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.

2. Index
 Introduction
 Object of the Act
 Applicability of the Act
 Non-Applicability of the Act
 Definitions
 Employees’ State Insurance Corporation
 Standing Committee
 Medical Benefit Council
 ESI Contribution
 ESI Benefits
 Penalties and Damages
 Conclusion

3. 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.

4. Object of the Act
It is 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.

5. 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
 Cinemas including preview theatres
 Newspaper establishments
 Road motor transport undertakings employing 20 or more persons

6. 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.

7. Definitions
Employee:
Any person employed for wages in or in connection with the work of a factory or establishment to which this Act
applies and who is directly employed by the principal employer on any work of, or incidental or preliminary to or
connected with the work of, the factory or establishment, whether such work is done by the employee in the factory
or establishment or
Immediate Employer:
In relation to employees employed by or through him, means a person who has undertaken the execution on the
premises of a factory or an establishment to which this Act applies or under the supervision of the principal employer
or his agent.
Principal Employer:
• In this behalf or where no authority is so appointed, the head of the department ;
• In a factory, the owner or occupier of the factory and includes the managing agent of such owner or occupier,
• In any establishment under the control of any department of any government in India, the authority appointed
by such government and any other establishment, any person responsible for the supervision and control of the
establishment

8. Employees’ State Insurance Corporation
Central Government may has established administrative body for the administration of the scheme of
Employees’ State Insurance in accordance with the provisions of this Act a Corporation to be known
as the Employees’ State Insurance Corporation.
The Corporation shall consist of the following members, namely : -
• A Chairman to be appointed by the Central Government
• A Vice-Chairman to be appointed by the Central Government
• Not more than five persons to be appointed by the Central Government
• One person each representing each of the in which this Act is in force] to be appointed by the State Government concerned
• One person to be appointed by the Central Government to represent the Union territories
• Persons representing employers to be appointed by the Central Government in consultation with such organisations of
employers as may be recognised for the purpose by the Central Government
• Persons representing employees to be appointed by the Central Government in consultation with such organisations of
employees as may be recognised for the purpose by the Central Government
• Two persons representing the medical profession to be appointed by the Central Government in consultation with such
organisations of medical practitioners as may be recognised for the purpose by the Central Government
• Three members of Parliament of whom two shall be members of the House of the People (Lok Sabha) and one shall be a
member of the Council of States (Rajya Sabha) elected respectively by the members of the House of the People and the
members of the Council of States
• The Director-General of the Corporation, ex-officio.

9. Standing Committee
A Standing Committee of the Corporation shall be constituted from among its members,
consisting of: -
• A Chairman appointed by the Central Government
• Three members of the Corporation appointed by the Central Government
• 8 members elected by the Corporation representing employers , employees, medical profession and
Parliament
Standing committee is empowered to:
1. Shall administer the affair of the corporation
2. Shall submit the consideration and decision of the corporations
3. Have discretion on other issues of corporation

10. Medical Benefit Council
The Central Government shall constitute a Medical Benefit Council consisting of: -
a) The director general, the employees’ state insurance corporation, ex-officio as chairman
b) The director general, health services, ex-officio as co-chairman
c) The medical commissioner of the corporation, ex-officio
d) One member each representing each of the states other than union territories in which this act is in force to be
appointed by the state government concerned
e) Three members representing employers to be appointed by the central government in consultation with such
organizations of employers as may be recognized for the purpose by the central government
f) Three members representing employees to be appointed by the central government in consultation with such
organizations of employees as may be recognized for the purpose by the central government ; and
g) Three members, of whom not less than one shall be a woman, representing the medical profession, to be
appointed by the central government in consultation with such organizations of medical practitioners as may be
recognized for the purpose by the central government.

11. Duties of Medical Benefit Council
The Medical Benefit Council shall: -
• Advise the Corporation and the Standing Committee on matters relating to the administration of medical
benefit, the certification for purposes of the grant of benefits and other connected matters
• Have such powers and duties of investigation as may be prescribed in relation to complaints against medical
practitioners in connection with medical treatment and attendance
• Perform such other duties in connection with medical treatment and attendance as may be specified in the
regulations.

12. ESI Contribution
• E.S.I. Scheme being contributory in nature, all the employees in the factories or establishments to which the
Act applies shall be insured in a manner provided by the Act
• The contribution payable to the Corporation in respect of an employee shall comprise of employer's
contribution and employee's contribution at a specified rate
• The rates are revised from time to time. Currently, the employee's contribution rate is 1.75% of the wages and
that of employer's is 4.75% of the wages paid/payable in respect of the employees in every wage period
• For newly implemented areas, the contribution rate is 1% of wages of Employee and 3% payable by Employers
for first 24 months
• Employees in receipt of a daily average wage upto Rs.137/- are exempted from payment of contribution.
Employers will however contribute their own share in respect of these employees.

13. Collection of Contribution
• An employer is liable to pay his contribution in respect of every employee and deduct employees contribution
from wages bill and shall pay these contributions at the above specified rates to the Corporation within 15 days
of the last day of the Calendar month in which the contributions fall due
• The Corporation has authorized designated branches of the State Bank of India and some other banks to
receive the payments on its behalf.
Contribution Period and Benefit Period
Contribution Period Cash Benefit Period
1st April to 30th Sept. 1st Jan of the following year to 30th June
1st Oct to 31st March of the year following. 1st July to 31st December.

14. ESI Benefits
Sickness and
Extended Sickness
Benefit
Maternity
Benefit
Disablement
Benefit
Dependents'
Benefit
Medical
Benefit
Funeral
Benefit
ALL BENEFITS UNDER THE ESI SCHEME ARE PAID IN CASH EXCEPT MEDICAL
BENEFIT, WHICH IS GIVEN IN KIND.

15. 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.
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.

16. Disablement Benefit
• In case of temporary disability arising out of employment injury, this benefit is admissible 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 lump sum s permissible in certain cases.
Dependents' Benefit
• Periodical pension paid to dependents 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.

17. Medical Benefit
• 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 :
a. Out-patient treatment
b. Domiciliary treatment
c. Specialist consultation and diagnostic facilities
d. X Ray and Lab Investigations
e. Ambulance services etc.
Funeral Benefit
Funeral Expenses : An amount of Rs.10,000/- is payable to the dependents or to the person who performs last rites
from day one of entering insurable employment.

18. Penalties and Damages
• 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
• 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.

19. Coverage
• IT covers all the states except Manipur and Arunachal Pradesh also, it covers all union territories except Dadra
& Nagar Haveli, Daman & Diu and Lakshadweep Islands.
• The scheme is notified in 325 complete Districts out of 393 Districts, where scheme was partially implemented
and 89 Districts Headquarters out of non implemented Districts.
Coverage(As on 31st March, 2016)
No. of Insured Person family units 2.13 Crores
No. of Employees 1.89 Crores
Total No. of Beneficiaries 8.28 Crores
No. of Insured women 3.78 Lacs
No. of Employers, etc 7.83 Lacs
Coverage(As on 31st March, 2017)
No. of Insured Person family units 3.19 Crores
Total No. of Beneficiaries 12.37 Crores

20. Conclusion
• This act provides Social Security scheme for employees drawing wages not exceeding ₹21000/-.
• This scheme framed under the act aims at providing for certain cash benefits to employees in the
event of sickness, maternity, employment injury and medical facilities in kind.
• This act also has provisions to identify the employees who are entitled to get benefits.