Employee state insurance

1. THE EMPLOYEES STATE
INSURANCE ACT, 1948
PRESENTED BY
VISAKH P

2. INTRODUCTION
 ESI Scheme of India, is a multidimensional social security
system tailored to provide socio-economic protection to
worker population and their dependents covered under the
scheme.
 Pioneering measure in social insurance in India.
 Originally called "workmen's state insurance bill" 1946.
 Came into force on 19th April 1948.

3. OBJECTIVE
 To provide certain benefits to employees in case of
sickness, maternity and employment injury
 to employees of factories and establishments and also to
make provisions for certain other matter incidental thereto.
 To provide medial facilities to legal dependents of the
employees who are insured person
 This medical facility is also extended to retired person also

4. CHAPTER 1 PRELIMINARY
 Sec 1: COMMENCEMENT, EXTENT AND APPLICABILITY
OF THE ACT:
 It extends to whole of India.
 Came into effect on the date 1948 as notified by the Central
government to the official gazette.
 Applies to all factories other than seasonal factories having 20
or more workers (not using power) and 10 or more workers
(using power) having wages not exceeding INR 21,000.
 Rate of contribution by employer is 3.25% and by employee is
0.75% (a total of 4%).
 The act can be extended by the Central government to any
establishment , industrial , agricultural or otherwise with
consultation and giving one month’s prior notice

5. Sec 2: DEFINITIONS
• Appropriate government – shall be central government for major ports
,oil fields, mines and railways and for other cases, the state government.
• Dependent : a widow, widowed mother, unmarried daughter, legitimate
son, minor brother, widowed sister, widowed daughter-in-law, unmarried
sister.
• Employee : any person directly employed by the principal employer or
employed through an immediate employer or on contract basis
• Factory : any premise including 10 or more employees on any day in the
preceding 12 months for carrying out ordinary processes.
• Permanent partial disablement : disablement is permanent in
nature and reduces the working capacity of the worker
• Permanent total disablement : disablement is permanent in nature
which incapacitates him from all work.
• Temporary disablement : an injury which makes the worker
temporarily incapable of working .
• Wages: any remuneration paid in cash but does not include gratuity,
travelling allowances, special expenses, employer’s contributions to
provident fund or pension.

6. CHAPTER 2:CORPORA
TION,ST
ANDINGCOMMITTEE&
MEDICALBENEFITCOUNCIL
• Sec 3 : Establishmentof the EmployeeState Insurance Corporation by
the Central Government
• Sec 4: Constitution of the Corporation: The corporation is a Statutory
body and shall consist of :
o Chairman
o Vice-chairman
o 5 persons appointed by central government
o One person appointed by central government as union territory
representative
o 10 employers representative
o 10 employees representative
o 2 medical professionals
o 3 members of parliament (2 from Lok Sabha & 1 from Rajya Sabha)
• Term of office of members of Council : For term of 4 years
• Eligibility for re-appointment : Shall be eligible for re-appointment as the
case maybe

7.  SEC 8 –Constitution of StandingCommittee: A Standing committee shall be
constituted comprising of :
 A chairman
 3 members of the corporation appointed by the Central government
 3 members from corporation representing State governments
 8 members elected by corporation in which 3 employer’s representative, 3
employee’s representative, 1 from medical profession and 1 from parliament
 Sec 9 : Term of Office: Shall be two years from date of election
 Sec 10: Medical Benefit Council: A Medical Benefit Council shall be
constituted comprising:
 Director General, ESIC
 Director General, Health services
 Medical commissioner of corporation
 1 member representing each state and Union Territory
 3 representatives of employers, 3 representatives of employees appointed by
the central government
 3 members representing medical profession , out of which one shall be a
woman

8.  Sec 11: Resignation of Membership: Any member of these bodies
can resign by
 giving in writing to the Central Government
 Sec 13: Disqualifications: A member may be disqualified if he is
of unsound mind or an undischarged insolvent or convicted for
moral turpitude or having substantial interest in the corporation.
 Sec 15 : Fees and Allowances: Fees to the members are give as
prescribed by the central government.
 Sec 17 : Staff: Additional staff maybe employed with the approval
of the central government for carrying out routine work
 Sec 18 : Powers of Standing Committee: General
superintendence and control of
 corporation ,administer the affairs of the corporation.
 Sec 22: Duties of Medical Benefit Council:
 Advise the corporation and standing committee on matters related
to administration of medical benefits, grant of certification
 Investigate matters related to complaints against the practitioners
 Duties related to medical treatment

9. CHAPTER 3 : FINANCE &AUDIT
 Sec 26: Employees State Insurance Fund: All the contributions and
moneys received by way of grants , donations and gifts from the
central or state government or local bodies or any individuals shall
be paid in the fund called employees state insurance fund .
 Sec 28: Purpose for which fund maybe expended: Payments of
medical benefits, fees and allowances, salaries, pensions,
gratuities, establishment and maintenance of hospitals ,
dispensaries and other institutions.
 Sec 34: Audit : The accounts of the corporation shall be audited
annually by the
 CAG of India.
 Sec 35: Annual Report : To be submitted by the corporation to the
central government.
 Valuation of assets and liabilities : To be assessed every three years
by a valuer appointed by central government.

