Information for Employers
a) Relief/Advantages for employers
Employers are absolved of all their liabilities of providing medical benefits to their employees and their family members or dependants in kind or in the form of fixed cash allowance, lump-sum grant, reimbursement of actual expenses, or opting for any other medical insurance policy of limited scope unless it is a contractual obligation of the employer.
Employers are granted exemption pertaining to the applicability of Maternity Benefit Act, Workmens' Compensation Act etc in respect of employees covered under the ESIC Scheme.
This results in employers possessing a productive and well-secured workforce, at their disposal which is an essential ingredient for better productivity of an organization.
Employers are absolved of any responsibility in times of physical distress of their employees or workers such as employment injury, sickness or physical disablement thereby resulting in loss of wages since the responsibility of paying cash benefits shifts from the employer to the ESIC Corporation in respect of insured employees.
Any amount or sum paid by way of contribution under the ESIC Act is deducted in computing 'Income' under the Income Tax Act.
b) Coverage of factory/establishment
In the first instance, this Act is applicable to all non-seasonal factories utilizing power and employing ten or more individuals, as well as is applicable to non-power using manufacturing organizations and establishments employing 20 or more persons for wages and falling under the ambit of an implemented geographical area. As of now, employees of establishments, companies or factories that fall within the ambit of coverage and earning wages not exceeding Rs. 10,000/- per month are covered under this ESIC Scheme.
Under Section 1(5) of the Act, the provisions of ESIC Act have been extended to the following classes of establishments:
- Shops and Commercial establishments
- Cinemas, including preview theatres
- Hotels & Restaurants
- Newspaper establishments
- Road Motor Transport establishments
Under Section 1(5) of the ESIC Act, the Indian Government is empowered to extend the Scheme to any other establishment or class of establishments, commercial, industrial, agricultural or otherwise, with the passage of time. A State Government may extend the provisions of this Act in consultation with the ESIC and with the prior approval of the Central Government, after submitting six months notice of its intention in the official gazette; provided that where the provisions of this Act have been brought into force or implemented in any part of State, the said provisions shall stand extended to any such establishment or class of establishments within that part, if such provisions have already been extended to similar establishments or class of establishments in another part of that same State.
At the national level, the ESIC Scheme is administered by a statutory body called the ESIC (Employees' State Insurance Corporation), set up under ESI Act of 1948. This statutory body comprises of representatives on behalf of employers, employees, the Central Government, various State Governments, medical professionals and the Parliament members.
A Standing Committee is constituted from amongst the members of the Corporation that acts as the Executive Body for the administration and implementation of this ESIC Scheme.
The Medical Benefit Council which is a statutory body, advises ESIC pertaining to matters connected with the provision of medical care/healthcare to the beneficiaries of this Scheme. The Chief Executive of the ESIC is the Director General who is also ex-officio member of the Corporation and of its Standing Committee.
As part of the decentralization process, Regional Boards have been constituted in each State of Indian Union. To make this scheme more effective and to make the entire process more accountable, Local Committees have been formed as advisory bodies at the grass-root level for smooth functioning of the ESIC Scheme.
To manage day-to-day administration and operations, the headquarters of ESIC is situated at New Delhi. Besides headquarters, there are Regional Offices and Sub-Regional Offices in various states of India along with 800 and above Branch Offices at industrial towns throughout India. The healthcare or medical facilities under this Scheme is administered by various State Governments, who have been entitled statutory responsibility in this regard, except in Union Territory of New Delhi and Noida area of U.P, where the medical facilities are being provided directly by the ESIC.
With a view to provide facilities for early detection and diagnosis of occupational diseases among ESI beneficiaries, the ESIC has set up five Zonal Occupational Disease Centres at Kolkata, Mumbai, Delhi, Chennai and Nagda and another ODC is coming up at Pune. All these centres are well-equipped with all the essential medical facilities. These Zonal Occupational Diseases Centres cater to the needs of ESIC beneficiaries of the neighbouring states also.
This ECIS Scheme is primarily funded by contributions raised from insured employees and their employers in the implemented areas across India as a small but specified percentage of wages payable to such employees.
Employees in receipt of an average daily wage of Rs 40/- or less are exempted from payment of their share of contribution but are entitled to all social security benefits under this scheme.
The contribution rates are as follows:
- Employees' contribution - 1.75 % of wages
- Employers' contribution - 4.75 % of wages
Under the provisions of this Act, the State Governments contribute 12.5 percent of expenditure on medical expenses incurred on ESIC beneficiaries in their respective States within the per capita ceiling. Any expenditure exceeding this ceiling is borne entirely by the respective state governments.
The contributions made by employees and their employers are deposited in a common pool known as the ESIC Fund that is utilized for payment of cash benefits to the insured persons and their family members including dependants in addition to providing medical facilities to the beneficiaries under this scheme. The administrative and other expenses of the Corporation are also met from this pool fund.
The provisions of the ESIC Act are not applicable to factories or establishments under the control of Central Government / State Governments because such employees working with PSUs are in receipt of social security benefits that are substantially similar or superior to the benefits provided under the ESIC Act. The case of each such Public Sector Undertaking (PSU), is decided on merit by comparing the quality and quantity of benefits being provided to the employees by the concerned managements with those being conferred and admissible under the ESIC Act.
Under Section 87 of the ESIC Act, the "Appropriate Government" may grant or renew exemption in respect of a Factory/Establishment or class of factories or establishments in any specified area from the operation of this Act for a period not exceeding one year at a particular time.
