Employees
State Insurance Act 1948
Employees' State Insurance Act, 1948 envisaged an
integrated need based social insurance scheme that would protect the interest
of workers in contingencies such as sickness, maternity, temporary or permanent
physical disablement, and death due to employment injury resulting in loss of
wages or earning capacity. The Act also guarantees reasonably good medical care
to workers and their immediate dependents.
ESI Act the Central Govt. set up the ESI Corporation to
administer the Scheme. The Scheme thereafter was first implemented at Kanpur
and Delhi on 24th February 1952. The Act further absolved the employers of
their obligations under the Maternity Benefit Act, 1961 and Workmen
Compensation Act 1923. The benefit provided to the employees under the Act is
also in conformity with ILO conventions.
ESI Scheme:
•
ESI Scheme for India is an integrated social
security scheme tailored to provide Social Production to workers and their
dependents, in the organised sector, in contingencies, such as Sickness, Maternity
and Death or Disablement due to an employment injury or Occupational
hazard
COVERAGE:
The ESI Act 1948 applies to
•
Non – seasonal Factories using power in and
Employing ten (10) or More persons
• Non – seasonal and non- power using factories
and establishments employing twenty(20) or more persons
•
Employees of the Factories and Establishments
in receipt of wages not exceeding Rs.7500 /- Per month are covered under this
Act.
WAGES Defined
Wages means all remuneration paid or payable in cash to
an employee, if the terms of the contract of employment, express or implied,
were fulfilled and includes any payment to an employee in respect of any period
of authorised leave, lock out, strike which is not illegal or layoff and other
additional remuneration, if any, paid at intervals not exceeding two months,
but does not include:-
a). any
contribution paid by the employer to any pension fund or Provident fund, or
under this act;
b). any traveling
allowance or the value of any traveling concession;
c). any sum paid
to the person employed to defray special expenses entailed on him by the nature
of his employment; or
d). any gratuity
payable on discharge.
The above definition has three parts
- All remuneration paid or payable in cash to an employee following from the term of employment (including agreement) express or implied. The periodicity of payment is not relevant in this case.
- Any additional remuneration even if not flowing from any agreement or settlement but paid at intervals not exceeding two months.
- The exceptions as provided in Clause (a) to (d) above. Any remuneration paid or payable under Para 1 and 2 is wages and chargeable to contribution whereas any amount paid towards items mentioned in clause (a) to (d) are not wages and therefore no contribution is chargeable on the amount.
Finances
•
The Scheme is primarily funded by
contribution raised from Insured Employees and their employers
•
Payable such as
1. Employees’
Contribution – 1.75% of the Wages
2. Employers’
Contribution – 4.75% of the Wages
TOTAL - 6.5 %
of the Wages
Employees in
receipt of an average daily wage of Rs.40/- or Less, are exempted from Payment
of their share of contribution (w.e.f 8.4.00) but are entitled to all social
security benefits under the Scheme.
Contribution &
Benefit Period
•
Employees covered under the ESI Act, are
required to pay contribution towards the scheme on a monthly basis. A
contribution period means a six month time span from 1st April to 30th
September and 1st October to 31st March.
•
Cash benefits under the scheme are generally
liked with contributions paid. The benefit period starts three months after the
closure of a contribution period. The two type of periods are elucidated below.
Contribution Period Benefit
Period
1st April to 30th September 1st January to 30th June
of the following year
1st
October to 31st March 1st July to 31st
Dec.
ADVANTAGES OF EMPLOYERS
1. Employers are absolved of their liabilities of providing
medical facilities to employees and their dependents in kind or in the form of
fixed cash allowance, reimbursement of actual expenses, lump sum grant or
opting for any other medical insurance policy of limited scope unless it is a
contractual obligation of the employer.