10. CHAPTER 4 : CONTRIBUTIONS
 Sec 39-44: Contributions to be made comprises of employer’s
portion and employee’s portion to be made in the fund at a rate
prescribed by the government. The manner , nature and mode of
payment of contribution to be made is prescribe by the
government. The principal employer shall maintain registers and
file the returns to the corporation at a specified time.
 Sec 45: Social security officer, functions and duties: he is
appointed for the purpose of enquiring into the correctness of the
returns filed by the corporation for which the officer can carry out
the investigation by interrogating, collecting evidences, etc .
 Sec 45-B to 45-E: Recovery of arrears: the arrears may be
recovered through the issue of certificate for recovery to the
Recovery Officer. The officer may recover the arrear amount of
contributions within his jurisdiction in a manner prescribed.

11. CHAPTER 5 BENEFITS
 The insured persons, their dependents shall be
entitled to the following benefits:
 a)Periodical payments to any insured person in case
of his sickness.
 b)Periodical payments to an insured woman in case
miscarriage or sickness arising out of the
pregnancy.
 c)Periodical payments to an insured person
suffering from a disablement as a result of an
employment injury.

12.  d)Periodical payments to such dependents of an
insured person who dies as a result of an
employment injury.
 e)Medical treatment of insured persons.
 f)payment of funeral expenses on the death of
insured person at the prescribed rate of.
 Bar against receiving compensation under any
other law
 Insured person or his dependents shall not be
entitled to receive or recover any compensation or
damages under any other Act from the employer or
from any other person if benefits under this Act is
availed.

13.  Benefits not assignable
 Right to receive any payment or benefit under this Act
shall not be transferable or assignable.
 Benefits not to be combined
 An insured person shall not be entitled to receive for
the same period
 a)Both sickness benefit and maternity benefit or
 b)Both sickness benefit and disablement benefit for
temporary disablement or
 c)Both maternity benefit and disablement benefit for
temporary disablement.
 d)Note:Where a person is entitled to more than one
benefits, he shall be entitled choose which benefit he
shall receive.

14. Benefits available to insured
employee
 The purpose of the Employee State Insurance Act is to
provide benefits as detailed in the Act particularly in
section 46, to the insured persons or their dependants.
 The following benefits are provided under section 46.
 Sickness benefit
 Maternity benefit
 Disablement benefit
 Dependents benefit
 Medical benefit
 Funeral expenses

15. Sickness benefit
 Every insured employee is entitled to the cash benefit for the
period of sickness certified by a duly appointed medical
practitioner if the contributions in respect of him were payable
for not less than 78 days in the corresponding contribution
period.
 Cash benefit takes the form of periodical payment made to an
insured person which is payable for maximum numbers of 91
days in any two consecutive benefit periods. The benefit is not
paid for the first two days of sickness which is treated as the
waiting period.
 Insured persons suffering from long term diseases like T.B.,
leprosy, mental, heart etc. and who have been continuous
employment for two years are entitled to get sickness benefit
period up to 309 days.

16. Maternity benefit
 A periodical cash benefit is payable to an insured woman
employee, in cash of confinement, miscarriage, medical
termination of pregnancy, premature birth of a child or
sickness arising from pregnancy etc.
 If the contributions in respect of her were payable for at
least 70days in the two immediately preceding
contribution periods
 The benefit is payable of twice the standard benefit rate or
Rs.20, whichever is higher for all days on which she does
not work during the prescribed period.

17. Disablement benefit
 It is payable to an employee who is injured in the course
of his employment and is permanently or temporarily
disabled or contacts any occupational disease.
 A person who sustains temporary disablement for not less
than 3days(excluding the day of accident) shall be entitled
to periodical payment as may be prescribed by the central
govt.
 The benefit of temporary disablement is, however, not
payable for any day on which the employee works,
remains on lease, holiday or strike in respect of which he
receives wages.

