Employees’ State Insurance Scheme of India,is a multidimensional social security system tailored to provide socio-economic protection to worker population and their dependants covered under the scheme.
The scheme was inaugurated in Kanpur on 24th February 1952. The comprehensive and multi-pronged social security programme is administered by an apex corporate body called the Employees' State Insurance Corporation.
The promulgation of Employees' State Insurance Act, 1948 (ESI Act), by the Parliament was the first major legislation on social Security for workers in independent India.
The ESI Act 1948, encompasses certain health related eventualities that the workers are generally exposed to; such as sickness, maternity, temporary or permanent disablement, Occupational disease or death due to employment injury, resulting in loss of wages or earning capacity-total or partial. Social security provision made in the Act to counterbalance or negate the resulting physical or financial distress in such contingencies, are thus, aimed at upholding human dignity in times of crises through protection from deprivation, destitution and social degradation while enabling the society the retention and continuity of a socially useful and productive manpower.
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 shops, hotels, restaurants, cinemas including preview theatres, road-motor transport undertakings and newspaper establishments employing 10* or more persons.
Further under section 1(5) of the Act, the Scheme has been extended to Private Medical and Educational institutions employing 10* or more persons in certain States/UTs.
*Note: However the threshold for Coverage of establishments is still 20 Employees in Maharashtra and Chandigarh. The existing wage limit for coverage under the Act is Rs.21,000/- per month (w.e.f. 01/01/2017).
The ESI Scheme is now notified in 526 Districts in 34 States and Union Territories, which include 346 complete District, 95 District Headquarters and in 85 Districts. The scheme is implemented in centers. The scheme is yet to be implemented in Arunachal Pradesh and Lakshadweep.
ESI Scheme, like most of the Social Security Schemes the world over, is a self financing health insurance scheme. Contributions are raised from covered employees and their employers as a fixed percentage of wages. The State Governments, as per provisions of the Act, contribute 1/8th of the expenditure of medical benefit within a per capita ceiling of Rs. 1500/- per Insured Person per annum. Any additional expenditure incurred by the State Governments, over and above the ceiling and not falling within the shareable pool, is borne by the State Governments concerned.
E.S.I. Scheme being contributory in nature, all the employees in the factories or establishments to which the Act applies shall be insured in a manner provided by the Act. The contribution payable to the Corporation in respect of an employee shall comprise of employer's contribution and employee's contribution at a specified rate. The rates are revised from time to time.
Currently, the employee's contribution rate (w.e.f. 1.1.97) is 1.75% of the wages and that of employer's is 4.75% of the wages paid/payable in respect of the employees in every wage period. For newly implemented areas, the contribution rate is 1% of wages of Employee and 3% payable by Employers for first 24 months (w.e.f. 06.10.2016) Employees in receipt of a daily average wage upto Rs.137/- are exempted from payment of contribution. Employers will however contribute their own share in respect of these employees.
Collection of Contribution
An employer is liable to pay his contribution in respect of every employee and deduct employees contribution from wages bill and shall pay these contributions at the above specified rates to the Corporation within 15 days of the last day of the Calendar month in which the contributions fall due. The Corporation has authorized designated branches of the State Bank of India and some other banks to receive the payments on its behalf.
Contribution Period and Benefit Period
There are two contribution periods each of six months duration and two corresponding benefit periods also of six months duration as under.
Contribution period Corresponding Cash Benefit period
|Contribution Period||Cash Benefit Period|
|1st April to 30th Sept.||1st Jan of the following year to 30th June|
|1st Oct to 31st March of the year following.||1st July to 31st December.|
The section 46 of the Act envisages following six social security benefits :-
In addition, the scheme also provides some other need based benefits to insured workers.
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