Employees’ State Insurance Act, 1948

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It is a comprehensive Social Security Scheme designed to accomplish the task of socially

protecting the 'employees' in the organized sector against the events of sickness,
maternity, disablement and death due to employment injury and to provide medical care
to the insured employees and their families.

HIGHLIGHTS:
I.Applicability :
 The Act applies to all factories (including Government factories but excluding
seasonal factories) employing ten or more persons and carrying on a
manufacturing process with the aid of power or employing 20 or more persons
and carrying on a manufacturing process without the aid of power
 Shops employing 10 or more persons.
 Private Educational Institutions (those run by individuals, trustees, societies or
other organizations and Medical Institutions (including Corporate, Joint Sector,
trust, charitable, and private ownership hospitals, nursing homes, diagnostic
centers, pathological labs).
 Every employee (including casual and temporary employees), whether employed
directly or through a contractor, who is in receipt of gross wages up to Rs. 21000
p.m. (Earlier 15000/-)

This Act absolves the employer’s liability under the Maternity Benefit Act and
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Workmen’s Compensation Act.
 Employees’ State Insurance Act, 1948
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II. Contributions :
 The employer contributes 4.75% of the wages (gross)
 The employees contribute 1.75% of their wages, except when the
"average daily wages in a wage period" are equal to or less than Rs. 40.
The amount of contributions should be paid into the ESI Account with an
authorized branch of State Bank of India, through an ESI challan in quadruplicate
on or before the 21 st of the month following the calendar month in which the
wages fall due.

A financial year is divided into two six months span, i.e., April to September and
October to March. Each of the six monthly period is called a ‘contribution period’.
Similarly, a calendar year is divided into two six monthly span, i.e., January to June and
July to December, with each of the six monthly period being called a ‘benefit period’.
Example - In respect of the contribution period from 1st April to 30th September, the
corresponding benefit period shall be from 1st January of the year following, to 30th
June; and in respect of the contribution period from 1st October to 31st March of the
year following, the corresponding benefit period shall be from 1st July to 31st December
of the year following. In the case of a newly employed person, the first contribution
period shall commence from the date of employment, and the corresponding first benefit
period shall commence on the expiry of 9 months from the said date. 
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 Employees’ State Insurance Act, 1948
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III. 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 employer should furnish a Return of
Contributions along with the challans of monthly payment.

The ESI Scheme is administered by a corporate body called the 'Employees'

State Insurance Corporation' (ESIC), which has members representing
Employers, Employees, the Central Government, State Government, Medical
Profession and the Parliament. The Director General is the Chief Executive
Officer of the Corporation and is also an ex-officio member of the Corporation.

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 Process of Registration
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A. The Factory or Establishment to which the Act applies is to be registered by

logging into ESIC Portal i.e. www.esic.in. The employer is supposed to sign
up, providing company name, principle employer’s name, State and region as
well as e mail address. The employer trying to register would get a password
into his mail id. The employer can log in to www.esic.in and his mail ID can be
used as user ID and the password received has to be accessed from the mail
box to be used to register his unit by providing information in the Portal.
Automatically a 17 digit code number is generated after successful registration.

B. Code No. - It is a 17 digit unique identification number allotted to each of the

factory/establishment registered under the provisions of the Act. Such a number
is generated through ESIC portal on submission of the pertinent information by
the employer or generated on receipt of Survey report from the Social Security
Officer.

A. Sub-code no. - This is also a unique identification number allotted to a sub-unit,

branch office, sales office or Registered Office of a covered factory or
establishment located in the same State or different State. The employer can
register any Branch or Sales Office through ESIC Portal using his credentials
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 Employees’ State Insurance Act, 1948
SCHOOL OF MANAGEMENT

IV. Benefits :

The Act envisages six types of benefits to insured persons and /or their family.
None of these benefits are transferable, attachable or assignable. They are
also not commutable.

 SICKNESS BENEFIT
 MATERNITY BENEFIT
 DISABLEMENT BENEFIT
 DEPENDANTS BENEFIT
 MEDICAL BENEFITS
 FUNERAL BENEFITS

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 Benefits in detail
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 MEDICAL BENEFIT (paid till 3 years / incapacity lasts)

