ESI applicability

What ESI?

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.

The ESI scheme is a self-financed comprehensive social security scheme devised to protect the employees covered under the scheme against financial distress arising out of events of sickness, disablement or death due to employment injuries.

The ESIC has its headquarters in New Delhi besides 23 regional offices, 26 sub-regional offices in the states and over 800 local offices throughout the country to support the implementation of the ESI scheme. In addition, the Medical Benefit Council, a specialized body that advises the ESIC on the administration of Medical benefit is functioning.

 Who and when?

The ESI scheme is applicable to all factories and other establishments as defined in the Act with 10 or more persons employed in such establishment and the beneficiaries’ monthly wage does not exceed Rs 21,000 are covered under the scheme. Whether the employer has employed 10 or more employees, all employees employed by the employer, agnostic of the salary are reckoned..

The employer is required to pay his contribution and deduct employees’ contribution from wages and 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.

Note:  The scheme under the act also supports restaurants, motor road transports, newspaper establishments and undertakings, movies and purview theatres, hotels, shops.  The threshold for coverage of establishment is 20 employees in Maharastra.

ESIC contribution rates (Reduced w.e.f. 01/07/2019)
Particulars	Current Rate	Reduced Rate
Employer Share	4%	3.25%
Employee Share	1%	0.75%
Total	5%	4%

 

 

 

Entities Covered Under ESIC

As per the government notification dated Sec 1(5) of the ESI Act the following entities are covered:

• Shops.
• Restaurants or hotels engaged only in sales.
• Cinemas.
• Road motor transport establishments.
• Newspaper establishments (which is not covered under the Factory Act).
• Private educational institutions.

Step 1: Log in to ESIC Portal

• An employer needs to get himself registered on the ESIC portal.
• An employer can register on the ESIC portal by clicking on the ‘Sign Up’ button under the ‘Employer Login’ option on the home screen.
• After clicking on the ‘Sign up’ button, the employers need to fill in the details and submit the form.

Step 2: Confirmation Mail

• After submitting the form for sign up to the portal, the employer will receive a confirmation mail sent to the registered mail id and mobile number entered at the time of sign up.
• The email will contain the username and password details for registering as an employer and employee under the ESIC scheme.

Step 3: Employer Registration Form-1

• Next, log in to the ESIC portal along with the username and password received in the mail. This will redirect to the page having the option of ‘New Employer Registration’.
• Click on the ‘New Employer Registration’ option. Next, select the ‘Type of Unit’ from the drop-down list and click on the ‘Submit’ button. The ‘Employer Registration – Form 1’ will appear and the employer needs to fill in the details.
• The Employer Registration Form-1 contains details pertaining to the unit of the employer, details of the employer and employees. Once, the complete form is filled by the employer, he needs to click on the ‘Submit’ button.

Step 4: Payment for Registration

• After submission of the Employer Registration Form-1, the ‘Payment of Advance Contribution’ page will open where the employer needs to fill the amount to be paid and select the payment mode.
• The employer will need to pay the advance contribution for 6 months.

Step 5: Registration Letter

• On the successful payment of six months advance contribution, the system generated Registration Letter (C-11) is sent to the employer which will contain a 17 digit Registration Number by the ESIC department.
• The Registration Letter (C-11) is a valid proof of registration of the employer.

 

Documents Required for ESIC Registration

Since the procedure for registration is online, no physical documents are required to be submitted. The documents required while filling the online registration form are:

• A registration certificate obtained either under the:
  • Factories Act, or
  • Shops and Establishment Act
• Certificate of Registration in case of Company, and Partnership deed in case of a Partnership
• Memorandum of Association and Articles of Association of the Company
• A list of all the employees working in the Establishment
• PAN Card of the Business Entity as well as all the Employees working under the entity
• The compensation details of all the employees
• A cancelled cheque of the Bank Account of the Company
• List of Directors of the Company
• List of the Shareholders of the Company
• A register containing the attendance of the employee

 

Benefits of ESIC Registration

 

The benefits of registering under this scheme are varied. Some of them are:

• Sickness benefits at the rate of 70% (in the form of salary), in case of any certified illness and which lasts for a maximum of 91 days in any year.
• Medical benefits to an employee and his family members.
• Maternity benefit to the women who are pregnant (paid leaves).
• If the death of the employee happens while on work – 90% of the salary is given to his dependents in the form of a monthly payment after the death of the employee.
• Same as above in case of disability of the employee.
• Funeral expenses.
• Old age medical care expenses.

Returns Filed Every Year After the Registration is Finalised

After the registration ESI Returns have to be filed twice a year. The following documents are required for the filing of the returns:

• Register of attendance of the employees.
• Form 6 – Register.
• Register of wages.
• Register of any accidents which have happened on the premises of the business.
• Monthly returns and challans.