ESI Act,1948

 On 19th April,1948 , the ESI Act was introduced by the
Government as a scheme of social insurance for the industrial
workers. The words "except the State of Jammu and Kashmir"
omitted by Act No. 51 of 1970, w.e.f. 1st September, 1971.
The Scheme, thereafter was first implemented at Kanpur and
Delhi on 24th February 1952. The Act further absolved the
employers of their obligations under the Maternity Benefit Act,
1961 and Workmen's Compensation Act 1923. The benefit
provided to the employees under the Act are also in conformity
with ILO conventions.

To provide for certain benefits to employees in
case of sickness, maternity and injury during
employment and to make provision for certain
other matters in relation thereto.

 “ Appropriate Government ” means, in respect of establishments under the control
of the Central Government or 2 [a railway administration] or a major port or a mine or oil-
field, the Central Government, and in all other cases, the 3 [State] Government .
“ Confinement ” means labour resulting in the issue of a living child, or labour after 26
weeks of pregnancy resulting in the issue of a child whether alive or dead .
“ Contribution ” means the sum of money payable to the Corporation by the principal
employer in respect of an employee and includes any amount payable by or on behalf of
the employee in accordance with the provisions of this Act .
“ Corporation ” means the Employees’ State Insurance Corporation set up under this
Act.
“ Exempted employee ” means an employee who is not liable under this Act to pay
the employee’s contribution .
“ Insured person ” means a person who is or was an employee in respect of whom
contributions are or were payable under this Act and who is, by reason thereof, entitled
to any of the benefits provided by this Act.
“ Sickness ” means a condition which requires medical treatment and attendance and
necessitates abstention from work on medical grounds .

The Act is applicable to all other factories other than the seasonal
factories.
The appropriate government may extend the provisions of the Act or
any of them to any other industrial, commercial or agricultural
establishment.
The existing wage limit for coverage under Act is Rs 21000 /- per
month w.e.f 1st Jan,2017. Earlier it was Rs.15000/- per month.

The State Govts. have extended the provisions to : shops, hotels,
restaurants, cinemas including preview theatres, road-motor
transport undertakings and newspaper establishments employing 20
or more coverable employees.
Educational Institutions employing 20 or more persons in Rajasthan,
Bihar, Pondicherry,Jammu & Kashmir, Uttarakhand, Chattisgarh,
West Bengal, Jharkhand, Kerala, UttarPradesh, Andhra Pradesh,
Assam, Punjab, Tamilnadu.
 Private Medical Institutions in the State of West Bengal, Rajasthan,
Bihar, Kerala, Himachal Pradesh, Uttarakhand, Andhra Pradesh,
Punjab, Assam, UT Chandigarh, Jharkhand and Orissa.

Seasonal factories engaged exclusively in any of the activities like:
cotton ginning, cotton or jute pressing, decoration of ground nuts,
manufacturing coffee, indigo,lac, rubber, sugar, or tea or any
manufacturing process incidental to or connected with any of the afore
said activities, and including factories engaged for a period not
exceeding seven months in a year in blending, packing or repackaging
tea or coffee, or in such other processes as may be specified by the
central govt.
Mines.
Railway running sheds.
Govt. factories or establishments and Indian naval, military, or air
force.
Other Govt. notified exempted establishments.

The following persons are not to be counted
a) A proprietor or a partner whether drawing
salary or not;
b) A contractor lending the services of his
employee;
c) An apprentice engaged under the Apprentice
Act, 1961;
d) Persons employed on contract for service,
e.g. legal, technical, tax consultants etc;

To Promote and measure for health and welfare of
INSURED EMPLOYEES (IE).
Intervene for the rehabilitation and reemployment
for disabled / injured.
To appoint inspectors for purposed of the act.
To determine the amount of contribution and
relevant verification.

Subject to the general superintendence and
control of the corporation, the standing committee
shall administer the affairs of the corporation and
may exercise any of the powers and perform any of
the functions of the corporation.
 Shall submit for the consideration and decision of
the corporation all such cases and matters as may
be specified in the regulations made in this behalf.
In its discretion, may submit any other case or
matter for the decision of the corporation.

 Advise [the corporation and the standing committee]
on matters relating to the administration of medical
benefit, the certification for purposes of the grant of
benefits and other connected matters.
Have such powers and duties of investigation as may
be prescribed in relation to complaints against medical
practitioners in connection with medical treatment and
attendance.
 Perform such other duties in connection with medical
treatment and attendance as may be specified in the
regulations.

