Employees State Insurance (abbreviated as ESI) is a self-financing social security and health insurance scheme for Indian workers

Employees State Insurance

The fund is managed by the Employees State Insurance Corporation (ESIC) according to rules and regulations stipulated in the ESI Act 1948. ESIC is a Statutory and Autonomous Body and the Administrative Ministry is the Ministry of Labour and Employment, Government of India.

This scheme is started for Indian workers. The workers are provided with a huge variety of medical, monetary, and other benefits from the employer. Any Company having more than 10 employees (in some states it is 20 employees) who have a maximum salary of Rs. 15000/- has to mandatorily register itself with the Employees State Insurance Corporation (ESIC).

UNDERSTANDING THE WORKING OF THE SCHEME IN BRIEF

Under this scheme, the employer needs to contribute an amount of 4.00% of the total monthly salary payable to the employee whereas the employer needs to contribute only 1.00% of his monthly salary every month of the year. The only exemption to the employee in paying his contribution is whose salary is less than Rs. 100/- per day.

BENEFITS OF ESIC REGISTRATION

  1. Sickness benefits at the rate of 70% (in the form of salary), in case of any certified illness certified and which lasts for a maximum of 91 days in any year
  2. Medical Benefits to an employee and his family members
  3. Maternity Benefit to the women who are pregnant (paid leaves)
  4. If the death of the employee happens while on work – 90% of the salary is given to his dependents every month after the death of the employee
  5. Same as above in case of disability of the employee
  6. Funeral expenses
  7. Old age care medical expenses

COVERAGE OF THE SCHEME

The Employees State Insurance Corporation (ESIC) scheme applies to the following As per the government notification dated Sec 1(5) of the ESI Act. :

Under Section 2(12), the Act is applicable to non-seasonal factories employing 10 or more persons.

Under Section 1(5) of the Act, the Scheme has been extended to:

  1. Shops,
  2. Hotels, Restaurants,
  3. Cinemas including preview theatres,
  4. Road-motor transport undertakings,
  5. Newspaper establishments,
  6. Establishments engaged in Insurance Business, Non-Banking Financial Companies,
  7. Port Trust, Airport Authorities and
  8. Warehousing establishments employing 10* or more persons.

Further, under Section 1(5) of the Act, the Scheme has been extended to Private Medical Institutions, Educational institutions and to contract and casual employees of Municipal corporations/Municipal Bodies employing 10* or more persons in certain States/UTs.

The existing wage limit for coverage under the Act effective from 01/01/2017 is Rs.21,000/- per month [Rs. 25,000/- per month in the case of persons with a disability].

*Note: However the threshold for Coverage of establishments is still 20 Employees in Maharashtra.

DOCUMENTATION REQUIRED FOR EMPLOYEES STATE INSURANCE CORPORATION (ESIC) REGISTRATION

The documents required for the registration are –

  1. A registration certificate obtained either under the:
  2. Factories Act
  3. Shops and Establishment Act
  4. Certificate of Registration in case of Company, and Partnership deed in case of a Partnership
  5. Memorandum of Association and Articles of Association of the Company
  6. A list of all the employees working in the Establishment
  7. PAN Card of the Business Entity as well as all the Employees working under the entity
  8. The compensation details of all the employees
  9. A canceled cheque of the Bank Account of the Company
  10. List of Directors of the Company
  11. List of the Shareholders of the Company
  12. A register containing the attendance of the employees

After collecting all the above-mentioned documents the following procedure is to be followed for the registration of the ESI:

  1. Form No – 1 (Employers Registration Form) is to be downloaded and filled.
  2. After downloading the PDF version of the form and filling it, it has to be submitted on the website itself along with the above-mentioned documents.

After verification of the form, the government will issue a 17 digit unique number after this the employee will provide to his employee the duly filled form as a part of the registration process and will get an ESI Card after registration.

EMPLOYEES STATE INSURANCE CORPORATION (ESIC) RETURNS

The half-yearly return of ESIC for the period April to September is due by 12 November, and October to March is due by 12 May.

CONSEQUENCES FOR NON- COMPLIANCE WITH ESIC CONTRIBUTION

Amount deducted from employee’s wages as an employee contribution is deemed to have been entrusted to the employer. Therefore the employer has a higher responsibility to deposit the contribution with ESI.

Non-payment or delayed payment of the Employee’s contribution deducted from the wages of the employee amounts to ‘Criminal Breach of trust’ is punishable under IPC Section(s) 406, 409 and also an offense u/s 85 (b – g) of ESI Act. Non-payments, delayed payments, or falsifying payments under Employees State Insurance (ESI) Act may attract imprisonment for a period extending up to 2 years and a fine up to Rs 5,000.

An employer who fails to pay the contribution within the limit specified in the regulation shall be liable to pay simple interest at the rate of 12% per annum in respect of each day of delay or default in payment of contribution.

CONCLUSION

The above-mentioned compliance and penal provisions are just brief in nature with respect to Employee state insurance schemes, to avoid such non-compliances one needs to take professional help who would help the organization not only in understanding the requirements but also will guard the organization from heavy penalties and prosecutions.

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