The Employees' State Insurance Scheme, outlined in the Employees' State Insurance Act of 1948, serves as a comprehensive social insurance program. Managed by ESIC, the scheme aims to safeguard employees, as defined by the Act, from the financial burdens associated with sickness, maternity, disability, and employment-related fatalities. In this article, we will discuss in detail about the Employees’ State Insurance Scheme, coverage, benefits, and more.
What is the Employee's State Insurance Act of 1948?
The Employees' State Insurance Act of 1948 is legislation enacted in India to provide social security and health insurance benefits to employees and their dependents. It mandates employers to contribute to a fund managed by the Employees' State Insurance Corporation (ESIC), which administers the scheme. The Act aims to protect employees against financial burdens arising from sickness, maternity, disability, or death due to employment-related injuries. It covers various benefits, including medical care, maternity benefits, rehabilitation, and funeral expenses.
The Employee's State Insurance Scheme extends medical coverage and essential benefits to workers and employees in various sectors such as factories, businesses, hotels, transportation, cinemas, newspapers, educational or medical institutions, and shops, where ten or more individuals are employed. The ESI scheme provides benefits to both workers and their dependents in the event of work-related unfortunate incidents. Employees in these sectors earning up to Rs. 21,000 per month are eligible for this social security program under the ESI Act.
Employees’ State Insurance Scheme (ESIS): Overview
The Employees’ State Insurance Scheme (ESIS) provides comprehensive health benefits to employees in India. Given below is a brief overview of the scheme:
Information |
Details |
Inauguration Date |
24th February 1952 (ESIC Day) by Prime Minister Pandit Jawahar Lal Nehru |
Scheme Name |
Employees' State Insurance (ESI) scheme |
Coverage |
Provides insurance coverage for workers, ensuring medical care for the insured and their dependents |
Benefits |
|
Purpose |
To safeguard workers' health and provide financial support in case of medical emergencies or accidents |
Initially, the Employee's State Insurance Scheme was only implemented in Kanpur and Delhi, but was later introduced in other Indian states and Union Territories. In 2015, a series of health reform initiatives of ESIC were launched in the country. Due to the expanding industrialisation, as of March 31, 2019, the ESIS has been extended to over 34 states and Union Territories.
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What is ESIC full form?
ESIC, which stands for the ‘Employees' State Insurance Corporation,’ is a statutory entity instituted by the Government of India under the Ministry of Labour and Employment. It offers social security and health insurance provisions to employees and their dependents for occurrences like sickness, maternity, disability, or demise resulting from employment-related injuries.
Where is ESIC applicable?
The Employment State Insurance Scheme (ESIS) is applicable across various states and union territories in India, including Delhi, Maharashtra, Karnataka, Tamil Nadu, and West Bengal. It primarily targets establishments with 10 or more employees in specified industries and sectors.
Features and benefits of Employees’ State Insurance Scheme
The section 46 of the Employees' State Insurance Act, 1948 envisages the following six social security benefits:
Medical benefit:
Comprehensive medical care is extended to an insured individual and their family members starting from the commencement of their insurable employment. There is no limit on the expenditure for the treatment of the insured person or their family members. Additionally, medical care is available to retired and permanently disabled insured individuals and their spouses upon payment of a nominal annual premium of Rs. 120.
Sickness benefit:
Insured workers are entitled to receive sickness benefit, which is provided as cash compensation at 70% of their wages, during certified sickness periods, for up to a maximum of 91 days annually. To be eligible for this benefit, the insured person must contribute for a minimum of 78 days within a six-month contribution period. There are two divisions under sickness benefit, these include Extended Sickness Benefit and Enhanced Sickness Benefit.
Maternity benefit:
Maternity benefits for childbirth or pregnancy last for 26 weeks and can be extended by an additional month based on medical advice, with full wages granted, contingent upon contributing for 70 days within the previous two contribution periods.
Disablement benefit:
If a worker experiences temporary disablement, they can receive 90% of their monthly wage until they regain full health. In the event of permanent disability, 90% of the monthly wage can be accessed for the entirety of their life.
Dependants benefit:
The dependents of the insured are provided with financial support in the event of illnesses or injuries occurring while at work. In such cases, they are entitled to receive monthly payments, which are distributed equally among the surviving dependents.
Funeral expenses:
An amount of Rs. 15,000 is payable to the dependents or to the person who performs the last rites from day one of entering insurable employment.
Confinement expenses:
If an insured woman or an insured person's wife experiences childbirth in a location where essential medical facilities covered by the ESI scheme are unavailable.
Vocational rehabilitation:
The ESIC offers this assistance as needed by the insured, providing Vocational Rehabilitation (VR) training at VRS for permanently disabled individuals.
Physical rehabilitation:
This aid is also available as necessary, particularly for those disabled as a result of employment injuries.
