Tuesday, July 21, 2009

Employee State Insurance Act, 1948 – An overview




Employee State Insurance Act, 1948 – An overview

Introduction

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 than factory act, in the sense that the factory act is concerned 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 elsewhere 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.

Related Legislations: ESI (Central) Rules, 1950 and ESI (General) Regulations, 1950

Origin

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 2nd February 1952 at just two industrial centers in the country namely Kanpur and Delhi with a total coverage of about 1.20 lakh workers. There after the scheme was implemented in a phased manner across the country with the active involvement of the state governments.

Objectives:
The ESI Act is a social welfare legislation enacted with the object of providing certain benefits to employees in case of sickness, maternity and employment injury. Under the Act, employees will receive medical relief, cash benefits, maternity benefits, pension to dependents of deceased workers and compensation for fatal or other injuries and diseases.

Definitions

According to Section 2 (m) of Factories Act, 1948, Factory means any premises including the precints thereof - (a) whereon ten or more persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on, or (b) whereon twenty or more persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power or is ordinarily so carried on. But does not include a mine subject to the operation of Mines Act, 1952 or a railway running shed;

According to Section 2 (k) of Factories Act, "manufacturing process" means any process for - (i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal, or (ii) pumping oil, water, sewage or any other substance; or; (iii) generating, transforming or transmitting power; or (iv) composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding; lra-6 ] [ lra-7 or lra-7 ] (v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels; (vi) preserving or storing any article in cold storage;

According to Section 2 (h) of The Minimum Wages Act, "wages"- means all remuneration capable of being expressed in terms of money which would if the terms of the contract of employment express or implied were fulfilled be payable to a person employed in respect of his employment or of work done in such employment and includes house rent allowance but does not include -

(i) the value of - (a) any house accommodation supply of light water medical attendance or (b) any other amenity or any service excluded by general or special order of the appropriate government;

(ii) any contribution paid by the employer to any person fund or provident fund or under any scheme of social insurance;

(iii) any traveling allowance or the value of any traveling concession;

(iv) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or

(v) any gratuity payable on discharge


Applicability:

  • The ESI Act extends to the whole of India.
  • It applies to all the factories including Government factories (excluding seasonal factories), which employ 10 or more employees and carry on a manufacturing process with the aid of power and 20 employees where manufacturing process is carried out without the aid of power.
  • The act also applies to shops and establishments. Generally, shops and establishments employing more than 20 employees are covered by the Act. “Shop” according to the Delhi Shops and Establishment Act, 1954 means any premises where goods are sold either by retail or wholesale or where services are rendered to customers, and includes an office, a store-room, godown, warehouse or workhouse or work place, whether in the same premises or otherwise, used in or in connection with such trade or business but does not include a factory or a commercial establishment. “Establishment” means a shop, a commercial establishment, residential hotel, restaurant, eating-house, theatre or other places of public amusement or entertainment to which this Act applies and includes such other establishment as Government may, by notification in the Official Gazette, declare to be an establishment for the purpose of this Act. According to the Delhi Shops and Establishment Act, 1954, “Commercial Establishment” means any premises wherein any trade, business or profession or any work in connection with, or incidental or ancillary thereto is carried on and includes a society registered under the Societies Registration Act, 1860, and charitable or other trust, whether registered or not, which carries on any business, trade or profession or work in connection with, or incidental or ancillary thereto, journalistic and printing establishments, contractors and auditors establishments, quarries and mines not governed by the Mines Act, 1952, educational or other institutions run for private gain, and premises in which business of banking, insurance, stocks and shares, brokerage or produce exchange is carried on, but does not include a shop or a factory registered under the Factories Act, 1948, or theatres, cinemas, restaurants, eating houses, residential hotels, clubs or other places of public amusements or entertainment. Form 01 – Employers’ Registration Form also requires a copy of the registration certificate or licence obtained under the Shops and Establishment Act to be attached along with this form. From this it is quite evident that ESI Act will be applicable to shops and establishments. Again the definition of shops and establishment will vary from state to state depending on the shops and establishment act of that particular state.
  • The act does not apply to any member of Indian Naval, Military or Air Forces.
  • All employees including casual, temporary or contract employees drawing wages less than Rs 10,000 per month are covered. The ceiling limit has been raised from Rs.7500 to Rs.10000 with effect from 01.10.06.
  • Apprentices covered under the Apprenticeship Act are not covered under this Act. According to Apprenticeship Act 1961, “apprentice” means a person who is undergoing apprenticeship training in pursuance of a contract of apprenticeship.
    • The apprentices under any scheme as the name suggests come to learn the tricks of the trade and may not count much so far as the output of the factory is concerned, with that end in view, the apprentices are exempted from the operation of laws relating to labour unless the State Government thought otherwise.-- Regional Director ESIC v. M/s Arudyog 1987 (1) LLJ 292.
  • A factory or establishment, to which this Act applies, shall continue to be governed by its provisions even if the number of workers employed falls below the specified limit or the manufacturing process therein ceases to be carried on with the aid of power subsequently.
  • Where a workman is covered under the ESI scheme,
    • Compensation under the Workmen's Compensation Act cannot be claimed in respect of employment injury.
    • No benefits can be claimed under the Maternity Benefits Act.