Duties -
Inquiring into the correctness in any return of contribution.
Ascertaining Provision of the Act has been complied.
Other authorized / specified duties by the corporation.
Powers -
To collect require and relevant information of employer / contractor or
both.
To enter org / contractor premises at reasonable time and examined
relevant account books and relevant documents, payment of wages etc.
To examine employer, contractor, his agent / servant or IE in factory /
office
To make copies of extracts from any registrar, account books and other
books of maintenance of org.

The employer is required to contribute at the rate of 4.75% of the wages paid/
payable in respect of every wage period. Out of which 7/8th done by Central
Govt. and 1/8th done by State Govt.
The employees are also required to contribute at the rate of 1.75% of their
wages except when the “average daily wages in a wage period” are equal to or
less than Rs.137.
. For newly implemented areas, the contribution rate is 1% of wages of
Employee and 3% payable by Employers for first 24 months(w.e.f. 06.10.2016).
The employer should get his factory or establishments registered with the
E.S.I. Corporation within 15 days after the Act becoming applicable to it, and
obtain the employer’s Code Number. The regional officer will allot a code
number to the employer, which must be quoted in all documents and
correspondence.
It is the principle employer’s responsibility to deposit his own as well as
employee’s contribution in respect of all employees including the contract labor,
into the E.S.I. Account. Non-availability of funds cannot be a ground for non-
payment of contributions under the act. There is no provision to waive the
contribution, damages and interest.

In respect of an employee employed on any other basis,
(The amount of wages earned during the complete wages period
in the contribution period/number of days in full or part for which
he has worked for wages in that wage period)
Provided that where an employee receives wages without working on
any day during such wage period, he shall be deemed to have worked
for 26,13, 6 or 1 days or day if the wage period, be a month, a
fortnight, a week or a day respectively.

The following wage components(gross salary) are taken into account
a) Basic Pay,/Wages/Salary;
b) D.A/ HRA/ CCA/ Overtime/ officiating allowance/ Night shift allowance/
efficiency allowance/ Heat, Gas, Dust allowance/ Education allowance/
Food & Tea allowance/ conveyance allowance;
c) Wages/ salary/ pay for weekly off and public holidays;
d) Commission paid to sales staff;
e) Subsistence allowance paid to an employee during the period of
suspension;
f) Attendance Bonus or incentive or exgratia in lieu of Attendance Bonus
or production incentive;
g) Regular Honorarium or salary or remuneration paid to a Director;
h) Collection Bhatta paid to running staff.
i) Actual payments made towards leave salary, lay off compensation, or
wages for strike period.
j) Any other remuneration paid or payable in cash to an employee if the
terms of contract of employment, expressed or implied were fulfilled.

Consider the salary of an employee is Rs 9000 per month then the
ESI calculation for the employee would be calculated as:
ESI = 9000*(1.75/100) = 158
Note: Employees contribution is 1.75%
The ESI calculation for the employer’s contribution would be
calculated as:
9000*(4.75/100) = 428
Note: Employer’s contribution is 4.75%
In case the salary goes above Rs 21,000 per month during the
contribution period, the ESI would be calculated on the higher salary.
For example, if the salary of an employee is raised to Rs 21,000 per
month during the ESI contribution period, then the ESI would be
calculated on Rs 23,000 instead of Rs 21,000. But once the
contribution period is over he/she will not be eligible for benefits under
ESI Act,1948.

Employers covered under the Act, are required to Pay the contribution
towards the scheme on a Monthly basis. There are two contribution
periods each of Six months and two corresponding benefit periods also of
Six months duration as under.
Contribution Period(Fiscal Year) Benefit Period(Calendar Year)
1st April to 30th Sep 1st Jan to 30th June(of the
following year)
1st Oct to 31st March(of the
following year)
1st July to 31st Dec

Case: If an employee has joined on 19th June in a factory
and met with an accident on 15th December, will he be
covered under ESI,1948?
Ans- No.As the benefit Period starts from 1st Jan he wont be
covered as he is a new employee to the factory. Had he been
completed 9 months or more he would be benefited and
insured under the Act.

The purpose of the Employee State Insurance Act is to
provide benefits as detailed in the Act particularly in section
46, to the insured persons or their dependants.
Medical benefit
Sickness benefit
Maternity benefit
Disablement benefit
Dependants benefit
Funeral expenses
Others 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 Centers & Super Speciality.
Super-Speciality treatment such as:- Open Heart Surgery, Neuron
Surgery, Bone Marrow Transplant, Kidney Transplant or specialized
investigations like CAT scan, MRI, Angiography etc.
Eligibility for MB:- An employee who is covered under the Scheme
for the first time is eligible for medical care for a period of 3 months. If
employee contributes at least for 78 days in a contribution period the
eligibility is there up to the end of the corresponding benefit period.
Medical care is also provided to retired and permanently disabled
insured persons and their spouses on payment of a token annual
premium of Rs.120/-.