2. Employers are exempted from the applicability of the : -
(a). Maternity
Benefit Act
(b). Workmen's’
Compensation Act in respect of employee covered under the ESI Scheme
3. Employers have
their disposal, a productivity , well
secured workforce, an essential ingredient for better productivity
4. Employers are absolved of any responsibility in times of
Physical distress of workers such as sickness, employment injury or Physical
disablement resulting in loss of wages, as the responsibility of Paying cash
benefits shits to the corporation in respect of insured employees
5. Any sum paid by
way of contribution under the ESI Act is deducted in computing ‘income’ under
the Income Tax Act.
Benefits to
Employees
ESI Scheme Major Social Security Benefits in Cash and
Kind include …
1. Medical
Benefit – for self & Family
2. Sickness Benefit
– for self
3. Maternity Benefit
- for self
4. Disablement
Benefit
a). Temporary
Disablement Benefit – for self
b).
Permanent Disablement Benefit – for self
5. Dependents’
Benefit – for dependents in case of death due to employment injury
In addition, the
Scheme also provides some other need based benefits to insured workers. These
are:
i). Funeral
Expenses – to a person who performs the last rites of IP
ii). Rehabilitation
allowances – for self
iii). Vocational
Rehabilitation - for self
iv). Old age
Medicare – for self and spouse
v). Medical
Bonus – for insured women and IP’s wife
Medical Benefit
•
Medical Benefit means Medical care of IPs and
their families, wherever covered for medical benefit.
•
The Standard medical care consists of
out-door treatment, in-patient treatment, all necessary drugs and dressing,
pathological and radiological specialist consultation and care, ante-natal and
post natal care, emergency treatment etc.,
•
Out-door medical care is provided at the
state Insurance Dispensaries or Mobile Dispensaries manned by full-time doctors
(service’ system) or at the private
clinics of Insurance Medical Practitioners (Panel System)
•
Insured worker and members of his family are
eligible for medical care from the very first day of the worker coming under
ESI Scheme.
•
A worker who is covered under the scheme for
first time is eligible for medical care for the period of three months. If
he/she contributes at least for 78 days in a contribution period the
eligibility is there up to the end of the corresponding benefit period.
•
A worker is also eligible for extended
sickness benefit when he/she is suffering from any one of the long term 34
diseases listed in the Act. This is admissible after the worker has been under
ESI these conditions are satisfied medical benefit is admissible for a maximum
period of 730 days for the IP and his/ her family.
Sickness Benefit
Disablement Benefit
Other Benefit
Obligation of the Employers:
•
Sickness signifies a state of health
necessitating Medical treatment and attendance and abstention from work on
Medical grounds. Financial support
extended by the corporation is such a contingency is called sickness
Benefit
•
Sickness Benefit represents periodical
payments made to an Insured Person for the period of certified sickness after
completing 9 Months in insurable employment.
•
To qualify for this benefit, contributions
should have been payable for atleast 78 days in the relevant contribution
period.
•
The Maximum duration for availing sickness
Benefit is 91 days in two consecutive benefit periods
•
Standard benefit rate – this rate corresponds
to the average daily wage of an Insured person during the corresponding
contribution period and is roughly half of the daily wage rate.
Extended Sickness
Benefit
•
Extended Sickness Benefit is a Cash Benefit paid for prolonged illness
(Tuberculosis / Leprosy, Mental and Malignant diseases) due to any of the 34
Specified diseases
•
The IP should have been in continuous
employment for a period of 2 years and should have contributed for at least 156
days in 4 preceding contribution periods.
•
The
daily rate of Extended Sickness Benefit is 40% more than the standard Sickness
Benefit rate admissible
After
exhausting sickness Benefit Payable for 91 days the Extended Sickness Benefit
is payable up to further period of 124 / 309 days that can be extended up to 2
years in special circumstances
Enhanced Sickness
Benefit
•
Is Cash Benefit for IP undergoing sterilization
operation of vasectomy / tuberculous for family planning.
•
The contributory conditions are the dame as
for claiming sickness benefits
•
The daily rate of this benefit is double the
standard benefit rate. Say, not less than the daily wage.
