About Employee State Insurance (ESI)

ESI stands for Employee State Insurance managed by the Employee State Insurance Corporation (ESIC). The government introduced the ESI scheme for Indian workers, providing them with social security.

The ESIC is an autonomous body created by the law under the Ministry of Labour and Employment, Government of India. Employers and employees contribute a percentage of employee's wages towards ESI every month. Many medical, monetary and other benefits are provided to workers covered under the ESI Act.

ESIC registration applicability

In all factories and specified establishments where 10 or more persons are employed, the owner or employer of the units or establishment must compulsorily register with ESIC within 15 days from the date of its applicability. However, only those employees are covered under the ESI scheme whose monthly wages do not exceed Rs.21,000 (Rs.25,000 in the case of a person with a disability).

As per the Central Government notification, under Section 1(5) of the ESI Act the following establishments are covered if they employ 10 or more persons:

1. Shops.
2. Restaurants or hotels engaged only in sales.
3. Cinemas including preview theatres.
4. Road motor transport establishments.
5. Newspaper establishments (which are not covered under the Factory Act).
6. Private medical institutions.
7. Private educational institutions.
8. Casual employees of Municipal Corporations or Municipal Bodies

The Central Government has extended the coverage to the following entities if they employ 20 or more persons: 

1. Insurance business 
2. Non-Banking Financial Companies (NBFCs) 
3. Airport authorities 
4. Port trusts 
5. Warehousing establishments

ESIC contribution rates for employers and employees?

The ESI Scheme is mainly financed by contributions from employees covered under the scheme and their employers, as a fixed percentage of wages every month of the year.

Present rates of contribution are as follows: -

• Employer's contribution: 3.25% of the total monthly wage payable whereas,
• Employee's contribution: only 0.75% of his monthly wage

Employees earning up to Rs.176/- a day as wages are exempted from payment of their share of contribution. This means that for such employees only employer contribution has to be paid.

The State Govt. bears one-eighth i.e. 12.5% share of total medical expenditure, within the per person ceiling of Rs.1200/- per annum.

ESIC registration fees

The fee for ESI Registration is as follows:

ESIC Registration process

The ESIC registration is completely online. The following are the steps involved in ESIC Registration:

Step 1: Log in to ESIC portal

• Firstly, the employer is required to get himself registered on the ESIC portal
• Click on "Employer Login" option to register on the ESIC portal home screen
• Click on the ‘Sign Up’ button.
• After Sign up, the employers need to fill in the details and submit the form.

Step 2: Confirmation Mail

• After successful sign-up, the employer will receive a mail confirmation sent to the registered mail ID and mobile number.
  
• The email will contain the login credentials (username and password)'
• Use the username and password and log in to your account in the ESIC portal

Step 3: Employer Registration Form-1

• After Login to your account in the ESIC portal using your username and password
• Click on the ‘New Employer Registration’ option
• Next, select the ‘Type of Unit’ from the drop-down list and click on the ‘Submit’ button.
• The ‘Employer Registration – Form 1’ will appear and the employer needs to fill in the details. On the Employer Registration Form-1 (ESI registration Form), the employer needs to enter the details about the units of the employer, employer details, factory/establishment details and employee details. Once, the complete form is filled by the employer, he/she needs to click on the Submit’ button.

Step 4: Payment for Registration

• After submission of the ESI Registration Form, i.e. Form-1, a message will be displayed on the screen for payment of advance contribution. Click on the ‘Pay Initial Contribution’ link.
• The initial contribution amount will be displayed. Select the ‘Online’ option and click on the ‘Submit’ button
• The ‘Challan Number’ will be displayed on the screen. Note down the challan number and click on the ‘Continue’ button.
• The ‘Payment Gateway' page will open where the employer needs to select the mode of payment and fill the amount to be paid.

Step 5: Registration Letter

• On the successful payment of a six-month advance contribution, the system-generated Registration Letter (C-11) is sent to the employer by email which will contain a 17-digit Registration Number by the ESIC department.
• The Registration Letter (C-11) is a valid proof of registration of the employer.

