Employee s State Insurance Act 1948

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EMPLOYEES STATE

INSURANCE ACT, 1948


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HISTORICAL BACKGROUND

In addition to necessities of food, clothing, housingetc., man needs security in times of physical andeconomic distress consequent upon sickness,disablement etc. The Employees State Insurance Act

is an integrated measure of Social Security designedto accomplish the task of protecting employees asdefined in the Employees State Insurance Actagainst the hazards of sickness, maternity,

disablement and death due to employment injuryand to provide medical care to insured persons andtheir families.


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The ESI ACT provides for medical help andunemployment insurance to industrial workersduring their illness.

The basic objective is to offer social insurance toworkers in respect of three contingencies:

1. SICKNESS

2. EMPLOYMENT INJURY

3. CHILD BIRTH


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Although Factories Act 1948 was in place, thespectrum covered by it was confined to health,safety, welfare, leave, etc of the workers employed inthe factory premises only.

However, this act is extended to employees, whetherworking inside the factory or establishment orelsewhere.

Meaning thereby- It is not the place of work, but thenexus between the work and the factory, to whichthis act extend is material.


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OBJECTIVE

To provide for certain benefits toemployees in case of sickness,maternity and employment injury andto make provisions for related mattersin an integrated form through a

contributory fund.


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Question

How does the Employees' State InsuranceScheme assist workers?


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Answer

The dependence of an individualon cash income is a characteristicfeature of modern economy.

An interruption of moneyincome even for a small period is,therefore, a hardship.

This act provide healthprotection and incomemaintenance in a series of often-experienced contingencies likesickness, maternity, disablementand death due to employmentinjury & ameliorate economicanxiety and to be a friend in needand distress.


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COVERAGE OF THE ACT

The ESI Act 1948 applies to-

Factories in the manufacturing process and

employing 10 or more persons for wages, irrespectiveof aid of power.

Employees of covered units and establishmentsdrawing wages up to Rs 15,000/- per month

(excluding remuneration for overtime) come underthe purview of the ESI Act, 1948.


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Coverage of the act(Contd.)

The act has been extended to the following class ofestablishments:

Shops

Hotels & Restaurants

Club, Cinemas, including preview theaters Road Motor Transport Undertakings

Newspaper establishments


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ESI Act can be made applicable to shops also.

However, since Government has to provide forhospitals and medical facilities, the Act can be madeapplicable to different parts of state at differentdates.

Thus, if a factory is at a place where ESIC is unableto provide medical facilities, ESI Act may not bemade applicable to the area


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Government can exempt a factory or establishment

or persons or class of persons from provisions of ESIAct, if the employees are getting better medicalfacilities (e.g. if Government is convinced that thefactory itself is providing very good medical facilities

e.g. like TATA STEEL).


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If head office is covered under ESIC, branch offices

are also covered, when branch and principal officeare inter-dependent and there is unity ofrelationship.

It was held that employees working outside the

premises of factory can be covered under ESIC, ifthere is master-servant relationship.


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DEFINITIONS

DEPENDANT

A widow, a legitimate or adopted son below the ageof 25 years and an unmarried legitimate or adopteddaughter. (The age limit of the dependants has been

increased from 18 to 25).Source: The EmployeesState Insurance (Amendment) Act, 2010,Circularno. 40/2010

EMPLOYEEA person employed for wages for connection of work

of a factory/establishment, irrespective of the premisesof work & drawing less than Rs 15000/- p.m.


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DEFINITIONS

FACTORY

Any premises which employ 10 or more personsirrespective of the fact whether the manufacturingprocess is being carried out with or without the aid

of the power. Mines are not counted as factory.

Once a factory/establishment is covered, it continuesto be covered even if number of employees reduce[Section 1(6)]

Source: The Employees State Insurance(Amendment) Act, 2010,Circular no. 40/2010


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DEFINITIONS

WAGES- All remuneration paid or

payable, in cash to anemployee, if the terms of

contract of employmentare fulfilled.


