 

Vocational Rehabilitation: To permanently disabled Insured Person for undergoing VR Training at VRS.
Physical Rehabilitation: In case of physical disablement due to employment injury.
Old Age Medical Care: For Insured Person retiring on attaining the age of superannuation or under VRS/ERS and person having to leave service due to permanent disability insured person & spouse on payment of Rs. 120/- per annum.
Rajiv Gandhi Shramik Kalyan Yojana : This scheme of Unemployment allowance was introduced w.e.f. 01-04-2005. An Insured Person who become unemployed after being insured three or more years, due to closure of factory/establishment, retrenchment or permanent invalidity are entitled to :-

• 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.

Incentive to employers in the Private Sector for providing regular employment to the persons with disability:

• Minimum wage limit for Physically Disabled Persons for availing ESIC Benefits is 25,000/-.

• Employerss' contribution is paid by the Central Government for 3 years.

Benefits & Contributory Conditions:
An interesting feature of the ESI Scheme is that the contributions are related to the paying capacity as a fixed percentage of the workers’ wages, whereas, they are provided social security benefits according to individual needs without distinction.
Cash Benefits are disbursed by the Corporation through its Branch Offices (BOs) / Pay Offices (POs), subject to certain contributory conditions.