Advantages of ESI for Employer

Employers who come under the purview of the ESI Act, of 1948, derive the following benefits under the Scheme: - 

• Employers are relieved of their responsibility of providing medical facilities to employees and their dependents unless it is a contractual obligation of the employer. 
• Employers are exempted from the applicability of: 
  1. Maternity Benefit Act. 
  2. Employees’ Compensation Act. 
• Employers are relieved of any responsibility in times of physical distress of workers such as sickness, employment injury, or physical disablement resulting in loss of wages, as the responsibility of paying cash benefits shifts to the ESIC in respect of insured employees. 
• Any sum paid by way of contribution under the ESI Act is deducted in computing 'income' under the Income Tax Act. 
• Incentive Scheme for employers for persons with disabilities: For private sector companies, employing persons with disabilities on or after 1.4.2008 and drawing monthly wages up to Rs. 25,000/- are covered under the scheme. Employers are exempted from paying the employer’s share of contribution up to a maximum period of 3 years and the same is reimbursed to the Corporation by the Central Govt.

Advantages for employees under ESI Scheme

• Sickness Benefit:

Sickness Benefit is payable to an insured person in cash, in the event of sickness resulting in absence from work and duly certified by an authorized medical officer/practitioner.

Eligibility: After 9 months of insurable employment and at least 78 days of contribution in the relevant period.

Duration and Amount: Up to 91 days in two consecutive benefit periods at 70% of average daily wages.

• Extended Sickness Benefit:

Extended Sickness Benefit becomes payable to insured persons for the period of certified sickness in case of specified 34 long-term diseases and in case of rare diseases that need prolonged treatment and absence from work on medical advice.

Eligibility: After 2 years of insurable employment and at least 156 days of contribution in the preceding 2 years.

Duration and Amount: Up to 2 years (including 91 days of Sickness Benefit) at 80% of average daily wages.

• Enhanced Sickness Benefit (Cash)

Enhanced Sickness Benefit (Cash) is a cash benefit payable to insured persons in the productive age group for undergoing sterilization operation, viz. vasectomy/tubectomy.

Eligibility: After 9 months of insurable employment and at least 78 days of contribution in the relevant period.

Duration: It is payable to Insured women for 14 days for tubectomy and 7 days in case of vasectomy in respect of male IPs

Amount: The amount payable is 100% of the average daily wages.

• Maternity Benefit

Maternity Benefit is payable to Insured Women in case of confinement, miscarriage, or sickness related thereto in a benefit period.

Eligibility: At least 70 days of contribution in the preceding two consecutive contribution periods.

Duration and Amount: 12 weeks for normal delivery, 6 weeks for miscarriage, extendable by 4 weeks on medical grounds at 100% of average daily wages.

• Disablement Benefit

Disablement Benefit is payable to insured employees, being in insurable employment, suffering from physical disablement due to employment injury or occupational diseases.

Temporary Disablement: 90% of average daily wages until recovery.

Permanent Disablement: Lifelong benefit based on loss of earning capacity.

• Dependants’ Benefit (Family Pension)

Dependants’ Benefit (Family Pension) becomes payable to dependants of a deceased insured person where death occurs due to employment injury or due to occupational disease.

Eligibility: Death due to employment injury or occupational disease. 

Beneficial: The following dependent relatives can receive the benefit:

Dependent Parents can receive this benefit every month for lifetime

Dependent wife can receive this benefit every month for life or till her remarriage

Son up to the age of 25 years 

Unmarried daughter till her marriage

Amount: 90% of average daily wages distributed among dependants.

• Vocational Rehabilitation Benefit

Eligibility: Employees under 45 years of age with 40% or more disablement due to employment injury.

Benefit: The actual fee charged for vocational training or Rs. 123 per day, whichever is higher.

Duration: Payable for the entire duration of the vocational training.

1. Some other benefits offered by the Scheme are: -

Funeral expenses on the death of an insured person are subject to a maximum of Rs 10,000. The claim of such payment should be made within three months of the death of the IP

Free supply of physical aids and appliances such as crutches, wheelchairs, dentures, spectacles, and other such physical aids.

Preventive health care services such as immunization, family welfare services, HIV/AIDS detection, treatment, etc.

Confinement Allowance @ Rs.2500/- is paid to an insured woman or insured person in respect of his wife in case confinement occurs at a place where necessary medical facilities under ESI Scheme are not available. This is paid for two confinements only.

Unemployment Allowance (Rajiv Gandhi Shramik Kalyan Yojana): For involuntary unemployment, 50% of average daily wages for up to 12 months, plus skill upgrade training.