18. Dependents benefit
 If any employee dies during any period for which he is
entitled to a cash benefit, the amount of such benefit shall
be payable up to & including the day of his death. The
amount of benefit shall be paid to the nominee or, where
there is no nomination, to the heir or legal representative
of the deceased employee.

19. Medical benefit
 An insured person or a member of his family whose
condition requires medical treatment and attendance
entitled to receive medical benefit.
 Rs.250 on account of confinement expenses shall be paid
to an insured person or his wife if confinement occurs at a
place where necessary medical facilities under E.S.I.C.
schemes are not available.
 Employer not to dismiss or punish employee during period
of sickness-section73.

20. Funeral Expenses
 If an insured employee dies, the eldest serving member of
his family is entitled to reimbursement of such
expenditure subject to maximum of Rs.2500 (W.E.F.
December, 2000)The claim for the funeral expenses
should be submitted with prescribed document and form
within three months of the death of the insured employee.

21. CHAPTER –6 :ADJUDICATION OF DISPUTES &
CLAIMS
• Sec 74 -77 : Constitution of Employees Insurance Courts: The State
government establishes such courts to deal with matters related to the
rates of wages , rate of contributions to be made, the person who
shall be the principal employer, right of receiving the benefit of any
person, etc. the Court shall have:
 such numbers of judges as the state government thinks
fit
who has been a judicial officer or has 5 years legal
practice
• Sec 78: Powers of Employee Insurance Courts: It shall have all the
powers as that of a Civil court for the purpose of summoning,
enforcing of witness or can compel to produce the documents or any
other evidences. The procedure to be followed is as per the rules of
the State government.
• Sec 81-83: Appeals to the High Court: The insurance court can make
an appeal to the High Court in sixty days.

22. CHAPTER 7 PENALTIES
 Punishment for false statement:- In this case any false
statement or false representation, shall be punishable with
imprisonment up to Rs.2000 or with both
 Punishment for failure to pay contributions:- if any person
fails to pay any contribution which under to this act he is
liable to pay, he shall be punishable with imprisonment up
to three years.
 Punishment for other contravention:- in contraventions
like dismisses, discharges, reduces or otherwise punishes
an employee, shall be punishable with imprisonment up to
one year or with fine up to Rs.4000 or with both

23. Cont…
 Power to recover damages:- If employer fails to pay the
amount of contribution then corporation may recover from
the employer by way of penalty.
 Power of court to make orders:- If court makes order for
employer- if employer is not able to make this order
within period then employer shall be punishable with
imprisonment in respect thereof U/S.85 and shall also be
liable to pay fine up to Rs.1000 for everyday.

24. CHAPTER 8 MISCELLANEOUS
 Exemption of a factory or establishment (sec.87)
 Exemption may be granted to any factory or establishment for
maximum period of one year.
 Any exemption granted shall be notified by the notification in
the Official Gazette.
 The appropriate Govt. while granting exemption can improve
any terms and conditions upon the factory/establishment.
 If required any exemption can be renewed for max. one year
 Before granting any exemption Corp. must be given
opportunity to make representation which has to be considered
by the Govt.

25. Applicability of the Act
 The provisions of the Act is extended and its also
applicable to
 Smaller power-using factories with 10-19 persons
 Non-power factories with 20 or more persons
 Shops
 Hotels and restaurants
 Newspaper establishments
 Cinemas including preview theatres
 Road motor transport undertakings employing 20 or more
persons

26. Non-Applicability of the Act
 The Act, however, does not apply to mine or railway
running shed, and specific seasonal factories
 The state government may extend the provisions of the
Act to cover other establishments or class of
establishments. Industrial, commercial, agriculture or
otherwise, in consultation with ESI Corporation and with
the approval of the central government, after getting six
months notice of its intention to do so in the Official
Gazette.

27. Act Authorisation
 To Promote and measure for health and welfare of
INSURED EMPLOYEES (IE)
 Intervene for the rehabilitation and re- employment for
disabled / injured
 To appoint inspectors for purposed of the act
 To determine the amount of contribution and relevant
verification

28. Standing committeee
 Empowered to-
 Shall administer the affair of the corporation
 Shall submit the consideration and decision of the
corporations
 Have discretion on other issues of corporation

29. Medical Benefit Council
 Advise to administration on Medical Benefit, purpose of
grants and related matter
 Have power and duties of INVESTIGATION on
Empanelled Medical practitioner, its treatment and
attendance
 Perform other duties