Read more: How to register for ABHA health ID card
Eligibility for Employee’s State Insurance (ESI)
Given below is the eligibility criteria for ESI scheme:
- Employment status: Must be an employee in a covered establishment.
- Wage limit: Monthly wages should not exceed Rs. 21,000 (Rs. 25,000 for persons with disabilities).
- Coverage: Applicable to factories, shops, and other notified establishments with 10 or more employees.
- Age: No age limit for coverage.
What is covered under Employees’ State Insurance Scheme?
The Employee State Insurance ESI Act applies to every non-seasonal factory with a workforce of 10 or more individuals. The central government had further extended the coverage to:
- Shops
- Hotels
- Restaurants
- Road motor transport establishments
- Cinema including preview theatres
- Newspaper establishments
- Establishment engaged in insurance business
- Non-banking financial companies
- Port trust
- Airport authorities
- Warehousing establishments employing 20 or more people, where Central Govt. is the appropriate Govt.
The current wage threshold for coverage under the Act, effective January 1, 2017, stands at Rs. 21,000 per month (Rs. 25,000 per month for Persons with Disabilities).
Coverage position |
Coverage (As on March 31, 2022) |
No. of insured persons |
3.10 crore |
No. of employees |
2.78 crore |
Total no. of beneficiaries |
12.04 crore |
No. of insured women |
58.69 lakh |
No. of employers, etc. |
15.94 lakh |
What is not covered under Employees’ State Insurance Scheme?
Presently, the Employee’s State Insurance Scheme excludes individuals earning over Rs. 21,000 monthly, and for those with disabilities, the maximum wage limit stands at Rs. 25,000 per month.
Also, read: Difference between ABHA and Ayushman card
Infrastructure of Employees State Insurance Scheme (ESIS)
Since its establishment in 1952, the Scheme's infrastructure has continuously grown to accommodate the expanding worker population's social security needs. Given below are the details:
Aspects |
Infrastructure features |
In-patient services |
151 hospital and 42 hospital annexes |
Out-patient medical facilities |
1450 – ESI dispensaries 188– AYUSH units 954– Panel clinics |
Payment of cash benefits |
627/ 185 Branch offices/ Pay offices, whose functioning is supervised by 62 Regional/ Sub-Regional and Divisional offices |
Occupational disease centres |
One centre each at: · Mumbai · New Delhi · Kolkata · Chennai · Indore |
Read more: Beneficiary NHA Portal for PMJAY and Ayushman Bharat
What documents are necessary for ESI online registration?
For ESI online registration, the necessary documents typically include:
- Registration certificate or License obtained under Shops and Establishment Act or Factories Act.
- PAN card of the business entity.
- Cancelled cheque of the business entity.
- Aadhar card of all the partners or directors.
- Address proof of the business entity (such as utility bills).
- Bank statement of the business entity.
- List of employees along with their Aadhar card numbers, salary details, and date of joining.
- Photographs of the employer and employees.
- Incorporation certificate (for companies).
These documents may vary slightly based on the specific requirements of the Employees' State Insurance Corporation (ESIC) and the nature of the business entity. It's advisable to check the latest requirements on the official ESIC (Employee's State Insurance) website or consult with a professional for accurate guidance.
When does ESI registration become necessary?
If a company, organisation, or business establishment employs 10 or more workers, or in the case of Maharashtra and Chandigarh, more than 20 employees, Employee State Insurance - ESI registration is mandatory. Workers earning below Rs. 21,000 per month (Rs. 25,000 for those with disabilities) are covered under Employee State Insurance Corporation (ESIC) scheme. They contribute 1.75% of their salary while employers contribute 4.75%. Rates are subject to periodic revision. Workers with a daily average wage up to Rs. 50 are exempt from contributing, but employers must still contribute for them.
ESIC contribution rates
Given below are the ESIC rates (w.e.f. 01.07.2019):
Category |
Rates |
Employee's contribution rate |
0.75% of the wages |
Employer’s contribution rate |
3.25% of the wages |
Benefits of health insurance schemes in India
Health insurance schemes in India offer a multitude of benefits, ensuring access to quality healthcare for individuals and families across the country. One such initiative is the employee health insurance scheme, which provides coverage tailored to the needs of employees and their dependents.
Financial protection:
Shields against exorbitant medical expenses, preventing financial strain during emergencies.
Enhanced healthcare access:
Facilitates access to a wide range of medical services and treatments.
Preventive care:
Promotes preventive measures and routine check-ups, contributing to overall well-being.
Comprehensive coverage:
Offers coverage for hospitalisation, surgeries, medications, and diagnostic tests.
Customisable plans:
Provides flexibility with various plan options tailored to meet diverse needs and budgets.
Health insurance, whether private or government-sponsored, is crucial for financial security, ensuring access to quality healthcare, preventive services, and improved health outcomes. It mitigates the risk of high medical costs, promotes timely medical care, and contributes to overall well-being and economic stability for individuals and society.
