Employee State Insurance Act

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Last updated: June 13, 2019

Background: The Employee State Insurance Act, 1948 is one of the Acts relating to Social Security. Before this Act, there was no such legislation on the social security except the Workmen’s Compensation Act, 1923. The Workmen’s Compensation Act, 1923 provided only for compensation in case of: i) injury by accident arising out of and in the course of employment ii) occupational diseases The Employee State Insurance Scheme on the other hand was made to provide benefits in the case of: i) Sickness ii) Maternity ii) Employment injury iv) Benefits to the dependants of workers who died of employment injury v) Benefits for other disabilities Under the Workmen’s Compensation Act, the employer was liable for Compensation only when the worker works inside the factory. Under the Employee State Insurance Act, a claim arises whenever the employee may be i. e. inside or outside the factory. Under this Act, the liability for claims is placed on a Statutory Organization i.

e. Employee State Insurance Corporation.The ESI Act for the first time introduced the concept of Contributory Principle i.

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. the benefits under the Act are secured by financial contributions to the ESI Scheme both: i) by the employers and ii) by the employees Preliminary: (1) This Act may be called the Employees’ State Insurance Act, 1948. (2) It extends to the whole of India. (3) It shall come into force on such 2date or dates as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act and for different States or for different parts thereof. 4) It shall apply, in the first instance, to all factories (including factories belonging to the government) other than seasonal factories: [PROVIDED that nothing contained in this sub-section shall apply to a factory or establishment belonging to or under the control of the government whose employees are otherwise in receipt of benefits substantially similar or superior to the benefits provided under this Act.

] 5)The appropriate government may, in consultation with the Corporation and where the appropriate government is a State Government, with the approval of the Central Government], after giving six months’ notice of its intention of so doing by notification in the Official Gazette, extend the provisions of this Act or any of them, to any other establishment or class of establishments, industrial, commercial, agricultural or otherwise: PROVIDED that where the provisions of this Act have been brought into force in any part of a State, the said provisions shall stand extended to any such establishment or class of establishments within that part if the provisions have already been extended to similar establishment or class of establishments in another part of that State. ] 6) A factory or an establishment to which this Act applies shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time falls below the limit specified by or under this Act or the manufacturing process therein ceases to be carried on with the aid of power.The Beginning: The Employee State Insurance act was promulgated by the Parliament of India in the year 1948. To begin with the ESIC scheme was initially launched on 2 February 1952 at just two industrial centers in the country namely Kanpur and Delhi with a total coverage of about 1. 0 lac workers. There after the scheme was implemented in a phased manner across the country with the active involvement of the state government. Applicability: The ESIC Act applies to non-seasonal, power using factories or manufacturing units employing ten or more persons and non-power using establishments employing twenty or more persons. Under the enabling provisions of the act, a factory or establishment, located in a geographical area, notified for implementation of the scheme falls in the purview of the act.

Employees of the aforesaid categories of factories or establishments, but drawing wages only up to Rs 6,500 a month are entitled to health insurance cover under the ESI act. The wage ceiling for purpose of coverage is revised from time to time; to keep pace with rising cost of living and subsequent wage hikes. The present ceiling of Rs 6,500 has been effective from 1 January 1997 the appropriate government state or central is empowered to extend the provision of the ESI Act to various classes of establishment, industrial, commercial, agricultural or otherwise in nature.Under these enabling provisions most of the state governments have extended the ESI act to certain specific classes of establishments. Like shops, hotels, restaurants, cinemas, employing 20 or more persons.

2 but no industry have the right to opt out of the scheme. Registration: Employers who become coverable for the first time should submit particulars of their factory/establishment inform-01 for purpose of Registration and allotment of Code Number by the ESIC Regional office concerned.After receipt of the form and after satisfying itself about the information submitted, the ESIC allots a code number to the factory or establishment.

This code number is mentioned in: (a) Every correspondence with the ESI Corporation (b) Documents and (c) Returns under the Act. (B) THE ACT: A scheme of health insurance for industrial workers was under consideration of the Government of India for a long time. Such a scheme was felt urgent because of the conditions brought about by the Second World War.

The scheme envisaged under the Act is a compulsory state insurance providing for certain benefits in events like sickness, maternity, employment injury etc. The goal of security has also been provided for in the directive principle of state policy under the constitution of India (Article 41) which says- “The State shall within the limits of its economic capacity and development make effective provision for securing the Rights: 1. to work 2. to education 3.

to public assistance in cases of: i) unemployment ii) old age iii) sickness and disablement and iv) in other cases of undeserved want”Under the ESI Act, 1948 all persons employed for: 1. Wages in or 2. In connection with the work of a factory or establishment 3.

Irrespective of the fact whether they are: i) Manual ii) Supervisory iii) Salaried employees are entitled to various benefits provided under the Act. The Employee State Insurance Act, [ESIC] 1948, is a piece of social welfare legislation enacted primarily with the object of providing certain benefits to employees in case of sickness, maternity and employment injury and also to make provision for certain others matters incidental thereto.The Act in fact tries to attain the goal of socio-economic justice enshrined in the Directive principles of state policy under part 4 of our constitution, in particular articles 41, 42 and 43 which enjoin the state to make effective provision for securing, the right to work, to education and public assistance in cases of unemployment, old age, sickness and disablement.