30. Inspectors- Duties & Powers
 Duties –
 Inquiring into the correctness in any return of contribution
 Ascertaining Provision of the Act has been complied
 Other authorized / specified duties by the corporation.
 Powers –
 To collect require and relevant information of employer/
contractor or both
 To enter org/contractor premises at reasonable time and
examined relevant account books and relevant documents,
payment of wages etc.
 To examine employer, contractor, his agent / servant or IE in
factory/office
 To make copies of extracts from any registrar, account books
and other books of maintenance of organization

31. Employer/Employee's
Contribution
 It is the principle employer's responsibility to deposit his
own as well as employee's contribution in respect of all
employees including the contract labor, into the E.S.I
Account. Non-availability of funds cannot be a ground for
non-payment of contributions under the act. There is no
provision to waive the contribution, damages and interest
 The employer is required to contribute at the rate of 4.75%
of the wages paid/ payable in respect of every wage
period. The employees are also required to contribute at
the rate of 1.75% of their wages except when the "average
daily wages in a wage period" are equal to or less than
Rs.40.

32. Cont..
 The employer should get his factory or establishments
registered with the E.S.I. Corporation within 15 days after
the Act becoming applicable to it, and obtain the
employer's Code Number. The regional officer will allot a
code number to the employer, which must be quoted in all
documents and correspondence.

33. Adjudication of dispute &
claims
 Employees Insurance Court
 Institutions of proceedings, etc.
 Powers of employees' Insurance Court
 Reference to High Court
 Appeal
 Stay of payment during pending of appeal

34. Obligation of the Employers
 Get your Factory/establishment registered with in 15 days
after the Act becomes applicable. Submit Form 01 to the
Regional office for this purpose. Obtain Employer's code
No. for use in all ESIC Forms / documents and
correspondence with the offices of the ESI Corporation.
 Fill up Declaration Forms in respect of all coverable
employees and submit the same to the Regional Office/
Local Office of the corporation well before the 'Appointed
Day' and obtain insurance Numbers from the concerned
Local Office/ Regional Office, In respect of newly
appointed employees, fill up the declaration form soon
after appointment of such employees and submit the same
to the Local Office Concerned.

35. Cont…
 Pending receipt of identity cards/ identity certificates you may issue
"certificate of employment" in Form 86 to the covered employee(s)
enabling them to avail cash/medical Benefits
 Pay ESI contribution (Employee's Share @4.75% andthe Employer's
share @ 1.75% of the wages) with in 21days of the month following,
in which the wages fall due.
 Maintain an Accident Book as prescribed under the Factory Act / ESI
Act.
 Submit an Accident Report to the Local Office / ESI Dispensary
concerned immediately in respect of accidents that could result in
death or disablement and within 24 hours of its occurrence otherwise.
Minor accidents which do not cause absence from work need not be
reported
 Grant leave to insured employees on the basis of sickness certificates
issued by any authorized ESI doctor.

36. Importance in healthcare
 Social Safety Net: The ESI Act serves as a crucial social
security net for industrial and commercial employees,
offering financial protection during challenging times.
 Healthcare Access: It establishes a network of ESI
hospitals and dispensaries, ensuring that employees have
access to quality healthcare services when needed.
 Financial Stability: By providing benefits like sickness
and disability pay, the Act helps employees maintain
financial stability even when they are unable to work.

37. Cont..,
 Maternity Support: The Act provides maternity benefits,
offering support to working women during pregnancy and
childbirth.
 Employee Well-being: Complying with the ESI Act can
enhance employer-employee relations by demonstrating a
company's commitment to its employees' welfare.
 Reducing Unemployment: By offering financial support
during sickness or disability, the Act helps employees
return to work more quickly, reducing the likelihood of
unemployment.

38. Appicability in healthcare
 Establishment Size: The Act applies to factories and
other specified establishments where 10 or more persons
are employed (threshold may vary in different states).
 Wage Limit: It covers employees earning wages up to a
specified limit (as of my last update, it was Rs. 21,000 per
month).
 Geographic Coverage: The Act is applicable in specific
geographical areas as notified by the government.

39. Cont..
 Types of Benefits: The Act provides various benefits,
including medical benefits, sickness benefits, maternity
benefits, disablement benefits, and dependent benefits,
based on eligibility and contributions.
 Contributions: Both employers and employees make
contributions to the Employees' State Insurance
Corporation (ESIC) to fund the benefits provided.
 Legal Obligations: Employers are legally obligated to
register eligible employees for ESI benefits, make
contributions, and ensure compliance with the Act.
 Exemptions: Some categories of employees, like those
covered by other social security schemes, might be
exempt from ESI coverage.

40. Previous year questions
 Benefits under the ESI act (5 )
 Employee state insurance act (20) 2019

41. Thank you