What is ESIC Scheme?
The Employees’ State Insurance Scheme of India (ESIC) is a multi-faceted Social Security Scheme designed to provide socio-economic protection to ’employees’ in the organised sector. ESIC Scheme is administered by a statutory corporate body called the Employees’ State Insurance Corporation.
The ESI Scheme applies to factories and other establishments viz. Road Transport, Hotels, Restaurants, Cinemas, Newspaper, Shops, and Educational/Medical Institutions wherein 10 or more persons are employed. However, in some States threshold limit for coverage of establishments is still 20.
Another notable characteristic of the Scheme is that an employee’s insurance number remains the same as long as he or she remains within the ESIC wage limit. Changing jobs will not affect an employee’s insurance status, and his or her insurance number will remain the same.
It protects employees against sickness, maternity, disablement, and death as a result of a work-related injury, as well as provides medical care to insured employees and their families.
Who is Eligble for ESI?
According to ESIC website, with effect from January 1, 2017, the monthly wage ceiling for coverage of an employee is Rs. 21,000 per month.
It is the employer’s responsibility to enroll eligible employees in the ESIC program.
The contributions are based on the workers’ earning ability as a fixed proportion of their salary, yet they are awarded social security benefits based on individual needs without discrimination.
How are Contributions Made?
- Employer and employee contributions are primarily used to support the ESI funds, which are provided monthly at a fixed percentage of salaries received. State governments are also responsible for 1/8th of the cost of medical benefits.
- The ESI Scheme is financed by contributions from employers and employees. The rate of contribution by employer is 3.25% of the wages payable to employees.
- The employees’ contribution is at the rate of 0.75% of the wages payable to an employee.
- Employees, earning less than Rs. 176/- a day as daily wages, are exempted from payment of their share of contribution.
Is It Mandatory for the Employer to Register Under the Scheme?
Yes, under Section 2A of the Act and Regulation 10-B, it is the employer’s legal responsibility to register their factory/ establishment under the ESI Act within 15 days of its applicability to them.
Section 46 of the Act envisages the following six social security benefits. However, there are conditions to avail these benefits According to the ESIC website, these are the benefits that can be availed from ESI scheme.
ESIC SCHEME BENEFITS
Medical Benefit
From the moment an insured person starts insurable employment, he and his family receive full medical care. There is no limit on how much an Insured Person or a family member can spend on treatment. On payment of a nominal annual premium of Rs 120/-, medical care is also provided to retired and permanently disabled covered persons and their spouses.
Sickness Benefit
During periods of certified sickness for a maximum of 91 days per year, insured workers are entitled to Sickness Benefits in the form of cash compensation at the rate of 70% of salaries. To be eligible for illness benefits, the insured worker must contribute for 78 days during the course of a 6-month period.
Maternity Benefit
Maternity Benefit during confinement/pregnancy is payable for twenty-six (26) weeks, with a one-month extension on medical advice, at the full salary rate, subject to payment for 70 days in the preceding two Contribution Periods. Maternity Benefit during confinement/pregnancy is payable for twenty-six (26) weeks, with a one-month extension on medical advice, at the full salary rate, subject to payment for 70 days in the preceding two Contribution Periods.
Disablement Benefit
- 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 the disability continues.
- Permanent disablement benefit (PDB): The benefit is paid at the rate of 90% of the wage in the form of monthly payment depending upon the extent of loss of earning capacity as certified by a Medical Board.
Dependents Benefit
DB paid to the dependents of a deceased Insured person in the form of a monthly payment at a rate of 90% of wage in circumstances where death occurs due to a job injury or occupational hazard.
Other Benefits
- Funeral Expenses: From the first day of insurable work, a sum of Rs.15,000/- is payable to dependents or the person performing final rites.
- Confinement Expenses: An insured woman or an I.P. in respect of his wife in the event of confinement in a location where appropriate medical services are not accessible under the ESI Scheme.