•
The benefit rate of this benefit is double
the standard benefit rate. Say, not less than the daily wage.
•
The benefit is available up to 7 days for
vasectomy and up to 14 days for tubectomy operations.
Maternity Benefit
•
Maternity Benefit is cash payable to an
Insured women for the specified period of abstention from work for confinement
or mis-carriage or for sickness arising out of pregnancy, “confinement”
“premature birth of child or miscarriage” “confinement” connotes labour after
26 weeks of pregnancy whether the result issue is alive or dead,
•
“Miscarriage” means expulsion of the contents
of a pregnant uterus at any period prior to or during 26th week of
pregnancy.
•
Criminal abortion or miscarriage does not,
however, entitle to benefit.
•
The contribution condition is the same as for
Sickness Benefit.
•
The daily benefit rate is double the sickness
Benefit rate and is thus roughly equivalent to the full wages. Benefits are
paid for Sundays also.
•
The Benefit is paid as follows (Duration)
a). For Confinement
•
For
a total period 12 Weeks beginning not more than 6 weeks before the expected
date of child birth, if the insured women dies during confinement or with in 6
weeks thereafter, leaving behind the living child, the benefit continues to be
payable for the whole of the period. But the child also die during that period,
the benefit will be paid up to and including the day of the death of the child.
b). For Miscarriage
•
For the period of 6 weeks following the
•
date of miscarriage
c). For
sickness arising out of pregnancy,
• confinement,
Premature birth of child or
• miscarriage
• For
an additional period or up to four weeks.
• In
all the cases, the benefit is paid only if the insured woman does not work for
remuneration during the period for which benefit is claimed. There is no
waiting period.
•
Medical Bonus
Medical Bonus is
lump sum payment made to an Insured woman or the wife of an insures person
in
case she does not avail medical facility from an ESI hospital at the time of
delivery of a child.
This bonus of Rs. 250/- has been increased to Rs. 1000/-
from 1st April 2003
Disablement Benefit
a). Temporary
disablement benefit:
•
In case of temporary disability arising out
of an employment injury or occupational disease.,
•
Disablement benefit is admissible to insured
person for the entire period so certified by an Insurance Medical officer /
Practitioner for which IP does not work for wages.
•
The benefit is not subject to any
contributory condition and is payable at a rate which is not less than 70% of
daily average wages.
•
However, not payable if the incapacity lasts
for less than 3 days excluding the date of accident.
b)permanent
disablement benefit:
•
In case an employment injury or occupational
disease results in permanent, partial or total loss of earning capacity,
•
Periodical payments are made to the IP for
life at a rate depending on the actual loss of earning capacity as may be
determined and certified by a duly-constituted Medical Board.
•
The rates of Disablement Benefits are
determined in accordance with the provisions of Rule 57 of ESI (Central) Rules,
1991.
•
In order to product erosion in real value of
the periodical payments of Permanent
Disablement benefits, against rise in the cost of living index, periodical
increases are granted, based on actuarial calculation.
•
Commutation
of periodical payments into lump sum (one time payment) is permissible where
the permanent disablement stands assessed as final and daily rate of benefit
does not exceed Rs. 1.50. per day.
•
Commutation of Permanent Disablement Benefit into lump sum payment is
also allowed in case the total commuted value does not exceed Rs.10000/- (The
ceiling is now being raised to Rs.30000/-).
Dependents’ Benefit
Dependents’ Benefit
Dependents Benefit is a monthly pension payable to the
eligible dependents of an insured person who dies as a result of an Employment
Injury or occupational disease
Beneficiaries and
Duration of benefit
a). Widow /
widows during life or until remarriage
b). Legitimate
or adopted son until age 18 or if legitimate son is infirm, till infirmity
lasts.
c). Legitimate
or adopted unmarried daughter until age 18 or until marriage, whichever is
earlier, or if infirm, till infirmity lasts and she continues to be unmarried.
