Employee state insurance act
1948 is a social security scheme run by government of India and currently
covers more than 2 crore employees and more than 7.5 crore of their family
members. Eligible employees and employers get various benefits under the ESI Act
by contributing a portion of the employees’ salary towards ESI scheme.
Is Employee State
Insurance Act (ESI) applicable to your business?
ESI act applies to all shops, businesses, factories as well as
establishments that have 10 or more than 10 employees. If your organization
normally does not employ more than 10 employees but in any particular month the
employee strength was 10 or more, then also your business will covered under
the ESI Act and you will be required to contribute.
Benefits of
Registration under ESI
Benefits of ESI for
employees.
·
ESI scheme offers insurance cover for sickness, death,
disability, maternity and even unemployment benefits by providing cash
incentives and partial wages. The are more than 150 hospitals and more than
2000 dispensaries all over India that offer free treatment under ESI in the
above-mentioned cases.
Benefits of ESI for
employers
·
Employers are encouraged by the government to contribute towards
ESI for their employees, and in return the employers will get compensation for
work related accident and disability. Therefore, employers can just focus on
the betterment of their organization without worrying about some uncertainties.
Applicability &
Contribution of ESI Registration
Which employees are covered under ESI
act?
·
For ESI act applicability, the sum of employees’ basic salary,
dearness allowance and House rent allowance is considered. If this sum less
than INR 21,000/- per month (w.e.f. 01/01/2017 ), then the employee will
covered under ESI act and both employees and their employer need to contribute
some part of the employees salary towards the ESI scheme.
What is the Employer’s contribution
towards ESI?
·
Employers need to contribute 4.75% of the employees’ salary
(basic + DA + HRA) in the ESI scheme.
What is the Employee’s contribution
towards ESI?
·
Employee’s need to pay 1.75% of their salary towards ESI scheme
and therefore, the total ESI contribution come to 6.5 % which is to be shared
by the employees and their employers.
·
However, there are some newly implemented ESI areas that have an
ESI contribution rate of 4%. 3% of that is contribution by the employer and 1%
is to be contributed by the employee.
What is the ESI
registration process?
·
All the organization that have 10 or more employees, or once had
10 or more employees in their lifetimes are mandated by law to be registered
under the ESI scheme (Employee state insurance act, 1948).
·
The registration needs to be done online at the ESIC portal and
a 17 digit ESI number will be allotted to the organization upon the successful
ESI registration.
·
To register the eligible employees, their 11-digit UAN
(universal account number) will be taken for further process.
Documents Required For ESI Registration
- Document
Form 01 Employer's Registration (may be abstained from ESI Office).
- List
of minimum 10/20 Employees with their DOJ and Rate of Salary.
- Memorandum
& Articles of Association with Certificate of Incorporation/Partnership
Deed as applicable.
- Copy
of PAN.
- Bank
a/c existing Certificate.
- Copy
of Vat Registration.
- Copy
of Factory/Shop & Comm. EST Registration.
- A
copy of any other Registration as may be.
- Declaration
Form of each employee along with their 2 Postcard size photographs
(Optional)
Information - Benefits
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/-
(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/-
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 upto 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 Twenty Six (26) weeks, 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 Two Contribution Periods.
(d) Disablement Benefit
(d) Disablement Benefit
1.
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.
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.
(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 :-
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 Two Years.
·
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.
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.
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