Employees’ State Insurance (ESI) Act, 1948

The Employees’ State Insurance (ESI) Act of 1948 is a piece of Indian social security legislation that provides financial protection to employees in the event of sickness, maternity, disability, or death as a result of an employment injury. It is one of the most important acts aimed at providing medical care and financial assistance to employees and their families in the event of certain unforeseen circumstances. The Act is implemented by the Employees’ State Insurance Corporation (ESIC), which is an autonomous body under the Ministry of Labour and Employment.

Key Features of the ESI Act, 1948:

1. Coverage:

• Businesses with ten or more employees are subject to the ESIC Act (in certain states, the threshold is twenty employees).
• It is applicable to workers whose monthly wage (or salary) falls below a specific threshold, which is currently ₹21,000 for the majority of workers and ₹25,000 for workers with disabilities.
• Workers protected by the ESI Act are entitled to cash, medical, and other benefits.

2. Advantages as per the ESI Act:

• Sickness Benefits: Payment for at least 78 days in the relevant contribution period
• Benefits for Maternity: Under certain restrictions, female employees are entitled to paid leave during pregnancy which is 100% of daily wages.
• Benefits for Disabled Workers: Workers who have an injury at work that renders them temporarily or permanently disabled are compensated 90% of daily wages.
• Medical benefits: ESI hospitals and clinics offer medical benefits to employees and their families, including hospitalization, surgical treatment, and other healthcare services.
• Funeral Expenses: A predetermined payment is granted to the family of a deceased worker to cover funeral expenses as per actuals but not exceeding INR 10000/-.
• Unemployment Expenses: An employee who has lost work due to the closure of an industry or factory will receive 50% of the average daily wage.
• Dependent Benefit (Rule 58): The deceased should have been an employee at the time of the accident. The dependents will receive 90% of their daily wages, which will be divided amongst them in the prescribed ratio.
• Rehabilitation Benefit: Rehabilitation allowance is provided to the insured person who remains admitted for replacement of the artificial limbs which is 100% of daily wages.
• Confinement Expenses: If confinement takes place in an area without the required medical facilities under the Employees’ State Insurance (ESI) Scheme, a lump sum payment known as “confinement expenses” is given to the covered individual or their spouse.
• Skill Development Scheme:
  1. Vocational Training Programs: For insured people who are unable to return to their prior employment because of a disability or illness, ESIC may provide vocational training and rehabilitation programs. This is usually carried out through the ESIC Medical Care facilities and is intended to assist workers in becoming employable again.
  2. Skill Development Initiatives: Although skill development programs are not specifically covered by the ESIC Act, they are frequently included into larger social security and welfare programs. Employees who are enrolled in the ESIC system may benefit from the skill development initiatives offered by the Ministry of Skill Development and Entrepreneurship (MSDE), such as the Pradhan Mantri Kaushal Vikas Yojana (PMKVY).
  3. Training Centers: To assist employees in advancing their abilities, particularly in healthcare-related sectors, ESIC runs a number of medical and health-related training facilities. These could include classes in medical technology, nursing, managing health insurance, and other healthcare services.
  4. Pradhan Mantri Shram Yogi Maan-dhan Yojana (PM-SYM): This program is a further effort to assist workers in improving their living conditions, particularly those employed in unorganized industries. In addition to provide pension benefits, it is frequently linked to employee training and development initiatives.

 

3. Contributions:
   Both employees and employers contribute to the ESI plan. The employer’s contribution exceeds the employee’s contribution. The overall contribution is calculated as a proportion of the employee’s salary and dispersed accordingly.
   * Employer: 3.25 percent
   * Employees contribute 0.75% to fund benefits under the Act.

4. Employees’ State Insurance Corporation (ESIC):
   The Employees’ State Insurance Corporation (ESIC) is responsible for administering the Act. It is led by a Chairperson and includes members from both government and employee/employer organizations.
   ESIC oversees the fund, offers medical services, and ensures benefits are available to eligible employees.

5. Medical Care:
   The ESI Act ensures that employees and their families receive adequate medical care. This covers treatment for workplace-related injuries, diseases, and disabilities.
   ESI hospitals, clinics, and dispensaries offer free or low-cost medical care to their employees.

Administration:
The ESI Act is decentralized, with State Insurance Medical Services (SIMS) handling medical care and Regional/Branch Offices managing contributions and benefits.
ESIC collaborates with state governments and private healthcare providers to effectively offer services.

Registration Process:
Employers must register under the ESI Act, while employees must register to receive benefits. Registration is done through ESIC’s online site.

Objective of ESIC Act:
The Employees’ State Insurance Act of 1948 aims to provide social security for employees in need. Its goal is to lessen the financial burden on employees and their families in the event of an illness, accident, maternity leave, or death.

Amendments and Developments:
The Act has been amended to enhance employee benefits and expand its scope. These changes have often aimed to broaden the breadth of coverage, improve medical benefits, and raise pay limitations for coverage.

The Employees’ State Insurance Act of 1948 is critical for protecting workers and ensuring they receive financial and medical assistance during difficult times. It is a critical component of India’s social security system for the organized sector.

Conclusion:
To summarize, the Employees’ State Insurance Act, 1948 is an important social security legislation in India that assures workers’ well-being through comprehensive health and financial benefits. By establishing a system of mandated contributions from both employees and employers, the Act protects against risks such as sickness, injury, maternity, and death. The Employees’ State Insurance Corporation (ESIC) manages these benefits, assuring access to medical treatment, financial assistance during incapacitation, and pensions for dependents in the event of death. Overall, the Act promotes a safer, healthier, and more secure working environment, thereby benefiting workers and their families while also advancing social justice.