What is Employee State Insurance

Introduction

Employees’ State Insurance Corporation (“ESIC”) is a statutory corporate body set up under the ESI Act 1948, which is responsible for the administration of the ESI Scheme.

What is ESI Scheme

The ESI scheme is a Self-financed social security scheme. This is to protect the employees covered under the scheme against financial distress. The distress can be out of sickness, disablement or death due to employee injuries.

ESI Office

The ESIC has headquarters in New Delhi. Apart from the headquarters, 23  regional offices and 26 sub-regional offices in various states and 800 Local offices for the support.

Applicability of the ESI scheme

The ESI scheme is applicable to all factories and other establishments. An organization that has  10 or more persons employed will be applicable to ESI Scheme. If the wages of the organization and the beneficiaries’ monthly wage does not exceed Rs 21,000 are covered under the scheme.

Features of ESI Scheme

Complete medical care and attention are provided by the scheme to the employee registered under the ESI Act, During absenteeism from work due to illness, maternity, or factory accidents which result in loss of wages complete financial assistance is provided to the employees to compensate for the wage loss. The scheme also provides medical care to family members also.

The report also suggests that there are 3.14 crore employees are covered under this scheme with the total number of beneficiaries summing up to 13.32 crores.

The benefits under this scheme are categorized under two categories,

1) cash benefits (which includes sickness, maternity, disablement (temporary and permanent), funeral expenses, rehabilitation allowance, vocational rehabilitation, and medical bonus) and,

2) non-cash benefits through medical care.

The scheme is self-financing and contributory.  The funds under the ESI scheme are primarily built out of the contribution from the employees and employers payable monthly at a fixed percentage of wages paid.

Contribution

Currently, the employee contribution rate is 0.75% of the wages and that of employers is 3.25% of the wages paid. The employer makes the contribution from his own share in favor of those employees whose daily average wage is Rs 137 as these employees are exempted from their own contribution.

The employer is required to pay his contribution. This can be done by deducting the wages can be deposit the same with ESIC within 15 days from the last day of the calendar month in which the contribution falls due. The payment can either be done online or through designated and authorized public sector banks.