Medical benefit consists of "full medical care" including hospitalization, free of cost,
to the Insured Persons in case of sickness, employment injury and maternity. The
State Governments also contribute 1/8th share of the cost of Medical Benefit.
 SICKNESS BENEFIT
Sickness Benefit represents periodical cash payments made to an IP during the
period of certified sickness occurring in a benefit period when IP requires medical
treatment and attendance with abstention from work on medical grounds. Sickness
benefit is 50% of the average daily wages and is payable for 91 days during two
consecutive benefit periods.
i) Temporary Sickness Benefit: Sickness Benefit represents periodical cash
payments made to an IP during the period of certified sickness occurring in a
benefit period when IP requires medical treatment and attendance with abstention
from work on medical grounds.
ii) Extended sickness Benefit: In addition to 91 days of sickness benefit, insured
persons suffering from certain long-term diseases are entitled to extended
sickness benefit for 34 diseases. The list of diseases are enclosed in the
Annexure.
iii) Enhanced Sickness Benefit: The ESI Corporation has also extended
additional cash incentive to insured persons to promote acceptance of sterilization
method by providing sickness cash benefit equal to full wage for a period of 7 days
for vasectomy and 14 days for tubectomy.
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 Benefits in detail
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 MATERNITY BENEFIT
The benefit is payable in cash to an insured woman for confinement / miscarriage
or sickness arising out of pregnancy / confinement or premature birth of child or
miscarriage. For confinement, the duration of benefit is 12 weeks, for
miscarriage 6 weeks and for sickness arising out of confinement etc. 30 days.
The benefit is allowed at about full wages.
 DISABLEMENT BENEFIT
The Act provides for cash payment, besides free medical treatment, in the event
of temporary or permanent disablement as a result of employment injury as well as
occupational diseases. The rate of temporary disablement benefit is 72% of the
wages as long as the temporary disablement lasts. In case of total permanent
disablement, the insured person will be given life pension at full rate i.e., 72% of
his wages, while in cases of partial permanent disablement a portion of it will be
granted as life pension.
 DEPENDANT’S BENEFIT
In case of death, as a result of employment injury, the dependants of an insured
person are eligible for periodical payments. Pension at the rate of 40% more than
the Standard Benefit Rate will be paid periodically to widow (s) and children in
accordance with the prescribed share. An eligible son or daughter is entitled to
dependant’s benefit up to the age of 18 without any proof of education; the benefit
is withdrawn if the daughter marries earlier.
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 Benefits in detail
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 FUNERAL BENEFIT
Funeral benefit is a cash payment payable on the death of an insured person
towards the expenses on his funeral, the amount not exceeding Rs.2,500/-.
 OTHER EXPENSES
Rehabilitation allowance : Disabled IPs who remain admitted in an Artificial
Limb Centre for fixation or repair or replacement of the artificial limb are entitled to
a rehabilitation allowance for each day on which they remain at double the
Standard Benefit rate.
Vocational Rehabilitation : This scheme has been designed to provide financial
assistance to IPs who are referred to Vocational Rehabilitation Centre for training.
Under the scheme, IPs aged not more than 45 years who are permanently disabled
as a result of an employment injury (EI) with loss of earning capacity of not less
than 40% and are not in gainful employment subsequent to EI are entitled to
receive cash allowance equal to the expenditure charged by the Vocational
Rehabilitation Centre or Rs.45/- per day whichever is more during his stay at the
Vocational Rehabilitation Centre. Such IPs are also paid conveyance charges for
the journey undertaken by them from their normal residence to the centre and back.

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 Benefits in detail
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Medical Benefit to Retired IP’s and Permanent Disabled IP’s : On payment of Rs.10/-
P.M. or Rs. 100/- Per annum in lump sum for one year in advance, Medical Benefit can
be provided to:

- An Insured Person and his or her spouse who leaves

insurable employment on attaining the age of superannuation after being
insured for not less than five years, till the period for which contribution is
paid.

- An Insured Person and his/her spouse who ceases to be in insurable

employment on account of permanent disablement due to employment
injury shall be entitled to medical benefit.

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 Benefits in detail
SCHOOL OF MANAGEMENT

Medical Benefit to Retired IP’s and Permanent Disabled IP’s : On payment of Rs.10/-
P.M. or Rs. 100/- Per annum in lump sum for one year in advance, Medical Benefit can
be provided to:

- An Insured Person and his or her spouse who leaves

insurable employment on attaining the age of superannuation after being
insured for not less than five years, till the period for which contribution is
paid.

- An Insured Person and his/her spouse who ceases to be in insurable

employment on account of permanent disablement due to employment
injury shall be entitled to medical benefit.

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 Misc.
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Overtime Allowance - overtime allowances will be considered as wage for the purpose

of charging the contribution only and will not be considered for the purpose of the
coverage of the employee under the Scheme.

Bonus may not be treated as wage. Hence no contribution is payable on annual Bonus.

Layoff compensation - During the period of layoff, though the employee is not given
actual work and is also not given full remuneration but certain wages are paid to the
employee by way of remuneration for remaining attached to the factory/establishment of
the employer, therefore, such payments paid for the period of layoff are also wages for
the purpose of the ESI Act and hence contribution is payable on such payments.

DR. ISA MISHRA