The Employees' State Insurance Act of 1948 provides sickness, maternity, disability and death benefits to employees of factories and establishments. It aims to secure these benefits for employees and dependents. The Act applies to factories with 10+ employees and certain other establishments. Eligible employees receive benefits like sickness allowance, maternity benefits, disablement benefits and medical care for themselves and families. It was a pioneering social security measure in India.

1. EMPLOYEE STATE INSURANCE ACT
1948

2. The employees’ state insurance act – 1948
•Pioneering measure in social insurance in india.
•Health insurance first discussed in 1927 by indian
legislature.
•Originally called “workmen’s state insurance bill” 1946.
•Came into force on 19th april 1948.

3. OBJECTIVE
 The objective of the act is to secure sickness, maternity
and medical benefits to employees of factories and
establishments and dependents benefits to the
dependents of such employees.

4. APPLICABILITY
 ACT APPLIES TO
 Factories irrespective of power-using with 10 or more
persons employed
 Shops
 Hotels and restaurants
 Cinemas including preview theaters
 Newspaper establishments
 Road motor transport undertakings employing 20 or more
persons
 Private medical institutes & educational institutes employing
20 or more persons
State govt may cover other establishments in consultation
with the esi corporation and with approval of the central
govt.

5. DEFINITIONS
Employee: employee refers to any person employed on
wages in connection with the work of a factory or
establishment to which this act applies.
Includes technical, manual, clerical and supervisory
functions
No distinction between casual and temporary employees or
technical and non-technical, or time-rate or piece-rate.
Does not include naval, military or air force personnel.

6. DEFINITIONS (CONTD.)
Wages: means all remuneration paid in cash, including
payment in period of leave, lockout or strike which is not
illegal. Does not include:
Contribution paid to the provident fund or pension fund
Travelling allowance
Sum paid to special expenses
Gratuity payable

7. Registration
•Registration of a factory/establishment with the
employees’ state insurance corporation (esi) is a
statutory responsibility of the employer under section 2-
a and 10-b.
•Declaration of registration in form 01 to be furnished to
the appropriate regional office within 15 days of the act
becoming applicable.
•Employer should get the declaration form filled in by
every employee covered under the scheme.

8. BENEFITS
1. Sickness and extended sickness benefit
2. Maternity benefit
3. Disablement benefit
4. Dependants’ benefit
5. Medical benefit
6. Funeral benefit

9. SICKNESS AND EXTENDED SICKNESS BENEFIT
 Represents periodical payments made to an insured
person for the period of certified sickness after completing
9 months in insurable employment.
 To qualify, contributions should be for minimum 78 days in
the relevant period.
 Maximum duration for benefit is 91 days.
 Rates of payment vary from rs.14-125 per day, I.E.
Average of 50% of daily wages.
 Insured persons suffering from tb, leprosy, mental and
malignant diseases or other specified long term diseases
are entitled to extended benefits at higher rates, provided
he has been continually employed for at least two years.

10. MATERNITY BENEFIT
 Implies cash payment to an insured woman in case of
confinement or miscarriage or sickness arising out of
pregnancy or premature birth.
 Woman should have contributed for minimum 70 days in
the preceding two consecutive contribution periods.
 Daily rate of benefits double the standard sickness benefit
rate, i.e. Full wages.
 Normally payable for max 12 weeks for confinement and 6
weeks for miscarriage or medical termination of pregnancy.
 Payable even in the event of the death of the woman.

11. DISABLEMENT BENEFIT
 In case of temporary disability arising out of
employment injury, this benefit is admissable for the
entire period certified by an insurance medical
officer/practitioner for which the insured person does
not work for wages.
 Rate payable not less than 70% of daily wages;
minimum 3 days of incapacity required.
 In case injury results in permanent, partial or total loss
of earning capacity, periodical payments to be made
for life. One-time lumpsum is permissible in certain
cases.

12. DEPENDANTS’ BENEFIT
Periodical pension paid to dependants of deceased where
death occurs out of employment injury or disease.
 Widows: 3/5th of benefit rate for life or until remarriage
 Children: 2/5th of benefit rate until 18
 Total amount distributed not to exceed ceiling of
disablement benefit.
 Benefit not paid to married daughters.
 In case there is no widow or child, benefit can be paid to
other dependants including parents.
 Amount paid is reviewed and increases granted from time to
time to compensate for erosion in real value and cost of
living.

13. MEDICAL BENEFIT
 Insured persons and their families entitled to free, full and
comprehensive medical care.
 Extended upto two years for chronic and long-term
diseases.
 Treatment continues even if person goes out of coverage,
till sickness ends.
 Package covers all aspects of health care from primary to
super-specialist facilities, such as:
1) Out-patient treatment
2) Domiciliary treatment
3) Specialist consultation and diagnostic facilities

14. MEDICAL BENEFIT (CONTD.)
1) In-patient treatment
2) Free supply of drugs and dressing
3) X-ray and laboratory investigations
4) Vaccination and preventive innoculations
5) Ante-natal, confinement, post-natal care
6) Ambulance service or conveyance charges
7) Free diet during admission in hospitals
8) Free supply of artificial limbs, aids and appliances for
physical rehabilitation
9) Family welfare services and other national health
programme services
10) Medical certification
11) Special provisions including super-speciality treatment.

15. FUNERAL BENEFIT
 Funeral expenses are in the nature of a lump sum
payment upto a maximum of rs.2500 ( now rs 5000)
made to defray the expenditure of the funeral of
deceased insured person.
 The amount is paid either to the eldest surviving
member of the family or, in his absence, to the person
who actually incurs the expenditure on the funeral.

16. PROTECTION
An employer cannot dismiss or punish an employee under
treatment for sickness of in receipt of any benefit or absent
from work due to illness. Any notice of dismissal, discharge
or reduction is invalid. However, the employer can
discharge or punish the employee if:
 He has received temporary disablement benefit and
remained absent for 6 months or more
 Is under treatment for sickness other than tb or arising out
of pregnancy and remained absent for 6 months or more
 Is under medical treatment for tb or a malignant disease
and has remained absent continuously for 18 months or
more.

17. MISCELLANEOUS
 Cash benefits payable under the esi act are not
liable to attachment or sale in execution of any court
decree or order.
 Right to receive benefit is not transferable.
 Disputes under the provisions of the act to be
decided by the employees’ insurance court (eic) and
not by a civil court. Appeals to the high court only by
an order of the eic on a question of law.
 Period of limitation for appeal is 60 days.