Sickness Benefits represents periodical cash payments made to an IP
during the period of certified sickness occurring in a benefit period when IP
requires medical treatment and attendance with abstention from work on
medical grounds.
Eligibility for SB:- Minimum 78 days contribution in one contribution period.
The daily rate of Sickness Benefit is 70% of the daily wages.
Max. Duration:- Maximum period of 91 days in any two consecutive benefit
periods.
Extended Sickness Benefit: Extended Sickness Benefit is a Cash Benefit
paid for prolonged illness due to any of the 34 specified long term diseases.

Eligibility for Extended SB:- Continuous employment for a period of 2
years and should have contributed for at least 156 days in 4 preceding
contribution periods. The daily rate of Extended Sickness Benefit at an
enhanced rate of 80% of wages.
Maximum Duration of ESB:- Including 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 on recommendation
of competent authority.
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.

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 mid wife.
Eligibility for MB:- The contribution condition is the same as for Sickness
Benefit.
The daily benefit rate is double the Sickness Benefit rate and is thus roughly
equivalent to the full wages subject to contribution for 70 days in the preceding 2
Contribution Periods.
The Benefit is paid as follows:-
(a) For Child Delivery:- For a total period of 12 weeks beginning not more than
6 weeks before the expected date of child birth. Now extended to 26 weeks w.e.f
1st April,2017, which is extendable by further one month on medical advice.
(b) For Miscarriage:- For a period of 6 weeks following the date of miscarriage.
(c) For Sickness arising out of pregnancy, confinement, premature birth of child
or miscarriage:- For an additional period of up to 04 weeks.

In the event of the death of the Insured Woman during confinement
leaving behind a child, Maternity Benefit is payable to her nominee on
production of Form 24 (B).
Medical Bonus:- Medical Bonus is lump sum payment made to an
insured woman or the wife of an insured person in case she does not
avail medical facility from an ESI hospital at the time of delivery. The
amount of Bonus is Rs. 2500/-.

Disablement Benefit It is payable to an employee who is injured in the course
of his employment and is permanently or temporarily disabled or contacts any
occupational disease.
 Temporary disablement benefit (TDB): From day one of entering insurable
employment & irrespective of having paid any contribution in case of employment
injury. Temporary Disablement Benefit at the rate of 90% of wage is payable so
long as disability continues. A person who sustains temporary disablement for not
less than 3days(excluding the day of accident) shall be entitled to periodical
payment as may be prescribed by the central govt. The benefit of temporary
disablement is, however, not payable for any day on which the employee works,
remains on lease, holiday or strike in respect of which he receives wages.
Permanent disablement benefit (PDB) : The benefit is paid at the rate of 90%
of wage in the form of monthly payment depending upon the extent of loss of
earning capacity as certified by a Medical Board . The PDB rate is calculated as
percentage of loss of earning capacity as assessed by the Medical Board/MAT/EI
Court in relation to TDB.

Dependant Benefit paid at the rate of 90% of wage in the form of monthly
payment to the dependants of a deceased Insured person in cases
where death occurs due to employment injury or occupational hazards.
Eligible Members:
A widow can receive this benefit on monthly basis for life or till her Re-
Marriage.
A son or daughter can receive this benefit till 25 years of age.
Other dependants like parents including a widowed mother etc. can
also receive this benefit under certain conditions.
The first installment is payable within a maximum of three months
following the death of an insured person and therefore, on a regular
monthly basis.

Funeral expenses are in the nature of a lump sum payment
of Rs. 10000/- (revised from Rs.5000/- w.e.f:- April 2011)
made to defray the expenditure on the funeral of 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.

Confinement Expenses : An Insured Women or an I.P.in respect of his wife
in case confinement occurs at a place where necessary medical facilities under
ESI Scheme are not available.
Vocational Rehabilitation :To permanently disabled Insured Person 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.
Rajiv Gandhi Shramik Kalyan Yojana : This scheme of Unemployment
allowance was introduced w.e.f. 01-04-2005. An Insured Person who become
unemployed after being insured 3 or more years, due to closure of
factory/establishment, retrenchment or permanent invalidity are entitled to :-
Unemployment Allowance equal to 50% of wage for a maximum period of up
to 2Years. Medical care for self and family from ESI Hospitals/Dispensaries
during the period IP receives unemployment allowance.
Vocational Training provided for upgrading skills - Expenditure on fee/travelling
allowance borne by ESIC.

