ESI
ESI
What are ESI and ESIC?
ESI stands for Employee’s State Insurance and is a self-funding social security and health insurance scheme for employees in India. Employees enrolled under the ESI scheme are entitled to medical treatment for themselves and for the dependents of enrolled employees.
They are also entitled to disability or permanent invalidity benefits and even death benefits. The ESI Act 1948 is the governing legislation for ESI and the Employees’ State Insurance Corporation administers the fund. ESIC is an autonomous body under the Ministry of Labour and Employment.
Employees State Insurance Act 1948 :
The Employees State Insurance ACT,1948 was the first act with the motive to provide social benefit to the workers of the organization and the act was regulated by the employees state insurance corporation (ESIC) and controlled by the department of ministry of labor India.
They are also entitled to disability or permanent invalidity benefits and even death benefits. The ESI Act 1948 is the governing legislation for ESI and the Employees’ State Insurance Corporation administers the fund. ESIC is an autonomous body under the Ministry of Labour and Employment.
Advantages of ESI registration :
Benefits for an employee:
Employees State insurance is developed with the aim to provide employees with the legal benefit by providing them a legal assistance it can be be cash benefits or non cash benefits both the benefits are provided with the motive to develop and sustain the interest of the workers and lets discuss those benefits in brief below;
- Medical benefits:Employees covered under the ESI scheme can easily meet the medical expenses of themselves, their spouses, children, and parents.
- Sickness support:ESI helps employees especially when they are hospitalized and unable to go to the office by covering 70% of their wages for 91 days. It also helps to overcome the illness with financial stability but with the one condition that the employee who claims for sickness benefit needs to make payment towards the ESI fund for At Least 78 days can claim for sickness benefit under this act.
- Maternity support:Enrolment in ESI provides women with a lot of support during pregnancy who made contribution towards Esi fund for minimum 70 days are eligible for 100% wages; For example, women can take up to 26 weeks of paid Leave during their pregnancy or 6 weeks paid leave in case of miscarriage and 12 weeks incase a employees adopting a new new born baby
- Funeral Benefit:On the death of the employee who made a contribution towards the ESI fund the eldest family member will be provided with the Lump Sum amount of Rs.10000 for the funeral expenses.
- Employment Injury Allowance: An insured employee under ESI act met with the permanent total disablement or partial disablement due to the course of injury from employment they were allowed with the 100% of daily wages and this can be claimed when the employee is admitted in the hospital and until their recovery.
- Dependent Benefit: This is a kind of monthly pension that is payable to the dependents of the employees who died due to employment injury and will be paid with the 90% of wages of the deceased person.
- Unemployment Allowances: Under Rajiv Gandhi Shramik Kalyan Yojana Scheme ESI act provides the employees with monetary support who lost their job due to injury from employment or closure of business will be provided with monetary bentary 50% of their monthly wages for first 12 months and 40% of monthly wages for next twelve monthly this condition is allowed only if the employees enrolled in the ESI scheme for last three years.
Benefits for the employer:
- Compliance:ESI is mandatory for companies with more than 20 employees. So taking out ESI early will help the owner avoid legal action and penalties.
- Maximize productivity:ESI provides many benefits to employees but minimizes the difficulties they face, allowing them to work productively, and resulting in high profits.
- Create goodwill:Completion of an ESI creates goodwill with investors, consumers, and respondents. When you say you have signed up for an ESI, it gives your company a good reputation and builds trust.
Employer Liability towards ESI registration:
- The first liability of the employer is to make an on time registration by filing out form A of ESI act within 15 days once s this major step is done the employer should submit the declaration form of the employees who are in the payroll.
- It is mandatory for the employer to collect the funds of both employee and employer contributions of prescribed percentage rate within 15th of every month and contribution indeed to be deposited to the prescribed bank authority.
- The main responsibility of the employer is to maintain the records and registers or if any changes regarding the count of employees or any change in the organization need to be mentioned in the ESIC by the employer.
Who are Eligible for ESI Registration:
As mentioned above, any organization with more than 20 employees is required to register under the ESI scheme. Any organization with more than 20 employees must register under the scheme within one month of reaching 20 employees. Small organizations with less than 20 employees can also voluntarily register under the ESI scheme.