In the absence
of any widow or legitimate child, the benefit is payable to a parent or
grandparent for life, to any other male dependent until age 18 or to an
unmarried or widowed female dependent until age 18.
•
How much …
•
The total divisible benefit is equivalent to
the temporary disablement benefit rate (roughly 70% of the wage rate). The
widow / widows share 3/5th of the benefit and the legitimate or
adopted son and daughter 2/5th each of the benefit. If the total
benefit so divided exceeds the full rate, there is a proportionate reduction in
the respective shares of the beneficiaries.
• The amount of pension paid to the dependents
of a deceased insured person is reviewed vi-a-vis the cost of living index and
increases are granted from time to time to compensate for erosion in its real
value.
Other Benefit
(i). Funeral
Expenses
Funeral
Expenses are in the nature of lump sum payment up to a maximum of Rs.2500/-
made to defray the expenditure on the funeral of deceased IP. The amount is
paid either to the eldest surviving member of the family or, in his absence, to
the person who actually incurs the expenditure on the funeral.
(ii)Rehabilitation
Allowance
The corporation,
vide its Resolution dated 22.12.1979, resolved to grant rehabilitation
Allowance to the IPs, for each day, on which they remain admitted in an
Artificial limb centre. On the rates, which generally confirm to double the
Standard Sickness Benefit rate. The above benefit was introduced with effect
from 1.1.1980.
Levy of Interest
& Damages
Under Section 39(5)(a) of the ESI act, read with
Regulation 31(A) of the ESI (General) Regulations 1950, the employer is liable
to pay simple interest at the rate of 15 percent per annum in respect of each
day of default or delay in payment contributions. In addition, under the
Provision of Regulation 31-C of ESI (General) Regulations, 1950, read with
sec.85(B)(i) of the ESI Act, the Corporation is empowered to recover damage as
under:
Period of delay in Rate of Damages
Payment of
Contribution on the amount due
i). Up to less
than 2 months
5 %
ii). 2 months
and above but less than 4 months 10%
iii).4 months
and above but less than 6 months 15%
iv). 6 months
and above 25%
Interest and
damages can also recover as arrears of land revenue Section 45(c) to Section
45(I) by the Recovery Officer of ESI Corporation.
Obligation of the Employers:
1). Get your Factory / establishment registered with in
15 days after the Act becomes applicable. Submit Form 01 to the Regional office
for this purpose. Obtain Employer’s code No. for use in all ESIC Forms /
documents and correspondence with the offices of the ESI Corporation.
2). Fill up Declaration Forms in respect of all recoverable
employees and submit the same to the Regional Office/ Local Office of the
corporation well before the ‘Appointed Day’ and obtain insurance Numbers from
the concerned Local Office/ Regional Office, In respect of newly appointed
employees, fill up the declaration form soon after appointment of such
employees and submit the same to the Local Office Concerned.
3). Pending receipt of identity cards/ identity
certificates you may issue “certificate of employment” in Form 86 to the
covered employee(s) enabling them to avail cash/medical Benefits
4). Pay ESI contribution (Employee's Share @4.75% and the
Employer’s share @ 1.75% of the wages) with in 21 days of the month following,
in which the wages fall due.
5)maintain an Accident Book as prescribed under the Factory Act / ESI Act.
6)submit an Accident Report to the Local Office / ESI
Dispensary concerned immediately in respect of accidents that could result in
death or disablement and within 24 hours of its occurrence otherwise. Minor
accidents which do not cause absence from work need not be reported
7)Grant leave to insured employees on the basis of
sickness certificates issued by any authorized ESI doctor.
Maintain the
following records/ registers properly for the purpose of inspection
- Attendance Registers / Muster Rolls (in respect of all employees including those employed through contractors)
- Wage register
- Cash Book / Bank Book
- Account Books including Ledgers and Vouchers, Balance Sheet.
- Employees’ Register
- Accident Book
- Returns of Contribution
- Return of Declaration Forms
- Copies of Challans
- Inspection of Books
