Understanding the ESIC Act: A Comprehensive Overview

Introduction

The Employees’ State Insurance Scheme, or ESIS, is a dynamic security program designed to offer employees and their families’ socioeconomic coverage. On February 24, 1952, the program was introduced in Kanpur. The Employees’ State Insurance Corporation (ESIC), an independent apex corporate organization, is responsible for overseeing the Employees’ Security Insurance (ESI), a comprehensive multifaceted security scheme.

The history of the ESIC Act After being introduced in 1952, the ESIC program has advanced significantly over its nearly 70-year history. Since just a small number of the manufacturing businesses in India required human resources during the early stages of industrialization, the parliament’s decision proved historically significant.

The law was passed during a period of poor economic conditions in India. Consequently, creating a multifaceted social security program with legal safeguards to protect working-class interests became the standard. The following types of factories and establishments are covered by the ESI Act of 1948: Power-using, non-seasonal factories with ten or more employees. Establishments and enterprises with 20 or more employees that are not seasonal and do not require electricity.

Employee State Insurance (ESIC) Act, 1948

The first significant piece of legislation passed by the parliament to grant workers social security was the Employees’ State Insurance Act of 1948 (ESI Act). Certain health-related incidents that employees are frequently exposed to are covered by the ESI Act of 1948. These consist of illness, maternity, and temporary or permanent disability. The Act also covers the incidence of occupational diseases or deaths brought on by work-related injuries that result in a complete or partial loss of income or earning capacity.

Employee Benefit

The social security benefits that ESIC offers under the ESI Act are intended to mitigate the effects of any financial or physical hardship that may arise during the aforementioned emergencies. Therefore, by protecting people from exploitation, poverty, and social degradation and enabling society to retain productive and socially beneficial labor, the ESI Act seeks to safeguard human dignity in times of crisis.

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Functions of Employees State Insurance Act, 1948

The 1948 State Insurance Act known as Employees is crucial to the well-being of many workers.

 The following are the purposes of this act:

The Employee’s State Insurance Act of 1948 permits hiring employees by section 17 of the constitution. In addition, it can give qualifying staff workers a gratuity and other fund-related perks.

The authority granted by this statute allows it to invest or withdraw funds from the central government to give employees better amenities.

The 1948 Employees State Insurance Act grants the authority to recruit or employ social security officers to carry out the act’s procedures among other Indian bodies. These officers have the authority to enforce that this act’s practices be followed.

The 1948 Employee’s State Insurance Act additionally withholds a certain amount of money from employee remuneration to govern all aspects of its operations and support other employees.

The Employees State Insurance Act’s Director-General is empowered to make choices that will expedite the act’s implementation. By the situation, he can also alter the implementation tactics.

The employee’s state insurance legislation of 1948 is in charge of keeping track of all the expenses made to give workers’ compensation and other benefits.

Benefits of Employees State Insurance Act, 1948

The 1948 Employees’ State Insurance Act is taken into account when paying employees’ benefits. In addition, it offers several advantages, which are listed below:

Health Advantage

Additionally, such employees’ salaries are not withheld while they receive treatment. If any member of their family suffers a serious sickness, they also receive a set percentage of compensation.

Benefit of Maternity

It is the greatest benefit that the Employees’ State Insurance Act of 1948 offers to women. Pregnant women are entitled to additional leave both before and after giving birth. This implies that for a few months before and following delivery, expectant mothers are exempt from having to report to work. Throughout their maternity leave, they will get their full income.

Benefit of Disability

Individuals with disabilities are also entitled to additional benefits under the 1948 Employees State Insurance Act. It offers additional reservations to people with disabilities in different categories.

Benefits for Unemployment

The 1948 Employees State Insurance Act also gives unemployed people who are qualified to work a certain amount of monthly compensation. In addition, it offers loans to those looking to start their businesses. By this statute, they can accept loans with cheaper interest rates.

Insurance Benefits

 Both public and private employees are eligible for insurance benefits under the 1948 Employees State Insurance Act.

Employees State Insurance Scheme Benefits

The ESI provides workers with full medical coverage in the event of an illness, accident, disability, or even death at work, as well as financial assistance during unemployment periods. Benefits of the ESI program include:

  • Physical incapacity
  • Motherhood
  • Illness
  • Dependent
  • Health care
  • Allowance for unemployment
  • In addition to the aforementioned benefits, the program offers the insured workers the following need-based advantages:
  • Rehabilitation in the workplace
  • Physical therapy
  • Senior health care
  • Gandhi Rajiv Yojana Shramik Kalyan
  • Encouragement for private sector firms to hire people with disabilities regularly

Finance

For Indian workers, the ESI is a self-financing health insurance plan, similar to other social security systems introduced by ESIC. A set percentage of salaries is contributed by both covered employees and their respective employers. The state governments pay one-eighth of the medical benefit costs under the terms of the ESI Act, with each insured worker contributing a maximum of INR 1500 annually per capita. The relevant state government is responsible for paying any additional costs that exceed the cap and do not fall into the shared pool.

