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Published by: Aditya on Jun 11, 2010
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The Employee State Insurance Act, 1948, is a piece of social welfare legislation enacted primarily with the object of providing certain benefits to employees in case of sickness, maternity and employment injury and also to make provision for certain others matters incidental thereto. The Act in fact tries to attain the goal of socio-economic justice enshrined in the Directive principles of state policy under part 4 of our constitution, in particular articles 41, 42 and 43 which enjoin the state to make effective provision for securing, the right to work, to education and public assistance in cases of unemployment, old age, sickness and disablement.

Under sec 1(4) of the act, the Act applies to non-seasonal, power using factories or manufacturing units employing twenty or more persons on wages. Now, the provision of the act have also been extended the under sec 1(5) of act to cover : Like shops, hotels, restaurants, cinemas, employing 20 or more persons Act does not apply to:  Mines  Railway running sheds  Govt. factories or establishments and Indian naval, military, or air force  Other Govt. notified exempted establishments


Seasonal factories engaged exclusively in any of the activities like: cotton ginning, cotton or jute pressing, decoration of ground nuts, manufacturing coffee, rubber, sugar, or tea or any manufacturing process incidental to or connected with any of the afore said activities, and including factories engaged for a period not exceeding seven months in a year in blending, packing or repackaging tea or coffee, or in such other processes as may be specified by the central govt. The factories exempted as seasonal from the provisions of the act. 


Employee: The term ³employee´ as defined under sec 2(9) of the act, refers to any person employed on wages, in or in connection with, the work of a factory or establishment to which this act applies. Persons whose remuneration (excluding the remuneration for over-time work) doesn¶t exceed Rs.6500 per month are covered under the act. Wages: It means all remuneration paid in cash , if the terms of contract are fulfilled , & includes any payment in any period of authorized leave , lockouts or strike which is not illegal or lay-off & include other remuneration paid at intervals not exceeding two months, but doesn¶t include: Contribution paid to provident fund , gratuity payable on discharge.   

Contribution under ESI Act,1948 

Employees : 1.75% on total monthly wages Employer : 4.75% on total monthly wages (Employees whose average daily wage is below Rs. 15 are exempted from payment of their contribution , only the employer¶s contribution will be payable at 4.75% in respect of such employee.) 

Time & Method for payment of Contribution 

Both the employer¶s and the Employees¶ contribution are to paid in cash or by cheque , into the State Bank of India or any other bank authorized by the ESI Corporation, by filling in a prescribed Challan in quadruplicate within 21 days following the end of the calendar month (like contribution period from 1st April to 30th sep. & the corresponding benefit period shall be from 1st Jan to 30th June) in which the contribution falls due. Because these periods are fixed. An employer who fails to pay his contribution within the periods specified shall be liable to pay interest & damages for late payment under sec 85 (B) of the act. The Bank will retain two copies of the Challan and return other two to the employer, one for submitting to the Regional Office of the Corporation and the other for the record of the employer. 


The employer should get his factory or establishments registered with the E.S.I. Corporation within 15 days after the Act becoming applicable to it, and obtain the employer s Code Number. The regional officer will allot a code number to the employer, which must be quoted in all documents and correspondence

Benefits under the Act
Six kinds of benefits are provided under the Act:  Sickness benefit  Maternity benefit  Disablement benefit  Dependents benefit  Medical benefit and  Funeral expenses.

Sickness & Extended Sickness benefit 

Sickness benefit is payable to an insured person in cash, in the event of sickness resulting in absence from work and duly certified by an authorised insurable medical officer/ practitioner. The benefit becomes admissible only after an insured has paid contribution for at least 78 days in a contribution period of 6 months. Sickness benefit is payable for a maximum of 91 days in two consecutive contribution period. An insured person suffering from any special long-term diseases (like tuberculosis, mental diseases) is eligible for extended sickness benefit at a rate which is 40% higher than the standard benefit rate , round to the next higher multiple of 5 paisa, for a period of 124\309 days.   


ESI is payable for a maximum period of 2 years on the basis of proper medical certification and authentication by the designated authority

. Enhanced sickness benefit  This cash benefit is payable to insured persons in the productive age group for under going sterilisation operation, viz., vasectomy/ tubectomy. 

The contribution is the same as for the normal sickness benefit. Enhanced sickness benefit is payable to the Insured Persons for 14 days for tubectomy and for seven days in case of vasectomy. 

. Maternity benefit
Confinement, miscarriage or medical termination of pregnancy.



Sickness arising out of pregnancy, confinement, premature birth of child or miscarriage or medical termination of pregnancy. Minimum 80 days in the immediately preceding two consecutive contribution periods is must. Maximum period for benefit is 91 days in one year.

Disablement benefit 

Disablement benefit is payable to insured employees suffering from physical disablement due to employment injury or occupation disease. Temporary disablement benefit at 70% of the wages is payable till temporary disablement lasts and is duly certified by authorised insurance medical officer. In case of permanent disablement, the cash benefit is payable is payable for life. Amount payable is worked out on the basis of earning capacity determined by a medical board.  

Dependants benefit 

Dependants benefit [family pension] is payable to dependants of a deceased insured person where death occurs due to employment or occupational disease. A widow can receive this benefit on a monthly basis for life or till remarriage. A son or daughter can receive this benefit till 18 years of age. Other dependants like parents including a widowed mother can also receive the benefitunder certain condition. The rate of payment is about 70% of the wages shareable among dependants in a fixed ratio. The first instalment is payable within a maximum of 3 months following the death of an insured person and thereafter, on a regular monthly basis   

Medical benefit 

An insured person or a member of his family whose condition requires medical treatment and attendance entitled to receive medical benefit. Rs.250 on account of confinement expenses shall be paid to an insured person or his wife if confinement occurs at a place where necessary medical facilities under this schemes are not available. Employer not to dismiss or punish employee during period of sicknesssection73.  

Funeral Expenses come in 1968.
If an insured employee dies, the eldest serving member of his family is entitled to reimbursement of such expenditure subject to maximum of Rs.2500 (W.E.F. December,2000) The claim for the funeral expenses should be submitted with prescribed document and form within three months of the death of the insured employee.  

Benefits cannot be combined 

An employee is not entitled to receive two benefits at the same time. That means he cannot receive for the same period. Both sickness benefit and maternity benefit; or Both sickness benefit and disablement benefit for temporary disablement; or




Both maternity benefit and disablement benefit for temporary disablement


Offences and penalties 

Punishment for false statement :- In this case any false statement or false representation, shall be punishable with imprisonment up to Rs.2000 or with both Punishment for failure to pay contributions :- if any person fails to pay any contribution which under to this act he is liable to pay, he shall be punishable with imprisonment up to three years. Punishment for other contravention :- in contraventions like dismisses, discharges, reduces or otherwise punishes an employee, shall be punishable with imprisonment up to one year or with fine up to Rs.4000 or with both  

Revision w.e.f. 01.12.2007 

Employees State Insurance (ESI) Corporation, a statutory body headed by the Union Labor minister, has revised its benefit rates of those insured and employers coming under the sub-regional office, ESI Corporation P une. The rates are revised as follows w.e.f. December 1, 2007: The daily rates of sickness benefit as given under rules 55 has been increased by 20 per cent. Daily rates of disability benefits have been increased to 50 per cent form 40 per cent. Daily rates of dependent¶s benefit have been increased to 50 per cent from 40 per cent. Funeral expenses given under rule 59 has been increased to Rs. 3,000/- from Rs. 2,500/-






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