Some of the 10 even with the ten employees are liable for ESI registration. The establishment covered under ESI Registration are:
- Shops
- Restaurants and hotels
- Cinemas
- Education Institutions
- Newspaper establishment
- Warehouse businesses
- Insurance companies
- Non banking finance institution
- Companies involved in motor transportation
- Airports and Ports.
These establishments provided under the ESI act are entitled to ESI registration and they can claim over the benefits that are provided to them and these regulations and REquirements of ESI can different from state to state and the rules and provisions are varied.
Documents required for ESI registration:
- PAN card of the company and copy of the sales invoice.
- Any license for the company (GST or MSME etc).
- Address proof for the company (Rental Deed).
- Number of employees and their details.
ESI Registration Process
Step 1: Submission of Form 1 along with the required documents mentioned above:
Form A is a important document that need to be filed first for the ESI registration process and this form need to be filed with the essential details of business like name, address and which type of business with the mandatory documents like company registration certificate,pan card,details of employees with their monthly wages this form 1 is crucial step for ESI registration.
Step 2: Verification of the submitted form and documents:
After submitting the form A details with the needed document the authority of Employees State Insurance Corporation will verify the document whether the submitted documents of the company meet with the Requirement of ESI act. And the verification can also be made physically by inspecting the premises of the company and to know whether employees fall in the preview of ESI requirements and benefit once the verification done the authority will move to the next step.
Step 3: Issue of certificate and unique identification number:
Once the authority is completed with the verification and satisfied with the document and information provided by the organization they will be moving to the next step of Certification ESIC will issue the certificate to the employer once the certificate is issued to the employer the company now it is registered under the ESI act, After the registration [process the organization will be simultaneously provided with the 17 digit identification code and this code will be useful for organization future transaction related to ESI.
Step 4: Enrolled employees will receive a unique ID card:
After the Registration in ESI the eligible employees who are enrolled under the ESI act will be provided with the separate identification number which is different from other employees this number will serve as a proof for the employees to claim the Benefits Provided Under ESI act.
Step 5: Employees who have now been added are reported to the authority:
Once the enrolled employees receive the unique identification card, the employer needs to inform the authority if there is any new employee added then only ESIC can maintain an updated record to maintain a better administration.
In this clause the agreement should specify the procedures of dispute resolution if in case the party involves the breach of agreement. If the agreement was not disclosing the contractual law or the particular jurisdiction. The other source of dispute resolution should be clearly mentioned in the indemnity agreement. eg: Arbitration, negotiation etc.
FAQ
FAQ On ESI:
1. What is the percentage contribution to the ESI scheme?
For every employee earning less than Rs.21,000/- per month, the employee has to contribute 0.75% of his salary and the employer has to contribute 3.25%, making a total of 4.00%. The above fund is collected and managed by ESIC.
2. Does Minimum Member Requirement of ESI Varies from state to state in India?
- States that require compulsory registration in ESI if a company with minimum 10 employees
- States that require compulsory registration in ESI if a company with minimum 20 employees
- Daman And Diu, Goa, Himachal Pradesh, Jammu and Kashmir, Lakshadweep, Madhya Pradesh, Maharashtra, Meghalaya, Nagaland, Tamil Nadu, Uttar Pradesh.
- But now the ESI scheme is not applicable in Manipur, Sikkim, Arunachal Pradesh and Mizoram.
Andhra Pradesh,Bihar,Chhattisgarh,Delhi, Gujarat, Haryana, Jharkhand, Karnataka, Kerala, Odisha, Pondicherry, Punjab, Rajasthan, Tripura, Uttarakhand, West bengal
3. What is meant by Insurance Number?
The Insurance Number is Provided to the Employees enrolled in the ESI scheme this unique identification number helps to identify the employees who are eligible for ESI benefit and this unique number is called insurance number.
4. IS ESIC is compulsory for all employees?
No, the ESIC is not compulsory for all the employees because this is applicable only when a company has a minimum 10 employees with the salary less than 21000 per month in some case disabled employee with the salary of 25000 per monthly are eligible for ESI benefit but every employees cannot be covered under ESI scheme.
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