Employee State Insurance Corporation(ESIC)

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Employee State Insurance Corporation(ESIC)

         Employee State Insurance Corporation (ESIC) is a self-financing social security and health insurance scheme that provides medical, sickness, maternity, and disablement benefits, as well as a variety of other benefits to employees and their families, such as funeral expenses, free supply of physical aids, and so on.   

ESIC Registration Eligibility

Any non-seasonal factory or company with more than 10 employees (in some states 20 employees) earning a maximum pay of Rs. 21,000/- is required to register with the ESIC within 15 days of its application date.

The employer is required to contribute 3.25 percent of the entire monthly wage payable to the employee, whereas the employee is simply required to contribute 0.75 percent of his monthly salary every month of the year under this system. Employees whose wage is less than Rs. 176/- per day are the only ones who are excused from paying their contribution.

Entities Covered Under ESIC

As per the government notification, under Section 1(5) of the ESI Act the following entities are covered:

When the above-mentioned establishments employ 10 or more persons, the owner/employer of the establishment must compulsorily register it with the ESIC.

Documents Required For ESI Registration

Benefits of ESIC Registration

What is included in Our Package

Drafting Documents

Application Filing

Application Processing

Completion of registration

Concerns Related to ESIC Registration

  • The ESI system is a contribution-based self-financing scheme. The ESI funds are mostly made up of monthly contributions from companies and employees at a fixed proportion of earnings received. The state governments additionally pay 1/8th of the cost of medical benefits.
  • The following establishments employing 10 or more persons attracts ESI coverage :
    • Shops
    • Hotels or restaurants not having any manufacturing activity, but only providing service
    • Cinemas
    • Roadside Motor Transport Establishments
    • News paper establishments
    • Private Educational Institutions and Medical Institutions

                              In some states the minimum employees required for coverage is  20 or more. A few State Governments have not extended                                          scheme to  include Medical & Educational Institutions.

  • Any amount deducted from wages under the ESI Act is regarded to have been entrusted to the employer for the purpose of paying the contribution for which it was deducted by the employee. Non-payment or late payment of the employee’s contribution after it has been taken from the employee’s earnings is a criminal offence punishable under Section 406 of the Indian Penal Code

 

Frequently Asked Questions(FAQ’s)

What is the procedure for registration of an employer?

An employer shall apply for FORM 01 within 15 days after the act becomes applicable to a unit or establishment.

What are the compliance requirements?

Every employer covered under this act has to comply with various compliances such as deposit of monthly contribution, in order to file half yearly return and report to ESIC authorities if there is any change in business activity, address, ownership and the management, maintenance of registers and records etc.

Whether the benefits grant to insured employees are transferable?

No, right to receive any benefits under this act is not transferable.

Is it mandatory for the Employer to register under the scheme?

Yes, it is the statutory responsibility of the employer register their Factory/ Establishment under the ESI Act within 15 days from the date when the act becomes applicable to them.

Can an establishment or factory once covered go out of coverage if the number of persons employed falls below the minimum limit prescribed?

Once a factory or an Establishment is covered under the Act, it continues to be covered despite the fact that the number of covered employees employed at any time falls below the required limit or there is a change in the manufacturing activity.

Is over-time to be included for wage ceiling limit for coverage of an employee?

No. Overtime is not included for calculating the wage ceiling limit for coverage of an employee. But, it is included for payment of contribution to cover the risk during the period of overtime work, and to enable receiving cash benefits at an enhanced rate also.

What is the time limit for payment of contribution?

Contribution will be paid for an employee in to a bank duly authorised by the Corporation within 21 days of the last day of the month in which the contribution is due for any wage period.

Is there any interest on delayed payment?

An employer who doesn’t pay the contribution within the time limit, will be liable to pay simple interest at the rate of 12% per annum for each day of default or delay in payment of contribution.

What are the records to be maintained for the purpose of the ESI scheme?

In addition to the Master roll, wage record and books of Account maintained under other laws, the employer is required to maintain the following records for ESI:-
• Accident Register in Form-11
• An inspection book.
• The immediate employer is also required to maintain the Employee’s Register for the employees deployed to the principal employer.

What are the reports to be submitted by the employer?

These are the following reports to be submitted by the employer :
• Reports: Accident report in Form 12 in case any accident takes place, to the notice of the Accident.
• Absence verification report such as Employee Records including attendance, wages and books of accounts.

What is an identity card?

On registration under the scheme the employer can give a temporary identity certificate, affix employee’s photo and authenticate it for use which is valid for a period of 3 months. This identity card functions as an identification both for claiming medical benefit at dispensary/ hospital and claiming cash benefits at the ESI branch Office.

Who are the persons to be counted for coverage of an establishment?

So long as the establishment employs a minimum prescribed number of persons it will continue to be covered under the Act whether these employees are employed at one place or at places separate from each other, as they are engaged in the organised activity of the same establishment. Thus, all the persons including those working in branches, registered. office, and sales office etc. irrespective of location are to be counted.

Who are the persons to be covered as “Employees”?

Any person employed for wages in or in connection with a factory or establishment, and:
A. Directly employed by the Principal employer, in a Factory or establishment within the premises or elsewhere, or in any part, department or branch of the factory or establishment.
B. Employees of the immediate employer:
• Being employed in the premises on any work of the factory or establishment
• Being employed outside the premises on the work in a factory or establishment outside the premises supervised by the principal employer or his agent.
• Employees lent or let on hire to the principal employer on any work of the factory.
• Paid Directors of a company.
But the following are Excluded :
• An Apprentice
• An employee receiving wages above the ceiling limit for coverage prescribed by the Central Government.
• Member of the Indian Armed Forces

What are funeral expenses? Who is to be paid?

A lump sum amount not more than Rs.10000/- appropriated towards expenditure on the funeral of a deceased employee, is paid either to the eldest surviving member of the family or if he is without family or not living with his family at the time of death, then to the person who actually performs the funeral of the deceased employee.