B.A, LL.B (HONS.

)
2022-23

LAW2103 – LABOUR LAW- II

ASSIGNMENT ON

EMPLOYEE’S STATE INSURANCE ACT,1948

SUBMITTED BY: K.R. SARADA (20BLA1110)

SUBMITTED ON: 27-02-2023
SUBMITTED TO: Prof. MRUDUL SHENOY

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S.N CONTENT PAGE.NO
O

1. Introduction 03

2. Functions of ESI Act, 1948 03-04

3. Benefits of ESI Act, 1948 04-05

4. ESI Corporation 05-06

5. Constitution of ESI Corporation 06-07

6. The Terms of Office Members 07

7. Powers of Corporation 07-08

8. Duties of Corporation 08

9. Conclusion 09

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Employee’s State Insurance Act, 1948

Introduction
 The Employees State Insurance Act of 1948 was instituted with
the target of getting monetary help in instances of infection,
maternity, and disablement and for giving health advantages to
workers of processing plants and foundations and their wards1.
 Its main aim is to provide for compensation to certain employees
and their dependents for employment injuries.
 It is responsible for regulating employer’s contribution, paying
compensation, ensuring compliances, etc.
 It is a self-financed initiative2, which serves as a type of social
security scheme, to prevent the working class from any financial
problems arising out of the above medical issues.

Functions of Employees State Insurance Act 1948

Employees, a state insurance act 1948, plays a major role in the
welfare of many employees3. The functions of this act are as follows:
 Under section 17 of the constitution, the employee’s state
insurance act 1948 can recruit staff members. Along with this, it
can also provide gratuity and some other fund related benefits to
the eligible staff members.
 According to the powers of this act, it can invest or take money
from the central government sanction for providing better
facilities to employees.
 The Employees state insurance act 1948, can recruit or hire the
social security officers to implement practices of the act among
1
Employees’ State Insurance Act, 1948: details you must know - iPleaders
2
Description of Employees State Insurance Act, 1948 (unacademy.com)
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Description of Employees State Insurance Act, 1948 (unacademy.com)

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 the other bodies of India. These officers have the power to
enforce the implementation of practices of this act.
 The Employee’s state insurance act 1948 also collects some
amount of money from the compensation of employees to
regulate all its functioning and to facilitate other employees.
 The Director-General of employee’s states insurance act has the
authority to make decisions for facilitating the act’s
implementation. He can also modify the implementation
strategies according to the need.
 It is the responsibility of the employee’s state insurance act 1948
to maintain the budget of all expenditures, which are done to
provide compensation and other facilities to the employees.

Benefits of Employees State Insurance Act 1948

Employees state insurance act 1948 comes into consideration for
providing the compensation benefits to the employees 4. Along with
this, it also has several benefits, which are catalogued below:
Medical Benefit
Along with this, the salary of those employees does not get deducted
during the period of their treatment. They also get a certain percentage
of compensation if any of their family members get any severe
medical illness. Apart from general healthcare benefits, retired and
permanently disabled workers also get an annual premium of Rs. 120.
This benefit extends to the spouses of the workers as well.
Maternity Benefit
It is the best benefit provided to the women by the employee’s state
insurance act 1948. Women who are pregnant get extra leave before
and after their delivery. It means pregnant women are not required to
join the office for some months before and after their delivery. They
will receive their full salary during their maternity leave.

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Employees State Insurance Act 1948 (deskera.com)

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Disablement Benefit
Employees state insurance act 1948 also provides extra benefits to
those who are differently abled. It provides extra reservations to
disabled individuals of various categories.
Unemployment Benefits
Employees state insurance act 1948 also provides some monthly
compensation to those unemployed and eligible to perform jobs.
Along with this, it also provides loans to the persons who want to
launch their startups. They can take the loans at lower interest under
this act.
Other benefits
Apart from these five basic ESI benefits, an insurable employee can
avail the following miscellaneous benefits5 also:

a) Funeral expenses: The dependents of a deceased employee

receive Rs. 10,000 to perform his last rites.

b) Vocational/physical rehabilitation: This is generally payable

to permanently disabled employees. They can avail of this benefit for
undergoing vocational and physical rehabilitation.

c) Old age medical care: This is payable for employees retiring on

superannuation or under VRS/ERS. Even persons who leave
employment after suffering a permanent injury and their spouses can
avail this benefit. The compensation amount here is generally Rs. 120
per month.

