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Jun 24, 2021

The Employee State Insurance (ESI) is a social security and health insurance scheme for salaried Indian citizens and their dependants in contingencies, such as, sickness, maternity or death and disablement due to an employment injury or occupational disease. It is structured to suit health insurance requirements of workers provides full medical facilities to insured persons and their dependants, as well as, cash benefits to compensate for loss of wages or earning capacity in different contingencies.

The ESI Act, (1948) applies to the following categories of factories and establishments in the implemented areas:-

  • Non-seasonal factories using power and employing ten (10) or more persons
  • Non-seasonal and non power using factories and establishments employing twenty (20) or more persons.
  • Please note: The Act applies to all factories (including factories belonging to the Government other than seasonal factories. [Section 1(4)]
  • Further please note that in some states such as Maharashtra and Orissa the minimum requirement is of 20 or more persons.

In the case of Assistant Director, ESIC v. Western Outdoor Interactive[1], the Bombay High Court held that the definition of ‘factory’ in the ESI Act has wider meaning as compared to the definition of the same under the Factories Act. The court further held that “the definition of “factory” in Factories Act and E.S.I. Act are not the same. Explanation II of Section 2(m) of the Factories Act is inserted in the Factories Act and not in the E.S.I. Act. It marks difference in its interpretation and application. In the definition of “factory” under Factories Act the words “worker working” are used, while in the E.S.I. Act, in the section defining “factory”, the term “person employed for wages” are used.”

Chapter V of the ESI Act, 1948 lays down information with respect to benefits available to registered employee. As per section 46 of the Act[2] the following six social security benefits are available to employees:-

  1. Medical Benefit: Full medical care is provided to an Insured person and his family members from the day he enters insurable employment. There is no ceiling on expenditure on the treatment of an Insured Person or his family member. Medical care is also provided to retired and permanently disabled insured persons and their spouses on payment of a token annual premium of Rs.120/- . These benefits include: System of Treatment; Scale of Medical Benefit; Benefits to Retired IPs; Administration of Medical Benefit in a State; Domiciliary treatment; Specialist consultation; In-Patient treatment; Imaging Services; Artificial Limbs & Aids; Special Provisions; Reimbursement.
  2. Sickness Benefit: Sickness Benefit in the form of cash compensation at the rate of 70 per cent of wages is payable to insured workers during the periods of certified sickness for a maximum of 90 days in a year. In order to qualify for sickness benefit the insured worker is required to contribute for 78 days in a contribution period of 6 months.
  3. Extended Sickness Benefit: Extendable upto two years in the case of 34 malignant and long-term diseases at an enhanced rate of 80 per cent of wages.
  4. Enhanced Sickness Benefit: Enhanced Sickness Benefit equal to full wage is payable to insured persons undergoing sterilization for 7 days/14 days for male and female workers respectively.
  5. Maternity Benefit: Maternity Benefit for confinement/pregnancy is payable for Twenty Six (26) weeks, which is extendable by further one month on medical advice at the rate of full wage subject to contribution for 70 days in the preceding Two Contribution Periods.
  6. Disablement Benefit: Temporary disablement benefit and Permanent disablement benefit
  7. Dependants Benefit: They are paid at the rate of 90% of wage in the form of monthly payment to the dependants of a deceased Insured person in cases where death occurs due to employment injury or occupational hazards.
  8. Other Benefits: Such as funeral expense.

Under this scheme, the employer needs to contribute an amount of 4.00% of the total monthly salary payable to the employee whereas the employer needs to contribute only 1.00% of his monthly salary every month of the year. The only exemption to the employee in paying his contribution is whose salary is less than Rs. 100/- per day. However, employer’s contribution is payable on these wages.

In the wake of pandemic Covid-19 situation, the Employee State Insurance Corporation (ESIC) vide notification (No. P`-11/14/Misc./1/2019-Rev) dated 16.03.2020, has extended the deadline for making the statutory contribution for the month of February, 2020 and March, 2020, by another 30 days. As per the notification, the deadline for submitting ESIC contribution is now April 15, 2020 and May 15, 2020, for the month of February 2020 and March 2020 respectively.[3]

Furthermore, ESIC has designated some of their facilities for quarantine and treatment of COVID-19 cases and allowed workers to purchase of medicines from private chemists and claim reimbursement. ESIC has also permitted treatment at tied-up hospitals, and have deferred payments of ESIC contributions for businesses and workers as stated above.[4]