Contribution

The Workers’ State Insurance program is a contributory plan. As a result, all workers in factories and other businesses covered by the ESI Act must obtain insurance by the rules.

Both the employer’s and the employee’s contributions make up the contribution that is due to the ESI corporation on behalf of a worker. Regular revisions are made to the rates. As of right now, the company contributes 4.75% of the wages provided to the employee in each pay cycle, while the employee contributes 1.75% (as of January 1, 1997) of their wages. In regions where the ESI program is being introduced, businesses must pay 3% of the employee’s earnings during the first two years of the program (as of June 10, 2016). Workers are not required to contribute to ESI if their average daily pay is less than INR 137. Employers do, however, make a contribution of their own for these workers.

Atal Bimit Vyatki Kalyan Yojana

For its customers, the ESI scheme is thought to be extremely helpful amid the current COVID-19 epidemic situation. Every month, millions of work chances have been lost due to the current pandemic. As a result, the ESIC offers monetary compensation for unemployment benefits as part of the significant Atal Bimit Vyakti Kalyan Yojana (ABVKY) government program.

One benefit program under the ESI scheme is the ABVKY. For three months, the compensation has been raised from 25% to 50% of the monthly wage as an exception.

Each beneficiary’s benefit under the jobless scheme is limited to INR 31,500. Before going unemployed, the insurer must have worked for two years. For them to be qualified for the program, these people also need to have contributed for 78 days.

ESIC Future Prospects

 Under Section 1(5) of the ESIC Act, the ESIC scheme now covers businesses such as retail stores, movie theaters, restaurants, hotels, newspaper companies, insurance companies, road-motor transport undertakings, airport and warehousing authorities, private medical institutions, and temporary and contract employees of the Municipal Corporation/ Bodies.

With 566 districts spread over 34 states and union territories, the ESI program is widely used in the nation. In the upcoming year, it wants to be in more than 700 districts.

Currently, the policy provides coverage to about 3.48 crore workers and around 13.32 crore beneficiaries, of which 51.2 lakh are women.

The beneficiaries of the system are entitled to the amenities of hospitals, clinics, and dispensaries that are affiliated with the Ayushman Bharat system.

Conclusion

The Indian legislative body that offers workers huge benefits is the Employees State Insurance Act of 1948. The act’s entire operation is governed from the headquarters, which are situated in New Delhi. The Employees State Insurance Act of 1948 is governed by the Ministry of Labor and Employment in conjunction with the Central Government. The act is said to have an expenditure of ₹80,000 crores. This act has given many benefits to Indian employees in the 70 years since it was introduced, and it will continue to do so with additional facilities in the future.

Author: Kavya, in case of any queries please contact/write back to us via email chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.

References

  • Gupta, I., & Mayur Trivedi. (2005). Social Health Insurance Redefined: Health for All through Coverage for All. Economic and Political Weekly, 40(38), 4132–4140. http://www.jstor.org/stable/4417169
  • Ramesh Bhat, & Sumesh K. Babu. (2004). Health Insurance and Third Party Administrators: Issues and Challenges. Economic and Political Weekly, 39(28), 3149–3159. http://www.jstor.org/stable/4415260
  • Merlis, M. (2001). Public Subsidies for Employees’ Contributions to Employer-Sponsored Insurance. Inquiry, 38(2), 121–132. http://www.jstor.org/stable/29772946
  • T. Padmanabhan. (1986). The Number Game: Occupational Health Hazards at Indian Rare Earths Plant. Economic and Political Weekly, 21(10/11), 443–452. http://www.jstor.org/stable/4375429
  • Javid A. Chowdhury. (2004). Recent Welfare Schemes: An Assessment. Economic and Political Weekly, 39(28), 3165–3170. http://www.jstor.org/stable/4415262
  • DUGGAL, R. (2015). Saving the Employees’ State Insurance Scheme. Economic and Political Weekly, 50(17), 17–20. http://www.jstor.org/stable/24481815
  • GUPTA, I., & CHOWDHURY, S. (2014). Public Financing for Health Coverage in India: Who Spends, Who Benefits, and At What Cost? Economic and Political Weekly, 49(35), 59–63. http://www.jstor.org/stable/24480496
  • The Employees State Insurance Act,1948

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