The Employees’ State Insurance Act 1948

The Employees’ State Insurance Act, of 1948 is social security legislation that provides for medical care and cash benefit in the contingencies of sickness, maternity, disablement, and death due to employment injury to workers.

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Coverage under the Employees’ State Insurance Act 1948

The act was originally applicable to non-seasonal factories using power and employing 20 or more persons, but it is now applicable to non-seasonal power-using factories employing 10 or more persons and non-power-using factories employing 20 or more persons.

Under section 1(5) of the act, the scheme has been extended to shops, hotels, restaurants, cinemas including preview theatres, road motor transport undertakings and newspaper establishments employing 20 or more persons.

The existing wage limit for coverage under the act is ₹21,000/- per month (with effect from 1st Jan 2017)

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Covered Area

Implemented in all the states except Nagaland, Manipur, Tripura, Sikkim, Arunachal Pradesh and Mizoram. Delhi, Chandigarh and Pondicherry UTs come under the implementation of this act.

Employee’s ESI ContributionEmployee’s ESI Contribution
1.75% of Gross Salary4.75% of Gross Salary
Total ESI Contribution 6.5% of Gross Salary

Benefits of ESI Act 1948

  • Medical
  • Maternity
  • Disablement
  • Dependants
  • Funeral
  • Sickness

Medical Benefits

The ESI Scheme provides full range of Medical Care to all Insured person and their family through a network of ESI Dispensaries, Hospitals & Panel Clinics, Diagnostic Centres & Super specialities.

Super-speciality treatment such as — Open Heart Surgery, Neurosurgery, Bone Marrow Transplant, Kidney transplant, or specialized investigations like CT scans, MRI, Angiography, etc.

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Eligibility for Medical Benefits

An employee who is covered under the scheme for the first time is eligible for medical care for a period of three months. If an employee contributes at least 78 days in a contribution period the eligibility is there up to the end of the corresponding benefit period.

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Maternity Benefits

Maternity Benefit consists of periodical cash payments in case of confinement or miscarriage or sickness arising out of pregnancy, confinement, premature birth of child or miscarriage, to an insured woman as certified by a duly appointed medical officer or midwife.

Eligibility for Maternity Benefits

The contribution condition is the same as for sickness benefits. The daily benefit rate is double the sickness benefit rate and is thus roughly equivalent to the full wages. The benefit is paid for Sundays also.

The Benefit is paid as follows:

  1. For child delivery: for a total period of 12 weeks beginning not more than 6 weeks before the expected date of childbirth.
  2. For miscarriage: for a period of 6 weeks following the date of miscarriage.
  3. For sickness arising out of pregnancy, confinement, premature birth of a child, or miscarriage, there is an additional period of up to 4 weeks.

The Maternity Benefit Amendment Act 2017 – Maternity leave is raised from 12 weeks to 26 weeks

Disablement Benefits

Disablement Benefit is admissible for disablement caused by employment injury. In the first instance, a temporary disablement benefit is payable as long as the temporary disability lasts. If the employment injury results in partial or total/permanent disability, permanent disablement benefit is payable till the death of the insured person.

Dependants Benefits

Dependents benefit is paid as a family pension to the dependants of a deceased insured person in the event of death due to employment injury or occupational disease and is equivalent to about 70% of the wages.

Eligible Members

A widow can receive this benefit on a monthly basis for life or till her Re-Marriage; a son or daughter can receive this benefit till 25 years of age, Other dependents like parents including a widowed mother, etc. can also receive this benefit under certain conditions.

Funeral Benefits

Funeral expenses are in the nature of a lump sum payment of ₹15,000 (as per 2020 data) made to defray the expenditure on the funeral of the deceased insured person. 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.

Sickness Benefits

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 is extendable up to 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.

In addition, the scheme also provides some other need-based benefits to insured workers.

Vocational Rehabilitation: To permanently disabled Insured persons 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.

The incentive to employers in the Private Sector for providing regular employment to persons with disability:

  • The minimum wage limit for Physically Disabled Persons for availing ESIC Benefits is 25,000/-.
  • Employers’ contribution is paid by the Central Government for 3 years.

Atal Beemit Vyakti Kalyan Yojana (ABVKY): This scheme is a welfare measure for employees covered under Section 2(9) of the ESI Act, 1948, in the form of relief payment up to 90 days, once in a lifetime. The Scheme was introduced w.e.f. 01-07-2018 on a pilot basis for a period of two years initially. The scheme has now been extended for another year i.e. from 1st July 2020 to 30th June 2021.

It has also been decided to enhance the rate of unemployment relief under the scheme to 50% of wages from the earlier rate of 25% along with a relaxation in eligibility conditions, provided the Insured Person should have been in insurable employment for a minimum period of two years immediately before her/his unemployment and should have contributed for not less than 78 days in the contribution period immediately preceding to unemployment and minimum 78 days in one of the remaining three contribution periods in two years prior to unemployment.

In a significant relaxation, relief shall become due for payment after 30 days from the date of unemployment and the claim can be submitted directly to the designated ESIC Branch Office by the worker. The enhanced benefit and relaxed conditions are applicable during the period from 24th March 2020 to 31st December 2020. Claims to get the relief can be made online at the website www.esic.in along with submission of the physical claim with an affidavit, photocopy of the Aadhaar Card and Bank Account details to the designated ESIG Branch Office by post or in person.

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