All You Need to Know about the Employees’ State Insurance and Its Benefits

What is the Employees' State Insurance Scheme?

The Employees' State Insurance Scheme is a multi-dimensional Social Security Scheme tailored to provide Socio-economic protection to the 'employees' in the organised 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.

The scheme aims to provide full medical care to the employees registered under the ESI Act, 1948 during their incapacity, restoration of their health and working capacity. It provides financial assistance to compensate for the loss of wages during the period of employees' abstention from work due to sickness, maternity, and employment injury. The scheme also provides medical care to the employees' family members.

The ESI Scheme is administered by a statutory corporate body called the Employees' State Insurance Corporation (ESIC), which has members representing employers, employees, the Central Government, the State Government, the medical profession and the Members of Parliament.

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What is the coverage of the Employees' State Insurance Scheme?

The scheme covers all the factories in India where 10 or more persons are employed. Moreover, it also covers shops, hotels/restaurants, cinemas, road motor transport establishments, newspaper establishments, private educational institutions, medical institutions, and other organisations employing 10 or more persons.

However, some states cover the establishments with 20 or more employees, and a few states have not extended the scheme to educational and medical institutions.

The employee within the threshold limit of wages, i.e., up to or equal to Rs 21,000 per month, is eligible for the ESIC scheme. It is the employer's duty to cover the eligible employees in the programme.

How is the ESIC scheme funded?

The ESI scheme is a self-financing scheme. The ESI funds are primarily built out of contributions from employers and employees payable monthly at a fixed percentage of wages paid. The State Governments also bear 1/8th share of the cost of medical benefits.

Is it mandatory for the employer to register under the ESIC Scheme?

Yes, it is the statutory responsibility of the employer under Section 2A of the Act read with Regulation 10-B to register their Factory/Establishment under the ESI Act within 15 days from the date of its applicability to them.

What are the six Social Security Benefits provided under the ESI Act?

The six Social Security Benefits provided under Section 46 of the Employees' State Insurance Act are as follows:

1. Medical Benefit:

Full medical care is provided to an insured employee and his family members from the day he/she enters insurable employment. There is no ceiling on expenditure on the treatment of an insured employee or his/her family member. Medical care is also provided to retired and permanently disabled insured employees and their spouses on payment of a token annual premium of Rs.120/- .

2. Sickness Benefit:

Sickness Benefit in the form of cash compensation at the rate of 70 per cent of wages is payable to insured employees during the periods of certified sickness for a maximum of 91 days in a year. In order to qualify for sickness benefit, the insured is required to contribute for 78 days in a contribution period of 6 months.

3. Maternity Benefit:

Maternity Benefit for confinement/pregnancy is payable for 26 weeks, which is extendable by a further one month on medical advice at the rate of full wage subject to contribution for 70 days in the preceding two contribution periods.

4. Disablement Benefit

• Temporary Disablement Benefit: 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 the disability continues.

• Permanent Disablement Benefit: 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.

5. Dependants Benefit:

DB paid at the rate of 90% of wage in the form of monthly payment to the dependants of a deceased insured employee in cases where death occurs due to employment injury or occupational hazards.

6. Other Benefits:

• Funeral Expenses: An amount of Rs.15,000/- is payable to the dependents or to the person who performs last rites from day one of entering insurable employment.

• Confinement Expenses: An insured woman or an insured person in respect of his wife in case confinement occurs at a place where necessary medical facilities under the ESI Scheme are not available.

In addition to the Social Security Benefits, the scheme also provides some other need-based benefits to the insured employees:

1. Vocational Rehabilitation: To permanently disabled insured employees undergoing VR training at VRS.

2. Physical Rehabilitation: To physically disabled employees due to employment injury.

How are the contributions made to the insured employees?

The ESI scheme 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. Besides, the cash benefits are disbursed by the Corporation through its Branch Offices or Pay Offices, subject to certain contributory conditions.

Warm Regards,
Ketki Jadhav
Content Writer