employee state insurance was adopted in India for the purpose of social security to workers in India

1. Dr.V.NAGANIRMALA
FACULTY
DEPARTMENT OF HRM
ACHARYA NAGARJUNA UNIVERSITY

2. EMPLOYEE STATE INSURANCE ACT 1948
HISTORY
APPLICABILITY OF THE ACT
DEFINITION OF THE ACT
BENEFITS OF THE ACT
KEY FEATURES OF THE ACT

3. History of ESI ACT 1948
The employee state insurance act was adopted in India for the purpose of Social
Insurance to the laborers
In 1927 the Tenth International Labor Conference consider to ratify the conventions
and recommendation of the ESI Act
In 1931 the Royal Commission also suggested some of the measures to ESI Act.
In 1940 Conference of Labor Ministers decided to invite the Provincial Government,
Employers, workers about the compulsory contribution of the sickness Insurance Fund
In 1941 the second conference of labor minister must be preceded the actual
examination of Problem in certain industries
In 1942 the third conference of labor minister was called to examine the tentative
sickness scheme prepared by the Labor department and Government of India.
Finally the conference agreed to introduced the scheme on selective basis
recommended sickness insurance schemes to the workers in jute cotton, heavy and
Engineering Industries.

4. In March 1943 the Govt of India appointed the Prof.B.P Adarkar as a special
officer to report on the health Insurance of Industrial workers in India.
 In 1944 Prof.B.P.Adarkar, along with the two members of ILO Maurice stack &
Ragunath rao submitted the comprehensive contributory scheme of social
insurance with some improvement of ESI Act .
 the standing committee in 1945 also supported this ESI Act to the workers.
The ESI act was introduced in the Central Legislature of 6th November 1946,
and It was passed in 1948.
Recommendations
Central Government should proceed with the preparation of the scheme of the
health insurance applicable to all Perennial factories and covering the
employment injuries and maternity benefits
The scheme circulated to provincial government and association of employers
and workers.

5. APPLICABILITY OF THE ACT
The ESI Act 1948 extends to whole of India
Section 1(3) of the Act empowers the Central government to enforce the different provisions of
the act in different state as the part of different dates.
Section 1(4) It applies to all factories belonging to the government other than seasonal factories.
Section -3 Establishment of the State Insurance Corporation
ESI Corporation shall be established by the central government by notification of the Official
Gazette.
The following are the main features of the corporation
1. It shall be body corporate by name of Employee State Insurance Corporation
2. The Corporation have Perpetual Succession
3. It shall also have common seal

6. Section 4- Constitution of the Corporation
1. chairman appointed by the Central Government
2. Vice Chairman appointed by the Central Government
3. Not more than 5 persons appointed by the Central Government
4. One person each representing each of the state appointed by the state government
5. Ten persons representing employer to be appointed by the central government in
consultation with the such organisation of the employee.
6. Two persons represents the Medical profession appointed by the Central Government

7. Section -10 Medical Benefit Council
The Medical benefit council consist of the following members
1. Director General as Employee State Insurance Corporation Ex-officio as a Chairman
2. Director General health services shall be ex-officio as a Co-chairman
3. Medical Commissioner of Corporation shall be ex-officio of member of the council

8. Definitions
Factory
Factory means any premises includes
a) where ten or more persons are employer or were employed by any day of preceeding
12 months but does not include Mines Act (1952) or a railway running shed.
b) where 20 or more persons are employed or were employed for wages on any day of
preceeding of 12 months
But the following is not a factory
a) Mines
b) Railway running shed

9. Appropriate Government
Appropriate Government means the central government in respect of establishment, under the
central government or a railway administration or a major part of a mine or oilfield and of the
state government.
Contribution
Contribution means the sum payable to corporation payable by the principal employer in
respect of the employee includes any amount payable by or on behalf of the employee in
accordance with the provision of the act.
Principal Employer
A) Owner of the factory
B) Managing agent of the owner or a factory
C) Legal Representative of Deceased owner
D) Manager so named under the factories Act.