The act strives to materialize these avowed objects through only to a limited extent. This act becomes a wider spectrum then factory act.In the sense that while the factory act concerns with the health, safety, welfare, leave etc of the workers employed in the factory premises only. But the benefits of this act extend to employees whether working inside the factory or establishment or else where or they are directly employed by the principal employee or through an intermediate agency, if the employment is incidental or in connection with the factory or establishment.

Coverage: With the implementation of ESI scheme, at just two industrial centers in 1952, namely Kanpur and Delhi, there was no looking back since then in terms of its geographic reach and demographic coverage.Keeping pace with the process of industrialization, the scheme today stands implemented at over 679 centers in 25 states and union territories. The Act now applies to 230 thousand factories and establishments across the country, benefiting about 8. 30 million family units of workers in the wage brackets. As of now, the total beneficiary population stands at about 32 million. Identity card: On registration every insured person is provided with a ‘temporary identification certificate’ which is valid ordinarily for a period of three months but may be extended, if necessary, for a further period of 3 months.Within this period, the insured person is given a permanent ‘family photo identity card’ in exchange for the certificate.

The identity card serves as a means of identification and has to be produced at the time of claiming medical care at the dispensary/ clinic and cash benefit at the local office of the corporation. In the event of change of employment, it should be produced before the new employer as evidence of registration under the scheme to prevent any duplicate registration. The Identity card bears the signature/thumb impression of the insured person.

Since medical benefit is also available to the families of Insured persons, the particulars of family members entitled to medical benefit are also given in the identity card affixed with a postcard size family photo. If your identity card is lost, a duplicate card is issued on payment as prescribed. Finance: Like most of the social security schemes, the world over, ESI scheme is a self-financing health insurance scheme. Contributions are raised from covered employees and their employers as a fixed percentage of wages. As of now, covered employees contribute 1.

5% of the wages, whereas as the employers contribute 4. 75% of the wages, payable to the insured persons. Employers earning less than Rs 40 a day as daily wage are exempted from payment of their share of contribution.The state government as per the provision of the act contributes 1/8 of the expenditure on medical benefit within a per capita ceiling of Rs. 600 per insured person per annum. Any additional expenditure incurred by the state government, over and above the ceiling, and not falling within the shareable pool, is borne by the state governments’ concerned. the contribution is deposited by the employer in cash or by cheque at the designated branches of some nationalized banks.

The responsibility for payment of all contributions is that if the employer with a right to deduct the employee’s share of contribution from employee’s wages relating to the period in respect of which the contribution is payable. Contribution periods and benefit period: Workers, covered under the ESI Act, are required to pay contribution towards the scheme on a monthly basis contribution period means a six-month time span from 1 April to 30 October and 1 November to 31 March.Thus, in a financial year there are two contribution periods of six months duration. Cash benefits under the scheme are generally linked with contribution paid. The benefit period starts their months after the closure of a contribution period, Contribution period corresponding benefit period 1 April to 30 September 1 January to 30 June of the following year 1 October to 31 march 18 July to 31 December. (C)THE ESIC: Establishment of Employees’ State Insurance Corporation: (1) With effect from such date as the Central Government may, by notification n the Official Gazette, appoint in this behalf, there shall be established for the administration of the scheme of employees’ state insurance in accordance with the provisions of this Act a Corporation to be known as the Employees’ State Insurance Corporation. (2) The Corporation shall be a body corporate by the name of Employees’ State Insurance Corporation having perpetual succession and a common seal and shall by the said name sue and be sued.

Constitution of Corporation: The Corporation shall consist of the following members, namely:- (a)A Chairman to be appointed by the Central Government; b) A Vice-Chairman to be appointed by the Central Government (c) Not more than five persons to be appointed by the Central Government (d) One person each representing each of the States in which this Act is in force to be appointed by the State Government concerned (e) One person to be appointed by the Central Government to represent the Union Territories (f) Ten persons representing employers to be appointed by the Central Government in consultation with such organizations of employers as may be recognized for the purpose by the Central Government; (g)Ten persons representing employees to be appointed by the Central Government in consultation with such organizations of employees as may be reorganized for the purpose by the Central Government;(h)Two persons representing the medical profession to be appointed by the Central Government in consultation with such organization of medical practitioners as may be recognized for the purpose by the Central Government (i)Three members of Parliament of whom two shall be members of the House of the People (Lok Sabha) and one shall be a member of the Council of States (Rajya Sabha) elected respectively by the members of the House of the People and the members of the Council of States; and (j)The Director-General of the Corporation ex-officio principal officer: (1) The Central Government may, in consultation with the Corporation, appoint a director general and a financial commissioner. (2) The director general shall be the chief executive officer of the Corporation. (3) The director eneral and the financial commissioner shall be whole-time officers of the Corporation and shall not undertake any work unconnected with their office without the sanction of the Central Government and of the Corporation. (4) The director general or the financial commissioner shall hold office for such period, not exceeding five years, as may be specified in the order appointing him. An outgoing director general or financial commissioner shall be eligible for re-appointment if he is otherwise qualified. (5) The director general or the financial commissioner shall receive such salary and allowances as may be prescribed by the Central Government. (6) A person shall be disqualified from being appointed as or for being The Director General or the Financial Commissioner if he is subject to any of the disqualifications specified in section 13.REFERENCE: 1) Textbook- Simplified Industrial law by R.

W. Lalwaney 2) Article by M Gopinath & Hari Krishna 3) Internet- http://nrcw. nic.

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