Under Section 88 of this Act, exemption is granted by the "Appropriate Government" to employees, or class of employees, who remain away from their headquarters for more than 7 months in a year including those employees who are posted or transferred to non-implemented areas.
Under Section 87 or Section 88 of ESIC Act, no exemption can be granted unless a reasonable opportunity has been given to the Corporation to make any representation and the same is considered by the "appropriate Government".
Under Section 90 of this Act, exemption can be granted to a commercial establishment or factory belonging to any local authority such as a Municipality / Corporation/Panchayats etc. and if employees in any such factory/commercial establishments are otherwise in receipt of benefits that are substantially similar or superior to the benefits provided under the ESIC Act.
The amount payable to the Corporation by the Principal Employer in respect of an employee is termed as Contribution. It comprises the amount payable by the employee and the employer.
It is obligatory on the part of the employer to calculate and remit ESIC contribution that comprises of employers' share 4.75% plus employees' share of 1.75% that needs to be paid on or before 21st of the following month to the month to which the salary is related. For example suppose if an employee who draws up to Rs.70/- as daily average wage, then such an employee is granted exemption from payment of his/her share of contribution. The employer is however required to pay employer's share of 4.75% of the salary receivable by the employee.
h) Recovery of contribution
In the first instance the Principal Employer is required to pay employers' share of contribution in respect of every employee whether employed directly or through immediate employer. The employees' share may thereafter, be recovered by making deduction from their wages for the wage period for which their contribution is made, however is payable. No such deduction may be made from any wages to their employees other than those relating to the period in respect in which contribution is payable.
i) Medical Benefit
The ESIC Scheme provides comprehensive range of medical treatment to insured individual and their dependants (including their family members). This is made possible through a network of ESIC Dispensaries & Panel Clinics, Diagnostic Centres and ESIC Hospitals etc. Super-speciality medical facilities are provided to the beneficiaries through advanced super-speciality medical institutions that are recognized and empanelled for the purpose on referral basis. The ESIC has set up a Revolving Fund in most of the States across India for ensuring smooth flow of funds for facilitating super-speciality treatments of ESIC beneficiaries.
All the insured individuals and their dependants including their family members under ESIC scheme are entitled to free, full and comprehensive medical care under the ECIS Scheme. The Medical benefit package covers all aspects of healthcare ranging from primary to super-speciality facilities.
j) Sickness Benefit
Sickness Benefit represents cash payments made to an insured person periodically during the period of certified sickness occurring in a benefit period when insured person undergoes medical treatment and attendance with abstention from work on valid medical grounds.
The maximum duration of Sickness Benefit is 91 days in two consecutive benefit periods. However, there is a waiting period of 2 days which is waived if the insured person is certified sick within 15 days of the spell for which sickness benefit was last paid. The sickness benefit rate is approximately equivalent to 50% of the average daily wages of the insured person.
k) Extended Sickness Benefit
After exhausting the Sickness Benefit payable up to 91 days, an insured person if suffering from Cancer, Tuberculosis, Leprosy, Mental or malignant diseases or any other specified long-term ailment, then such an employee is entitled to Extended Sickness Benefit at a higher cash benefit rate of about 70% of average daily wage for a period of two years.
l) Enhanced Sickness Benefit
For undergoing sterilization operations for the purpose of family planning, insured persons are eligible to Enhanced Sickness Benefit which is double the rate of sickness benefit.
m) Maternity Benefit(Section 50 of ESI Act)
Maternity benefit comprises of periodical cash payments to an insured woman as certified by a duly appointed medical officer or mid wife in cases such as confinement or miscarriage or sickness arising on account of pregnancy, confinement, premature birth of child or miscarriage.
n) Disablement Benefit
Disablement benefit is admissible for disablement that is caused by employment injury. At the first instance, Temporary Disablement Benefit (TDB) is payable as long as the temporary disability lasts. If the employment injury results in partial or total/permanent disability, then Permanent Disablement Benefit (PDB) is payable till the death of the insured individual.
No contributory conditions have been prescribed for this benefit. The rate of Temporary Disablement Benefit (TDB) is 70% or a little more of the wages. The rate of Permanent Disablement Benefit (PDB) is proportionate to the loss of earning capacity caused on account of the injury.
o) Dependant Benefit
Dependants' benefit consists of periodical payments to dependants or family members of an insured individual who dies on account of an employment injury sustained as an employee under the ESIC Act.
There are no contributory conditions or any criteria in order to qualify for such benefits. Thus, incase in an unfortunate or unforeseen incident suppose even if an individual dies of employment injury even on the first day of his employment, his dependants or family members are entitled to the aforesaid benefit.
p) Funeral Expenses
Funeral expenses are reimbursed in the nature of a lump sum payment up to a maximum of Rs. 5000/- with effect from 1st September, 2009. The funeral expenses are made to meet the expenditure incurred on the funeral of deceased insured individual. This amount is paid either to the eldest surviving member of the family or in his/her absence to that individual who actually incurs the funeral expenses.
- Employee's State Insurance Corporation - esic.nic.in
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Dr. Sameer Sippy. 2021. Employee State Insurance Corporation (ESIC) - Information for Employers. Medindia, viewed May 18, 2022, https://www.medindia.net/patients/health-regulations/employee-state-insurance-corporation-info-employers.htm.