Benefit Contribution duration Benefit Amount
Medical Benefit 78 days 3 month medical care
Sickness Benefit 78 days 70% of Wages
Maternity Benefit 70 days Double the sickness
benefit+Rs. 2500 bonus
per month
Disablement Not required 90% of wages
depending on loss in
earning capacity
Extended Sickness
Benefit
156 days 80% of Wages

The Factory / establishment registered with in 15 days after the Act becomes
applicable. Submit Form 01 to the Regional office for this purpose. Obtain
Employer’s code No. for use in all ESIC Forms / documents and
correspondence with the offices of the ESI Corporation.
Fill the Declaration Forms in respect of all coverable employees and submit
the same to the Regional Office/ Local Office of the corporation well before the
‘Appointed Day’ and obtain insurance Numbers from the concerned Local
Office/ Regional Office. In respect of newly appointed employees, fill up the
declaration form soon after appointment of such employees and submit the
same to the Local Office Concerned.
Pending receipt of identity cards/ identity certificate and may issue “certificate
of employment” in Form 86 to the covered employee(s) enabling them to avail
cash/medical Benefits
Pay ESI contribution (Employee's Share @4.75% and the Employer’s share
@ 1.75% of the wages) with in 21 days of the month following, in which the
wages fall due.

Maintain an Accident Book as prescribed under the
Factory Act / ESI Act.
Submit an Accident Report to the Local Office / ESI
Dispensary concerned immediately in respect of
accidents that could result in death or disablement and
within 24 hours of its occurrence otherwise. Minor
accidents which do not cause absence from work need
not be reported.
Grant leave to insured employees on the basis of
sickness certificates issued by any authorized ESI
doctor.

Right to receive Payment of any benefit under the Act that
shall not be “Transferable or Assignable”.
Cash Benefits payable under the Act are not liable to
attachment or sale in execution of any decree or order of any
court.
Employer shall not dismiss, discharge or reduce the wages
or otherwise punish a covered employee during the period he
/ she is in receipt of Sickness Benefit or Maternity Benefit etc.
By reason of his liability to pay his share of contribution
under the ESI Act, no employer shall directly or indirectly
reduce the wages of a covered employee.
Right to register their grievances / complaints at any level
for immediate Redressal & Judgment.
Right to approach EI Court against any action/ decision of
the medical Board etc.

Punishment for false statement:- In this case any false statement or
false representation, shall be punishable with imprisonment up to
Rs.2000 or with both
Punishment for failure to pay contributions:- If any person fails to
pay any contribution which under to this act he is liable to pay, he shall
be punishable with imprisonment up to 3 years.
Punishment for other contravention:- In contraventions like
dismisses, discharges, reduces or otherwise punishes an employee,
shall be punishable with imprisonment up to 1year or with fine up to
Rs.4000 or with both.
Power to recover damages:- If employer fails to pay the amount of
contribution then corporation may recover from the employer by way of
penalty.
Power of court to make orders:- If court makes order for employer- if
employer is not able to make this order within period then employer shall
be punishable with imprisonment in respect thereof U/S.85 and shall also
be liable to pay fine up to Rs.1000 for everyday.

Under Section 39(5)(a) of the ESI act, read with Regulation 31(A) of the
ESI (General) Regulations 1950, the employer is liable to pay simple
interest @ 15% per annum in respect of each day of default or delay in
payment contributions. In addition, under the Provision of Regulation 31-C
of ESI (General) Regulations, 1950, read with section 85 (B)(i) of the ESI
Act, the Corporation is empowered to recover damage as under:
Period of delay in Rate of Damages
payment of Contribution on the amount due
i)Up to less than 2 months 5%
ii)2 months and above but less than 4 months 10%
iii)4 months and above but less than 6 months 15%
iv)6 months and above 25%

THE EMPLOYEES’ STATE INSURANCE (CENTRAL)
RULES, 1950
THE EMPLOYEES’ STATE INSURANCE (GENERAL)
REGULATIONS, 1950
EMPLOYEES' STATE INSURANCECORPORATION
(GENERAL PROVIDENT FUND) RULES, 1995
THE MAHARSHTRA EMPLOYEES’ STATE
INSURANCE(MEDICAL BENEFIT) RULES,1954
THE MAHARSHTRA EMPLOYEES’ INSURANCE
COURT RULES,1959

Is the Act applicable to Kitchen of Cricket Club of India?
Ans: Yes. The Kitchen is a factory under section 2(12) of the Act. The
activities in the kitchen area has a direct connection with the activities
carried on in the rest of the club. As such, the Act, which is made
applicable to all factories is made applicable to the Club.
CCI vs ESIC,1994

Is the Act applicable to employees working in the Head Office
or Branch office of Factories covered by the Act?
Ans: Yes if such employees are doing work connected with the
administration of the factories.
Associated Cement Cos Ltd vs The Regional Director, ESIC
Bombay,1981

 The Employees’ State Insurance
Act,1948 Labour Law Agency, Mumbai
http://www.esic.nic.in/

ESI Act,1948

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