The Employees’ State Insurance (ESI) scheme is managed and administrated by the Employees’ State Insurance Corporation (ESIC), a statutory body set up under the Employees’ State Insurance Act, 1948. ESIC is governed by the Ministry of Labour and Employment, Government of India. In this blog, we will discuss about Employees’ State Insurance– Eligibility – Benefits
Topics Covered –
- Briefly explain the concept of ESI?
- Who is eligible for registering into ESI Scheme?
- Which entities are covered under ESI Scheme?
- What are the benefits of ESI Scheme?
- Is it mandatory for Employers to register under ESI scheme?
- What is the interest rate on ESI Scheme?
- What are the salary or wages components included in ESI Scheme?
- Is ESI contribution amount refundable?
Briefly explain the concept of ESI?
This scheme is a compulsory contributory fund aimed at assisting along with retirement benefits to the employee against financial crisis arising out in case of sickness, disablement due to employment injuries or death, etc. Under this scheme, an amount equal to 4% of the salary of employees is contributed towards the scheme. Out of which employee contributes 0.75% out of his/her salary and an employer contributes the remaining 3.25%. At the time of contingency, assistance (cash or non-cash) is provided to the employee insured on behalf of ESIC.
The headquarter of ESIC is at New Delhi besides headquarter, there are 23 regional offices, 26 sub-regional offices in the states and over 800 local offices throughout the country to support the execution of ESI scheme.
Who is eligible for registering into ESI Scheme?
Section 2 (12) of the ESI Act, 1948 prescribes the eligibility for registering into EPF Scheme-
- Any individual working in the non-seasonal factory with more than 10 employees’.
- Employees‘ working in Entities covered under ESI Act, 1948 in which more than 20 employees are employed.
- Monthly income of the employee (excluding overtime, bonus, leave encashment) does not exceeds Rs.21, 000 per month and if the employee is disable, then the wage limit is Rs. 25,000 per month.
- To avail the benefits of social security of the ESI scheme, employees should drawn wages up to Rs. 10,000 per month.
Which entities are covered under ESI Scheme?
ESI Act, 1948 covers many establishments which are eligible for the registration as long as entities having required number of employees’. The entities covered are-
- Restaurants or hotels which are engaged in sales
- Road motor & Roadside motor Transport establishments.
- Newspaper establishments covered under Factory Act.
- Private Educational institutions
What are the benefits of ESI Scheme?
ESI registration ensures following benefits under ESI Scheme-
- Medical Assistance- Registered ESI employee and the family members of the employee are enable to avail benefits of complete medical care and insurance.
- Maternity Assistance- Pregnant women’s are enable to maternity benefits up to 26 weeks. The period can be extended by 30 days on medical advice. To avail such benefits, employers are required to contribute wages for 70 days preceding 2 contribution periods.
- Disability benefits- Disabled employees’ gets 90% of their monthly salaries as disablement benefits.
- Sickness benefits- Absence from work due to illness can be taken maximum for 91 days along with 70% of monthly wages.
- Dependents benefits- Cases where employee’s death occurs due to injury or occupational hazards during employment then 90% of wages in the form of monthly payment is paid to dependants of deceased insured person.
- Funeral expenses- The family or the person who performs the last rites of the deceased employee is entitled to an additional amount of Rs. 15000 towards funeral expenses.
Is it mandatory for Employers to register under ESI scheme?
Yes, it is the statutory responsibility of the employer under Section 2A of the Act read with Regulation 10-B,to register their Factory or Establishment under the ESI Act, 1948 within 15 days from the date of its relevance to them.
What is the interest rate on ESI Scheme?
ESI rates are revised time to time. Currently ESI rate is 4%. The employee’s contribution rate is 0.75% of wages and employer’s contribution rate is 3.75% of the wages in every wage period.
Employees’ earning daily average wages up to Rs 176 are exempted from the contribution of ESIC. However, employers’ will contribute their share for such employees’.
What are the salary or wages components included in ESI Scheme?
ESI contributions are calculated based on the employee’s monthly gross salary. For ESI calculations, salary or wages consists of-
- Basic Pay
- Dearness Allowance (DA)
- House Rent Allowance (HRA)
- Incentives (inclusion of sales commission)
- City Compensation Allowance
- Meal Allowance
- Uniform Allowance
- Any other Special Allowance
Note- Gross monthly salary or wages does not includes Annual Bonus (Diwali, holi bonus), Encashment leave, Gratuity, Retrenchment Compensations.
Is ESI contribution amount refundable?
No, According to the ESI Act, 1948, ESI contribution amount is not refundable under any circumstances. Only the benefits are offered to insured employee and dependent family of the employee’s. No option for withdrawal is available except medical benefits.
In case of any query related to the ESI then seek assistance from the Team of Manthan Experts for immediate assistance.Apply for Assistance
Employees’ provident fund (EPF) – Eligibility – Benefits