ESI Corporation
According to Section 2(6)6, the term “Corporation” under the Act refers
to the Employees’ State Insurance Corporation.

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ESI Benefits to Employees | Employees State Insurance Act, 1948 (toppr.com)
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ESI Corporation: Constitution, Powers and Duties of ESI Corporation (toppr.com)

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Section 3 of the Act further states that the Central Government has to
establish the Corporation as per given provisions.

The Corporation is basically a body corporate that has features like

perpetual succession. It also has a common seal like other commercial
body corporates in India. Hence, the Corporation functions as a regular
body corporate.

The main function of this Corporation is to implement provisions of the

ESI Act and carry out its duties.

Furthermore, it has to pay compensation to employees, regulate

employers, frame rules and budgets for contribution, etc.

In order to achieve these tasks, the Act allows the Corporation to

exercise various powers through its members and officers.

Constitution of ESI Corporation

The ESI Corporation is an apex body under the Employees’ State
Insurance Act. Thus, many important functionaries and experts play a
role in its functioning.

The Corporation is headed by a Chairman and a Vice-Chairman 7 that

the Central Government appoints. Apart from these, the Central
Government gets to appoint five other persons of its choice.

Each State Government also gets to appoint one representative for itself
in the Corporation. Another person that the Central Government
appoints collectively represents all Union Territories.

In order to represent the views of employers and employees, the Central

Government appoints ten persons. The government generally consults
with employers’ organizations for this purpose. Even the medical
profession gets representation in the Corporation through two members.
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ESI Corporation: Constitution, Powers and Duties of ESI Corporation (toppr.com)

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Finally, the Corporation also has a Director General whose post is ex-
officio. Three Members of Parliament (2 from Lok Sabha and 1 from
Rajya Sabha) also become members.

The Term of Office Members

Members who represent employers, employees and the medical
profession, as well as the MPs, have a fixed duration8.

Their appointment lasts for four years from the date of notification of
their appointment. All other members of the Corporation may not have
such a fixed tenure.

Powers of the Corporation

The ESI Corporation has extensive powers to carry out its functions and
duties under the Act.

Firstly, Section 179 allows the Corporation to appoint staff members

and officers for carrying out its business effectively. It may bestow
provident fund, gratuity and other similar benefits on its staff.

Secondly, the Corporation has powers to purchase and sell movable as

well as immovable properties. It can even raise loans and invest its
money with the Central Government’s sanction.

In order to ensure compliance with provisions of the Act, the

Corporation can appoint Social Security Officers. These officer’s
function in their local limits and exercise jurisdiction over factories and
establishments therein.

All employers to whom this Act applies have to pay some contribution
for the benefit of employees. The Corporation has powers to determine
how much this contribution should be.
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ESI Corporation: Constitution, Powers and Duties of ESI Corporation (toppr.com)
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ESI Corporation: Constitution, Powers and Duties of ESI Corporation (toppr.com)

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The Director-General of the Corporation has to sign on every decision
it takes. He may appoint some other officer on his behalf to carry out
this task.

Duties of the Corporation

The Corporation performs many important duties under this Act. Most
of these duties are in the nature of compliances relating to its
functioning and decisions.

For example, every year the Corporation has to make a budget of its
probable income and expenditure. It has to submit this report to the
Central Government for its approval.

Furthermore, it has to maintain accounts of its incomes and expenses in

the format that the Central Government prescribes. None other than the
Comptroller & Auditor General (CAG)10 of India audits these accounts
every year.

Other compliances of the Corporation include submission of annual

reports of its activities to the Central Government. Apart from these, it
has to appoint a valuer to value its assets and liabilities every three
years.

Conclusion
Employees state insurance act 1948 is the legislative body of India
which provides enormous benefits to the employees. The headquarters
are located in New Delhi, from where the whole functioning of the act
is regulated. The central government and the ministry of labour and
employment together regulate the functioning of employee’s state
insurance act 1948. According to the reports, the act runs with a
budget of ₹80,000 crores11. Within the 70 years after launching, this
act had already provided numerous benefits to several employees of

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ESI Corporation: Constitution, Powers and Duties of ESI Corporation (toppr.com)
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Employees’ State Insurance Act, 1948: details you must know - iPleaders

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India and will continue to provide such benefits in future with more
facilities.

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