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DEEMED AS WAGES NOT DEEMED AS WAGES

Basic pay Dearness allowance Hose rent allowance City compensatory allowance Overtime wages Payment for rest day Production incentive Bonus other than statutory bonus Night shift allowance Heat, gas & dust allowance Payment for un-substituted allowance Meal/food allowance Suspension allowance Lay-off compensation Children education allowance

Contribution paid by the employer toany pension/provident fund or underESI Act.

Sum paid to defray special expensesentailed by the nature ofemployment.

Gratuity payable on discharge. Pay in lieu of notice of compensation. Benefits paid under the ESI Act.

Encashment of leave. Payment of inam which does notform part of employment.

Washing allowance for livery. Conveyance amount towards for

reimbursement for duty relatedjourney.


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QUESTION

Who administers theEmployees' StateInsurance Act?


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ANSWER

The ESI Act is administered by a corporate body called the Employees' StateInsurance Corporation (ESIC),

It has members representing Employees, Employers, the Central Government,State Governments, Medical Profession and the Parliament.

The Director General is the Chief Executive Officer of the Corporation and is alsoan ex-officio member of the Corporation.

The other bodies at the national level are the Standing Committee (a

representative body of the Corporation) and the Medical Benefit Council, aspecialized body which advises the Corporation on administration of MedicalBenefit.

At the Regional and Local levels, the Regional Boards and Local Committeeshave been constituted.

It discharges its obligations and duties through a net-work of Regional Officesand Branch Offices, Hospitals and Dispensaries spread over the entire country.

Source: The Employees State Insurance Act, 1948,SEC-3


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The designation of Inspector has been re-designatedas Social Security Officer to enroll them asfacilitator of the Scheme rather than to act as mereinspectors.

Source: The Employees State Insurance(Amendment) Act, 2010,Circular no. 40/2010


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QUESTION

Where do Employees'State InsuranceFunds come from?


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ANSWER

The Employees' State Insurance Funds are primarily builtout of employers contribution and employeescontribution payable monthly as a fixed percentage of

wages.Contribution-

Total contribution-6%Employers contribution-4.75%Employees contribution-1.75%N.B.- Employees receiving a daily average wage up-to Rs

70/- are exempted from payment of contribution.Employees will, however, contribute their own share inrespect of these employees.


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QUESTION

How are theContributions for ESI

Act collected?


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ANSWER

1)Contribution is deposited by the Employer incash/cheque at the designated branches of somenationalized banks.

2)Responsibility for payment of all contributions isthat of the employer with a right to deduct theEmployees' share of contributions from employees'

wages relating to the period in respect of which the

Contribution is payable.


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Contribution Periods-Workers, covered under the ESI Act, are required to paycontribution towards' the scheme on a monthly basis.

6-month time span 1st April to 30th September & 1st October to 31st March. Thus, in a financial year there are 2 contribution periods of

six months duration.

Benefit Periods-

Cash benefits under the scheme are generally linked withcontributions paid. Starts 3 months after the closure of a contribution period.


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There are two contribution periods each of six monthsduration and two corresponding benefit periods also ofsix months duration as under

Contribution period Corresponding

Benefit period

1st April to 30th Sept. 1st January of the following

year to 30th June

1st Oct. to 31st March 1st July to 31st December of

the year following


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Procedure of registration of employees underthe Scheme1)Entry into employment in a covered factory orestablishment

2)Employee is required to fill in a Declaration Form

3)Employee is then allotted a Registration Number,which distinguishes & identifies the employees.


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PLEASE SEESECTION 51-E

ATTENTION!


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A new section 51-E has been added-

EMPLOYEES STATE INSURANCE ACT, 1948

51-E. NOTIONAL EXTENSION OF PREMISES-

Accident occurring to an insured person whilecommuting from his residence to the place ofemployment and vice-a-versa shall be deemed to havearisen out of and in the course of employment for the

purpose of benefit under the Act. Source: The Employees State Insurance

(Amendment) Act, 2010,Circular no. 40/2010


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BENEFITS

BENEFITS- These are the payment (in kind or cash) made by theappropriate govt. to the insured person.

