The Employees State Insurance Act,1948

Introduction

• Social insurance of india• The Adakar plan- Workmen’s State Insurance

Bill, 1946• A social welfare legislation with the objective

of providing benefits to employees- sickness, maternity and employment injury.

• Act tries to attain socio-economic justice enshrined in DPSP under part IV of the constitution

Benefits of the Act

To Insured Person:• Sickness Benefit• Maternity Benefit• Disablement Benefit• Dependents Benefit• Medical Benefit• Funeral Expenses

• Different from Factories Act• Extensive regulations have been framed under

this act to identify the employees who would be entitled to the benefits.

• ESI Corporation

Applicability of the Act• Under Section 1(4), implementation of the scheme is

territorial• The act applies to all factories using power and employing

20 or more persons on wages• Provisions have also been extended to:o Smaller power using factories employing 10-19 personso Non-Power using factories employing 20 or more personso Shopso Hotels and Restaurantso Cinemas, including preview theatreso Newspaper Establishmentso Road motor undertaking employing 20 or more persons

• Does not apply to:

• Mine or railway shed• Specified seasonal factories

Some Definitions• Employee- under Section 2(9), to any person employed on

wages, in connection with the work of a factory to which this act applies.

• Remuneration excluding over time does not exceed Rs.6500 pm are covered

• No distinction between casual and temporary or between technical or non technical employees

• Employed by the principal employer or contractor on the factory premises or outside by the principal employer are all included in this act

• Includes Administrative staff and persons engaged in the raw materials or the distribution or the sale of the products

Wages

• Remuneration paid in cash, if the terms of the contract are fulfilled and includes any payment in any period of authorized leave, lockout or strike which is not illegal or lay off and includes other remuneration paid at intervals not exceeding two months.

• It does not include:• Contribution paid to the PF or Pension Fund• Travelling allownace or value of travelling concession• Sum paid to defray special expenses• Gratuity payable on discharge

Contributions

• Main source is one eighth share by State Govt towards the cost of medical care

• Employees contribution calculated individually for each employee at 1.75% of the wages paid/payable for every wage period.

• Employers contribution is calculated at the 4.75% of the total wages paid to all the employees covered under ESI Scheme.

• Employees whose avg daily wage is below Rs15 are exempted from payment of their contribution

• Contribution period and benefit period is fixed for the purpose of paying contributions

• Contribution benefit period from 1st April to 30th September, the corresponding period will be from 1st Oct to 31st March of the following year, the corresponding benefit period shall be from 1st july to 31st December.

• For newly employed person, first contribution period commences on the expiry of 9 months from the said sate.

Registration• Registration of a establishment with ESI is the

responsibility of the employer under Section 2-A of the act

• Within 15 days after the act becomes applicable the owner is liable to furnish to the appropriate regional office.

• Form 01• Forms for the registration of employees are the

declaration form and rerun of the declaration forms.

• The statutory registers to be maintained up to date are:

o Register of Employeeso Accident Book in which every accident to

employees during the course of employment is recorded

o Inspection Book• As and when required certain other forms

such as ESIC32, ESIC37, ESIC53, ESIC71, ESIC72, ESIC 86, ESIC105

Administration• The scheme is administered by a corporate body called ESIC• Comprises of- employees, employers, the parliament,

central and state governments and medical profession.• Responsible for- policy planning, decision making and

overseeing the functioning of the scheme through a standing committee drawn from main corporate body.

• Headed by- Union Minister of Labour as its Chairman• CEO is the DG who is the ex-officio member of the

corporation and its standing committee.• Responsible for- formulation of policy, overall supervision,

co-ordination and liaison with Central and State Govt.• ESIC has setup local offices all over the country for the

implementation of the scheme.

Benefits• Sickness and extended sickness benefit- • Standard benefit rate for 91 days in any two

consecutive benefit period.• Eligibility criteria• Extended sickness benefit for special long term

ailment like T.B, leprosy, mental disease• Benefit at a rate which is 40% higher than the

standard benefit rate, rounded to the next higher multiple of 5 paise for a period of 124/309 days.

• For Deserving cases duration may increase from 400 days to a maximum period of 2 years

Maternity Benefit• Only insured woman is entitled to this benefit• At double the standard benefit rate• Equal to full wages for a period of 12 weeks of which not

more than 6 weeks shall precede the expected date• Additional benefit in case of miscarriage.• In case of sickness arising out of miscarriage, pregnancy,

confinement and premature birth additional benefit is given for a period of one month

• Eligibility- 80 days in one or more preceding contribution periods of one year

Disablement Benefit

• Member suffering injury in the course of employment will receive free medical treatment and temporary disablement benefit in cash.

• It is 70% of the wages as long as temporary disablement lasts, provided it has lasted for not less than 3 days excluding the day of accident.

• In case of permanent disablement life pension at full rate that is 70% of his wages.

• Wages are paid on Sundays as well

Dependent’s Benefit• Timely help to the eligible dependents of an insured member

who dies as a result of an accident or an occupational disease arising out of in the course of employment.

• 40% pension rate more than the standard benefit rate i.e. 70% of wages will be paid periodically to the widow and children.

• Available to the widow as long as she lives or until she marries, to sons and daughters upto the age of 18 without any proof of education.

• If widow, child is not left then benefit is given to parents or grandparents but equivalent to 3/10ths of the full rate.

• 2 or more parents and grandparents the benefit is divided equally between them.

Funeral and Medical Benefit• 1968- funeral benefit• Amount not exceeding Rs.1500 is payable to the eldest

surviving member of the deceased insured person. Time period is 3 months from the death.

• Medical benefit consists of free medical attendance and treatment of insured persons and their families.

• Benefits is divided into 3 parts:o Restricted Medical Careo Expanded Medical Careo Full Medical Care

Restrictions• Receiving any benefits provided under this act, he is not

entitled to receive any similar benefit.• The insured person will not be entitled to receive for the

same period:o Both sickness and maternity benefitso Both sickness and disablement benefit for temporary

disablemento Both maternity and disablement benefit for temporary

disablement

• If a person is entitled to more than one benefits he has an option to select any one of them

Protection• The employer cannot dismiss, discharge or punish any

employee during the period that person is in receipt of sickness, maternity or disablement benefit.

• An employer can discharge or dismiss an employee on due notice if:

o He/she received temporary disablement and remained absent for 6 or more months continuously

o He/she is under medical treatment for sickness other than T.B or a disease arising out of pregnancy and has remained absent continuously for 6 months or more

o He/she is under medical treatment for T.B. or a malignant disease and has remained absent continuously for 18 months

Penalties and Damages• A person commits an offence after having been convicted by

court he will be punishable for every such subsequent offence with imprisonment for a term which may extend upto 2000rs or both

• Subsequent offence is for failure to pay any contribution then person is liable for a term of imprisonment which may extend to 1 year and not less than 3 months and fine of Rs4000

Miscellaneous

• Cash benefits payable under the ESIC are not liable to attachment or sale in execution of any court decree or order.

• Any dispute arises under this Act, the matter is decided by the Employee Insurance Court and not by Civil Court

• An appeal will lie in the High Court from an order of the Employees Insurance Court, it it involves substancial question of law.

• Period of limitation for appeal is 60 days.