Employees' State Insurance Act (ESI Act)

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The Employees State Insurance Act, 1948 is beneficial and social legislation. Its main aim is to provide economic security to people who work in certain factories and establishments. 

The ESI scheme provides complete medical care to the employees registered with the ESIC during the period of his/her incapacity and working capacity. It also provides financial assistance to compensate for the loss of wages of the employee during the period of his/her abstention from work due to sickness, maternity and employment injury. The ESI scheme provides medical care to family members of the employee also. The Act contains several important definitions and provisions that regulate these workers.

At present, the ESI scheme is applicable to all factories and other establishments as defined in the Act with 10 or more persons employed in such establishment and the beneficiaries’ monthly wage does not exceed Rupees twenty-one thousand (Rs 21,000) are covered under the scheme. In future this limit may change subject to government policy.  Whether the employer has employed 10 or more employees, all employees employed by the employer, agnostic of the salary are reckoned. The applicability of the scheme is explained through a flow chart below:

Please take a note that Construction Industry does not cover under ESI if it is a green field project. For the similar benefits Construction Industry used to follows BOCW Cess Act. However, it may differ for brown field project hence follow the principle employer guidance.

Establishments that are covered under the ESI Scheme

The Central Government issued a notification that all factories where 10 or more persons are employed are covered under the ESI scheme mandatorily. The following establishments employing 10 or more persons are also mandatorily covered under the ESI scheme:

1). Shops.

2). Hotels or restaurants not having any manufacturing activity, but only engaged in ‘sales’.

3). Cinemas, including preview theatres.

4). Road motor transport establishments.

5). Newspaper establishments.

6). All private educational institutions and medical institutions.

Benefits of the ESI Scheme

Broadly, the benefits under this scheme are categorized under two categories:

Cash benefits (which includes sickness, maternity, disablement (temporary and permanent), funeral expenses, rehabilitation allowance, vocational rehabilitation and medical bonus) and,

Non-cash benefits through medical care.

Complete medical care and attention are provided by the scheme to the employee registered under the ESI Act, 1948 at the time of his incapacity, restoration of his health and working capacity.

During absenteeism from work due to illness, maternity or factories accidents which result in loss of wages complete financial assistance is provided to the employees to compensate for the wage loss.

The scheme provides medical care to family members also.

In case a worker under the Act dies during employment, the ESI Corporation pays some money to his dependents. According to the Act, dependents are certain relatives of a deceased worker. These include his widow, a son below 25 years of age, an unmarried daughter and his widowed mother. A son/daughter above 25 years can also be a dependent if he/she is wholly dependent on the worker.

Pregnancy which leads to the birth of a living child is called “confinement” under this Act. It can also mean the birth of a child (living or dead) after 26 weeks of pregnancy.

The ESI Act contains a few categories of disablements for which employees can claim compensation. These may be either permanent or temporary. Permanent disablements may further be either partial or total.

For More Details about BOCW Cess Click Here
For More Details about Rules and Regulations Click Here 
For More Details about Labour Law's of Construction Industry Click Here
For More Details about Labour Welfare Fund Click Here