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Employees’ State Insurance Scheme

Employees’ State Insurance Scheme was inaugurated 25th February 1952 by the government of India. Employees’ is a public social security scheme which aims to provide health insurance funds to the working people in India.

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Employees’ State Insurance Scheme

Employees’ State Insurance Scheme was founded in Kanpur and Delhi simultaneously on 24th February 1952 by then Prime Minister of India Pandit Jawahar Lal Nehru. This scheme is a public social security scheme curated to provide health insurance funds to the working people of India. Employees’ State Insurance Scheme provides the member financial protection in case an unforeseen health-related event occurs. This scheme provides medical benefits, maternity benefits, disability benefits, unemployment allowance etc.

Employees’ State Insurance Scheme Eligibility Criteria

In a time where the industry was not completely developed, a lot of people of India were dependent on a variety of imported goods and services, India being the self-dependent country had started developing the working sector to ensure that the manufacturing and labor job opportunities remained in the country itself. To ensure that the workforce which was developing in India were financially from the health related eventualities that workers may be exposed to on a daily basis, the Parliament implemented the Employees’ State Insurance (ESI) Act, 1948 to provide social security to the workforce of India.

The Employees’ State Insurance Scheme was curated to help provide financial protection to the members from the health related issues that could occur anytime during the coverage period. The health related eventualities include temporary or permanent disability, serious illnesses, diseases contracted from the workplace, maternity, medical benefits, untimely demise due to health related issues etc. Employees State Insurance Scheme acts as a shield for workers, in case any of the above mentioned circumstances occurred.

Lets us learn more about Employees’ State Insurance Scheme

What is the Employees' State Insurance Act, 1948?

Employees’ State Insurance Act is a social security scheme designed to provide financial protection to the workforce of India such as employees and workers which are employed in the private or public sector. This act provides medical care and other financial benefits to the employees or workers who are employed in factories, public or private organisations or establishments etc. There are a significant number of ESI Hospitals, Clinics, Dispensaries, that provide medical care to the members of the ESI Act.

Eligibility Criteria for Employees’ State Insurance Scheme

To be able to avail the benefits of the Employees’ State Insurance Scheme a person should meet the eligibility criteria set by the committee. The Employees’ State Insurance Scheme shall be applicable to the following:

  • A person who is working in a non-seasonal factory which has more than 10 people employed. This eligibility criteria is applicable under the Section 2(12) of the Employees’ State Insurance Act.
  • From 1st January 2017, the wage limit of an employee was set to Rs. 21,000 which will enable the employee to be covered under the Employees’ State Insurance Scheme.

Features and Benefits of the Employees’ State Insurance Scheme

Not only does this scheme provide medical care, but this scheme also provides financial security to the member in times of financial crisis such as unemployment etc. There are several attractive features and benefits of the Employees’ State Insurance Scheme which are mentioned below:

1. Medical Care: Under the Employees’ State Insurance Scheme, medical expenses of the life insured shall be taken care of by providing affordable and reasonable health care facilities. The worker/employee shall be covered from the first day of their employment.

2. Disability Benefits: In case the employee/worker suffers temporary disability, the worker/employee shall be eligible for 90% of their monthly income until they recover. In case the employee/worker suffers permanent disability, they are eligible for 90% of their monthly income for the rest of their lives.

3. Maternity Benefits: Under this scheme, an employee/worker is provided financial support in case of child birth, unfortunate miscarriage or abortion. The employee can avail 100% of the average daily income for 26 weeks from the date of going into labour and 6 weeks in case of unfortunate miscarriage. 12 weeks of pay shall be provided in case of an abortion.

4. Sickness: Employees’ State Insurance Scheme ensures cash flow in the employee’s household in case he/she is sick and requires medical leaves. Under this scheme 70% of the average daily income/wage shall be provided to the beneficiary during medical leaves of the employee, the 70% of the daily wage can be availed for a maximum of 91 days. The employee can avail this in two consecutive periods.