10. Employee
The Employment of the person must be for wages it should be of
A) in an establishment
B) in a factory
C) in connection with the work of the factory
D ) Purchase of Raw material for the factory
E) Distribution of the sale of the product of factory
The following provisions are not as an employer
A) Indian Naval Miltary
B) Air Force

11. Wages
A) All remuneration paid or payable to cash in terms of employment
Payment of employee in respect of
B) authorized leave
C) lock out or strike
D) Lay off
Following are not wages
1. Pension fund or Provident fund
2. Travelling allowance
3. Gratuity

12. Dependent
There are 3 categories of dependents under this act
First Category
A) widow
B) Legitimate or adopted son who has not attained the age of 25 years
C) Unmarried legitimate or adopted daughter
D) Widowed Mother
Second Category
Legitimate or adopted son who has attained the age of 25 years
Legitimate or adopted daughter who has attained the age of 25 years

13. Third category
a) Parent other than widowed mother and minor illegitimate son
b) Unmarried illegitimated daughter
c) Legitimate daughter if married and Minor
d) Adopted daughter if married and minor
e) Adopted daughter if widowed and minor
f) Minor brother
g) Unmarried sister
h) Widowed sister
i) Widowed daughter in-law
j) Minor child of a predeceased son
k) Minor child of a predeceased daughter

14. Key features of ESI Act 1948
Employee state Insurance (ESI) is managed by the Employee State Insurance Corporation (ESIC), which is an
autonomous body working under the Ministry of Labour and Employment. The ESI scheme was started to
provide medical, monetary and other benefits to Indian workers.
Any non-seasonal factory or company having more than 10 employees (in some states, it is 20 employees)
who have a maximum salary of Rs. 21,000 has to mandatorily register itself with the ESIC and provide the
ESI benefits to its employees.
E.S.I.C. contribution rates are reduced W.E.F. 1st July 2019. The ESIC has fixed the contribution rate of the
employees at 0.75% of their wages and the employer's contribution at 3.25% of the wages for FY 2023-
24.
Rate of Contribution Under ESI
The ESIC is a social security system designed to provide socio-economic protection to workers, their
immediate families, and dependents. The rates for the contribution are declared by the ESIC and are
revised from time to time.

15. The contribution includes both the employe and employee contributions. The latest revision is
w.e.f. 01.07.2019 and the rates are as follows:
Employer’s Contribution – 3.25% of the wages paid/payable.
Employee Contribution – 0.75% of the wages paid/payable.
If the employee’s daily average wage is up to Rs.176, they are exempted from making the
contribution; however, the employer must make their share of the contribution.
The Employers must deduct the employee contribution from the wages bill and must pay the
employer and employee contribution at the rates specified above within 15 days of the end of
the month in which contributions are made

16. The state government will have to pay 1/8th total medical expenses. This is upto 1500 per head
under this act.
If the person are unemployed they can still receive the benefit under the ESI Act upto 3 years
however they have to provide the retrenchment letter along with the details regarding the last
employment.
Female employee can extend their maternity leave upto 26 weeks form time of going into labor
receive 100% of salary payout of period.

17. Contribution period Cash Benefit Period
1st April to 30th september 1st Jan to following year to 30 th june
1st Oct to 31st March of the year following Ist july to 31st December

18. Calculation of ESI
Particulars Caluclation Amount
Employer contribution (@3.25%) 20,000X3.25% 650
Employee Contribution (@0.75%) 20,000X0.75% 150
Total contribution 800

19. ESI BENEFITS
SICKNESS BENEFITS
MEDICAL BENEFIT
MATERNITY BENEFIT
DISABLEMENT BENEFIT
DEPENDENT BENEFIT

20. Sickness Benefit
Insured Member can avail the compensation upto 70% of the wages during the period of
certified sickness. This facility vaild upto 91 days during the two consecutive benefit period. In
the case of long term ailment upto 80% of the compensation rate of 2 years.
In order to avail this sickness benefit the worker pay his contribution for 78 days out of 6
months.
Medical Benefits
Every insurable employee are benefitted under the Act medical benefit
ESI Act has take care of all treatment expenses as per rules
Permanently disable workers get an annual premium of 120Rs. This benefit extend to spouses
also.

21. Maternity benefit
All female insurable employee can avail maternity benefit under this act in case of pregnancy or
confinement
Confinement in case means labor which result in birth of living child. It also means birth after 26 weeks of
pregnancy whether the child is living or not.
The maternity benefit generally payable to employee for 3 months
It may however to be extendable for one more months depending on the medical advice (70 days in the
preceding Year)
Disablement Benefit
A person who sustain the temporary disablement for not less than 3 days (excluding day of accident) shall
be entitled to periodical payment of such rates of such period subject to condition as may be prescribed by
the central government
person who sustain permanent disablement shall be entitled to periodical payment of such rate and of such
period.
Dependent Benefit
The benefit is available to injured person or to the member of the family where such benefit extended to
the member of the family

22. Penalties
Section 85-A Enhanced punishment in certain cases after previous conviction
Whoever having been convicted by a court of an offence punishable under this act, commits an
same offence shall for every such subsequent offence, be punishable with imprisonment of a
term which may extend t the 2 years and with the fine of 5,000Rupees.

23. QUERIES