Types of benefits- Medical benefit Sickness benefit

Maternity benefit Disablement benefit Dependents benefit Funeral expenses Some other need-based benefits-

Rehabilitation allowances Vocational rehabilitation Old age medicine Medical bonus

ELIGIBILITY NATURE RATE(Rs) PERIOD TO WHOM


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( )

MEDICAL Situational KIND --------- Situational SELF & FAMILY

MATERNITY Prescribed bythe central govt.

KIND Average dailywage (roughly)

84 days SELF

SICKNESS Newly insuredemployee-9

month,Others-78days(min) ofcorrespondingcontributionperiod

CASH 60%(roughly)of average daily

wage

91 daysduring two

consecutivebenefitperiods

SELF

DISABLEMENT Prescribed by

the central govt.

CASH --------- Depends

whethertemporary orpermanent

SELF

DEPENDENT Prescribed bythe central govt.

CASH --------- --------- DEPENDENT

FUNERAL Death of insuredemployee CASH Rs5,000(max) One-timeaffair DEPENDENT


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Medical benefit Insured worker and the members of his family are eligible for medical care from the

very 1st day of the worker coming under ESI Scheme. It includes primary medical care, diagnostic services, specialist consultations and

indoor medical care. Eligibility of insured worker for medical benefit- From the very 1st day of employment------------------------eligible for 3 months More than 3 months of employment------------------------eligible till the start of

benefit period More than 78 days in contribution period-------------------eligible till end of the

benefit period.

A worker is also eligible for extended sickness benefit when he/she is suffering from

anyone of the long term 34 diseases listed in the Act. This is admissible after theworker has been under ESI coverage for at least 2 years during which he/she shouldhave contributed at least for 156 days. When these conditions are satisfied medical

benefit is admissible for a maximum period of 730 days for the worker and his/herfamily.


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Maternity BenefitClaimed after confinement or for miscarriage, by obtaining a certificate ofconfinement or miscarriage from the Insurance Medical Officer/insurance MedicalPractitioner, and submit it to her Branch Office personally or by post along with aclaim for Maternity Benefit. The claim form also contains a declaration ofabstention from work.

If Benefit is desired before confinement, a Notice and Certificate of Pregnancy and aCertificate of Expected Confinement obtained from the Insurance medical Officer/Insurance Medical Practitioner are also required to be submitted.

For claiming Benefit in the event of death of an insured woman leaving behind achild, her nominee and if there is no such nominee, her legal representative shouldsubmit personally or by post to the Branch Office of the deceased insured woman,claim for the Benefit together with a certificate of death of the insured woman.

An insured woman claiming Maternity Benefit for Sickness arising out of pregnancy,confinement, premature birth of child or miscarriage should submit her claim in themanner as for sickness benefit.


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Sickness Benefit-Sickness signifies a state of health necessitating medical treatment and attendance andabstention from work on medical grounds. Financial support extended-by the Corporation issuch a contingency is called Sickness Benefit.

Contributions should have been paid in respect of an insured person in the correspondingcontribution period for not less than 78 days.

The daily rate of Sickness Benefit during any benefit period is the "standard benefit rate" . Thisrate corresponds to the average daily wage of an insured person during the corresponding

contribution period and is roughly half of the daily wage rate. Benefit is paid for Sundays also. Sickness benefit is payable' for a maximum period of 91 days in any two consecutive benefit

periods . Extended Sickness Benefit is a Cash Benefit paid for prolonged illness due to any of the 34

specified diseases as mentioned below. 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 ESB is payable up to a further period

of 124/309 days that can be extended up to 2 years in special circumstances. Enhanced Sickness Benefit is cash benefit for the insured persons undergoing sterilization

operation of vasectomy/ tubectomy for family planning.


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Disablement benefit-Disablement is a condition resulting from employment Injury which may

be :-(a) temporary(b) permanent (partial)(c) permanent (total)

Employment injury means a personal injury caused to an employee by anaccident or occupational disease arising out of and in course of hisemployment in a factory or establishment covered under the Employees'State Insurance Act.

Also, an accident arising in the course of employment is presumed also tohave arisen out of his employment if there is no evidence to the contrary.