5. Unemployment Allowance: Under this scheme, a monthly allowance for a period of 24 months shall be provided to the employee in case of invalidity because of non-employment injury or due to involuntary loss of employment.

6. Financial Dependents: In case of an unforeseen demise of the employee caused due to an injury at the place of employment, this scheme shall provide monthly payments which shall be equally divided amongst the surviving dependents of the employee.

7. Coverage: Under this scheme, the employee/worker shall be covered from the first day of their employment. This scheme includes the employee and their dependents.

Other benefits available to the employees under this scheme are as follows:

  • Funeral Costs
  • Confinement Costs
  • Old Age Medical Care
  • Vocational Rehabilitation
  • Physical Rehabilitation

Documents Required for Employees’ State Insurance Scheme Registration

Below mentioned is the list of documents required for the registration of Employees’ State Insurance Scheme:

  • Certificate of Registration of the company or establishment (in case of a private company)
  • License/Registration Certificate acquired under the Shops and Establishment Act or Factories Act
  • Articles and Memorandum of of Association of the Company
  • List of Employees along with their monthly compensation
  • Pan Card of the employees and the company
  • Cancelled Cheque of the Company
  • List of shareholders, partners and directors of the company

Employees’ State Insurance Scheme Registration Process

A person should follow the procedure mentioned below for registration of a company or establishment under this scheme:

Step 1- Visit the ESIC portal and login, on the new page click on ‘Sign Up’.

Step 2- Enter the company name, employer name, region, state, email ID and contact number. The email ID will be the username.

Step 3- Click on the check box to enroll the company, establishment of factory under a labour contract, workforce suppliers, security agencies etc.

Step 4- Click on submit, after the information has been submitted and email shall be sent login details and credentials. After signing up, visit the ESIC portal again to log in.

Step 5- Log into the portal and click on ‘New Employer Registration’. Choose the type of unit and click on submit.

Step 6- Enter the name of the unit, enter the postal address of the company, establishment or factory and enter the police station under whose jurisdiction the unit is. Enter if the building/premises is hired or owned, then click ‘Next.’

Step 7- Enter the nature/category of the business, provide PAN Card details etc. and click ‘Next’ to proceed.

Step 8- On the next page enter license details, date of the commencement of the company, establishment or factory etc. Select the constitution of ownership, owner details, click on ‘Save’ and proceed further by clicking ‘Next’.

Step 9- Enter the number of employees working and the number of employees with an income of less than Rs. 21,000. Enter the date when the first 10 employees were employed and then click on the ‘Employee Declaration Form’

Step 10- Select ‘Yes’ if the employee is already registered and ‘No’ in case the employee is not registered and click on ‘Next’.

Step 11- Enter personal details of the employee such as name, father’s name, address, date of birth, gender, marital status etc. Click on ‘Submit’.

Step 12- Select the ESI branch office and inspection division. Click on the checkbox to confirm the information provided is correct and click on ‘Submit’.

Step 13- Click on ‘Pay Initial Contribution’ to obtain a Challan Number for future references. Click on continue to make the payment.

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FAQ About Employees’ State Insurance Scheme

  • Is it compulsory for an employer to register under the ESI Scheme?

    Yes, it is compulsory for an employer to register under the ESI scheme in case they fall under the eligibility criteria of the scheme. The company, establishment or factory should be registered under the scheme within 15 days from the date of receipt of clearance of registration.

  • What is the salary limit under this scheme?

    Under this scheme, the employee’s monthly scheme should be within Rs. 21,000 to Rs. 25,000. 

  • What is the time limit to make payment for the contribution of ESI Scheme?

    The time limit to make payment for the contribution of ESI Scheme is 21 days from the last date of month.

  • What is the rate of interest charged for late payment of ESI Scheme?

    An interest of 12% shall be charged per annum for the late payment of ESI Scheme for each day of non-payment.

  • What types of establishments/organisations can apply for ESI Scheme?

    Hospitals, Restaurants, Shops, Cinemas/Theaters, Newspaper Establishments, Transport Establishments and Private Educational Institutions can avail the ESI Scheme.