Employees’ State Insurance (ESI) Scheme is a social insurance program designed to protect employees in India from various employment-related risks such as maternity, sickness, disablement, and death due to employment injury. The scheme provides financial assistance and medical care to insured employees and their families. In this comprehensive guide, we will explore the registration process, procedure, and benefits of the ESI scheme in detail.
The Employees’ State Insurance (ESI) Scheme is a social insurance program that aims to provide financial and medical benefits to employees and their families in times of need. The scheme is embodied to protect employees from various risks associated with employment, such as maternity, sickness, disablement, and death due to employment injury. It ensures the provision of reasonably good medical care to workers and their dependents.
The Employees’ State Insurance Corporation (ESIC) is an autonomous corporation established under the ESI Act. It operates under the supervision of the Ministry of Labour and Employment, Government of India. As a legal entity, the ESIC has the authority to raise and discharge loans with regulatory approval. It can also acquire movable and immovable property in its name, and all income derived from its operations vests with the corporation itself.
The ESIC can establish hospitals independently or in collaboration with state governments or private hospitals. However, the majority of hospitals and dispensaries are managed by the state government. The ESIC plays a crucial role in implementing and administering the ESI scheme across the country.
The ESI Act applies to various establishments and organizations, including:
It is important to note that the ESI Act also applies to individuals drawing a monthly wage up to ₹21,000 (₹25,000 in the case of a person with a disability). However, the number of employees required for coverage may vary in certain states like Maharashtra and Chandigarh, where it is still 20.
The ESI scheme operates on a contributions-based system, ensuring its self-financing from these contributions. Both the employer and the employee contribute funds at a rate determined by the government. The contribution is calculated as a fixed percentage of the wages paid.
Currently, the contribution rates are 1% of wages for employees and 4% of wages for employers. For newly established setups, the contribution rates for the first 24 months are 1% for employees and 3% for employers. Employers are also required to contribute on behalf of employees whose daily wage is below ₹137.
The employer is liable to deduct the employee's contribution and deposit it, along with their own contribution, with the ESIC within 15 days from the end of the month in which the contribution falls due. Employers can use either online or offline modes, through authorized banks, to deposit the contributions.
Employee State Insurance (ESI) and medical insurance are two different options that individuals can choose for employee benefits. While ESI is a life insurance scheme that provides coverage to employees earning up to ₹21,000 per month, medical insurance covers a wider range of medical expenses.
ESI functions as a life insurance policy, wherein the nominee receives a cover amount in case of any mishap to the policyholder. Treatment under ESI can only be availed at ESI empanelled hospitals. On the other hand, medical insurance policies offer greater flexibility and coverage. Individuals can get admitted to any network hospital affiliated with the insurance company and have their medical expenses covered, regardless of income restrictions.
ESI is recommended as a life insurance policy, while medical insurance provides comprehensive coverage for medical expenses. It is advisable to have both types of insurance to enjoy their respective benefits and avail tax benefits.
The ESI scheme offers several benefits for both employers and employees. Let's take a closer look at these benefits:
The registration process for the ESI scheme involves two steps: registration of the employer and registration of the employee. Let's understand these steps in detail:
The ESI scheme provides several social security benefits to insured employees and their families. These benefits include:
The ESIC code is a 17-digit unique identification code assigned to companies and establishments. Each digit in the code represents specific information about the organization. Let's break down the format and significance of the ESIC code:
The ESIC code helps in identifying and categorizing companies and establishments for administrative and regulatory purposes.
Yes, the ESI Act applies to startups and every corporate or registered organization employing 10 or more workers/employees (20 in certain states or union territories) with wages up to ₹21,000 per month. Startups meeting these criteria are required to register under the ESI Act to avail the benefits and comply with the legal requirements.
The Employees' State Insurance Corporation (ESIC) has made it mandatory for workers in the organized sector to contribute to the scheme. The threshold limit for mandatory coverage was raised to ₹21,000 per month from the previous limit of ₹15,000 per month. This provision came into effect on October 1, 2016, and expanded insurance coverage to an additional 5 million employees, bringing the total number of insured persons under the ESIC pool to over 30 million.
Individuals currently insured, whose salary exceeds ₹21,000 per month as a result of the proposed salary hike, are allowed to continue under the ESIC scheme. The Union labor ministry has also proposed extending provident fund, pension, and insurance benefits to the entire working population of the country by 2030.
ESIC is deducted from the gross salary of eligible employees. The deduction consists of 1% from the employee's contribution and 4% from the employer's contribution. All eligible employees whose salary falls within the ceiling of ₹25,000 per month contribute 1% of their salary, while employers contribute 4% to the ESI contribution fund.
ESI is an insurance scheme for people below a certain income level, providing them with excellent medical care free of cost for themselves and their families. The ESI deduction is a premium paid towards such insurance, and individuals cannot withdraw the amount contributed.
To claim benefits under the ESIC scheme, employees or their dependents must fill out specific forms according to the benefits they are seeking. Here is a list of the various forms for different benefits:
Employees can submit these forms and relevant documents to the ESIC branch office to claim their entitled benefits.
In conclusion, the Employees' State Insurance (ESI) Scheme provides crucial financial and medical assistance to employees and their families in times of need. The scheme covers a wide range of benefits, including medical care, sickness benefits, maternity benefits, disability benefits, and more. Employers and employees alike can benefit from the provisions of the ESI Act, which relieves employers of certain liabilities and provides tax exemptions. To avail the benefits, employers must register under the ESI Act, and employees must contribute to the scheme. By understanding the registration process, procedure, and benefits of the ESI scheme, individuals can ensure the well-being and financial security of themselves and their families
The Employees' State Insurance (ESI) Scheme is a social security and health insurance scheme implemented by the Government of India to provide medical and cash benefits to employees and their dependents in case of sickness, maternity, disablement, or death due to employment-related injuries.
Employees earning a specified wage threshold and working in establishments covered under the ESI Act are eligible for benefits under the ESI Scheme. Both permanent and temporary employees are covered, subject to certain criteria.
Employers must register their establishments and eligible employees with the ESI Corporation within 15 days of the ESI Act becoming applicable to them. They can do so by submitting Form 01 to the nearest ESI office along with required documents.
Once registered under the ESI Scheme, eligible employees receive an ESI card containing their unique insurance number. Employers facilitate the issuance of ESI cards to their employees by submitting the necessary details and documents to the ESI authorities.
The ESI Scheme offers a range of benefits, including medical benefits for indoor and outdoor treatment, cash benefits during sickness, maternity benefits, disability benefits, and dependent benefits in case of an employee's demise due to employment-related injuries.
Both employers and employees contribute to the ESI Scheme. The employer's contribution is a percentage of the employee's wages, while the employee's contribution is a fixed percentage of their wages. These contributions are subject to periodic revisions by the government.