An accident happening while traveling in a transport provided by the

employer or while meeting an emergency is accepted subject to certainconditions, to have arisen in the course of and out of employment. Injuries suffered while under the influence of drink sand drugs take away

the right to the employee to this benefit.


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It also covers occupational disease.

Occupational Diseases are such diseases as aresusceptible of being traced back to their occupational

origin.


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Temporary Disablement Benefit is paid periodically inarrears as the evidence of incapacity (medical certificate)is produced.

Permanent total disablement and permanent partial

disablement benefits are paid in the form of pensions.Current employment for wages or engagement in anygainful activities is no bar to payment of permanentdisablement benefits.

An insured person suffering from an occupation diseaseis also entitled to full medical care.


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The daily benefit rate for permanent total disablementand temporary disablement is 40% more than theStandard Sickness Benefit rate and is roughly equivalentto about '10%of the wage rate.

For permanent partial disablement, the rate of benefit isproportionate to the percentage of loss of earningcapacity.

The benefit is paid for Sundays also.

Temporary Disablement Benefit is paid as long asdisablement lasts.

The permanent disablement benefit is paid for the life-time of the beneficiary


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No way of adequately compensating a permanently disabled employee.

Yet some method of determining whether an employment injury hasresulted in permanent disablement and of assessing the extent ofpermanent damage caused by that employment injury has to beadopted for the purpose of determining the scale of compensation for

the loss of earnings. This is done by evaluating loss of earning capacity with reference to

general disability for all work.

The evaluation is done by a Medical Board. payment for permanentloss of earning capacity as recommended by the Medical Board is made,

subject to adjustment later.

Where the assessment of loss of earning capacity by the Medical Boardis not of a final character, the beneficiary is required to appear againbefore the Medical Board for a review of the assessment.


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Dependents' BenefitIt is a monthly pension payable to the eligible dependents ofan insured person who dies as a result of an EmploymentInjury or occupational disease.

Dependent- A widow, a legitimate or adopted son, below the

age of 25 years and an unmarried legitimate or adopteddaughter. Benefit for each Beneficiary

The total divisible benefit is equivalent to the temporarydisablement 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.


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How to claim 'Dependants' Benefit'?To establish title to Dependant' Benefit, the following documentsshould be submitted at the Branch Office:-(a) Claim in the appropriate form;(b) Evidence of death being due to employment injury;(c) Proof of relationship to the deceased supporting eligibility of the

claimant as a "dependant";(d) Evidence of age of the claimant(s),(e) Certificate of infirmity from Medical Referee or any otherprescribed authority in case of legitimate infirm son or legitimate oradopted unmarried infirm daughter.

After the claim to Dependant's Benefit has been admitted, the

beneficiary should submit at six-monthly intervals (with the claimfor June and December),a declaration that he/she is alive and hasnot married/remarried, attained the prescribed age & continues to

be infirm, as the case may be duly attested by the prescribedauthority.


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Funeral expensesThis component consists of a lump sum payment towardthe expenditure on the funeral of the deceased insuredperson.

The lump sum amount of this benefit is equal to the

actual expenditure, not exceeding Rs. 5000/- towardsthe funeral of the deceased insured person.

No contribution condition is required for this Benefit.The only condition for admissibility of this Benefit is thatthe deceased person should have been an insured person

at the time of his death. The expenses are payable to the eldest surviving member

of the family of the deceased insured person.


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Physical rehabilitationThe Corporation at its cost arranges for the

vocational rehabilitation of disabled insured personsprovided the disability has been assessed at above40% and the beneficiary is not over 45 years of age.The training is provided at vocational rehabilitationcenters run by the Govt. of India etc. The fee,travelling expenses etc are borne by the Corporation.


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Vocational rehabilitationThe Corporation at its cost arranges for the

vocational rehabilitation of disabled insured personsprovided the disability has been assessed at above 40percent and the beneficiary is not over 45 years ofage.

The training is provided at vocational rehabilitation

centers run by the Govt. of India etc. The fee,travelling expenses etc are borne by the Corporation.


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THANKYOU

Documents

Employee s State Insurance Act 1948