Areas Covered

The ESI Scheme is being implemented area-wise by stages. The Scheme is being implemented in almost all union territories and states except Nagaland, Manipur, Tripura, Sikkim, Arunachal Pradesh and Mizoram.

Administration of the Act

The provisions of the Act are administered by the Employees State Insurance Corporation. It comprises members representing employees, employers, the central and state government, besides, representatives of parliament and medical profession. A standing committee constituted from amongst the members of the corporation, acts as an executive body. The medical benefit council, constituted by the central government, is another statutory body that advises the corporation on matters regarding administration of medical benefit, the certification for purposes of the grant of benefits and other connected matters.

Registration

The employer should get his factory or establishment registered with the ESI Corporation within 15 days after the Act becomes applicable to it and also obtain the employer’s code number. Application should be made in Form 01 and after having being satisfied with the application form, the regional office will allot a code number to the employer, which must be quoted in all documents and correspondence.

Identity Card

An employee is required to file a declaration form upon employment in factory or establishment to show that he is covered under the Act.

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 the identity card is lost, a duplicate card is issued on payment as prescribed.

Employers’ / Employees’ Contribution

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. Presently covered employees contribute 1.75% of the wages, whereas as the employers contribute 4.75% of the wages, payable to the insured persons. Employees earning less than and up to Rs. 50 per day are exempted from payment of contribution.

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 of the employer with a right to deduct the employees share of contribution from employees’ wages relating to the period in respect of which the contribution is payable.

There are two contribution periods each of six months duration and two corresponding benefit periods. Cash benefits under the scheme are generally linked with contribution paid.

Contribution period - 1st April to 30th September, its corresponding Cash Benefit period is 1st January to 30th June of the following year.

Contribution period - 1st October to 31st March, its corresponding Cash Benefit period is 1st July to 31st December of the following year.

Certification of Return of Contribution by Auditor

Regulation 26 of Employees’ State Insurance (General) Regulations, 1950 was amended by Notification No.N-12/13/1/2008-P&D to include certain details to be mentioned in the Return of Contribution to be submitted by employers. The salient features of amendments made in the Returns of Contribution are as under:-

  1. Self-declaration by Employers regarding maintenance of records and registers, submission of Declaration Forms, employees engaged directly or through immediate employers and wages paid to the workers.
  2. All the Employers employing 40 and more employees shall have to append a certificate duty certified by a Chartered Accountant, in the revised format of Returns of Contribution.
  3. The Employers employing less than 40 employees will have to provide self- certification without any certification from the Chartered Accountants in Return of Contribution.

The Chartered Accountant should certify that he has verified the return from the records and registers of the company.

This notification has come into force with effect from 01-04-2008.

Benefits under the Scheme

Employees covered under the scheme are entitled to medical facilities for self and dependants. They are also entitled to cash benefits in the event of specified contingencies resulting in loss of wages or earning capacity. The insured women are entitled to maternity benefit for confinement. Where death of an insured employee occurs due to employment injury or occupational disease, the dependants are entitled to family pension. Various benefits that the insured employees and their dependants are entitled to, the duration of benefits and contributory conditions thereof are as under:

  • Medical benefits
  • Sickness benefits
  • Extended sickness benefit
  • Enhanced sickness benefit
  • Maternity benefit
  • Disablement benefit
  • Dependants benefit
  • Other benefits like funeral expenses, vocational rehabilitation, free supply of physical aids and appliances, preventive health care and medical bonus.

Obligations Of Employers

1. The employer should get his factory or establishments registered with the E.S.I. Corporation within 15 days after the Act becomes applicable to it, and obtain the employers Code Number.

2. The employer should obtain the declaration form from the employees covered under the Act and submit the same along with the return of declaration forms, to the E.S.I. office. He should arrange for the allotment of Insurance Numbers to the employees and their Identity Cards.

3. The employer should deposit the employees’ and his own contributions to the E.S.I. Account in the prescribed manner, whether he has sufficient resources or not, his liability under the Act cannot be disputed. He cannot justify non-payment of E.S.I. contribution due to non-availability of finance.

4. The employer should furnish a Return of Contribution along with the challans of monthly payment, within 30 days of the end of each contribution period.

5. The employer should not reduce the wages of an employee on account of the contribution payable by him (employer).

6. The employer should cause to be maintained the prescribed records/registers namely the register of employees, the inspection book and the accident book.

7. The employer should report to the E.S.I. authorities of any accident in the place of employment, within 24 hours or immediately in case of serious or fatal accidents. He should make arrangements for first aid and transportation of the employee to the hospital. He should also furnish to the authorities such further information and particulars of an accident as may be required.

8. The employer should inform the local office and the nearest E.S.I. dispensary/hospital, in case of death of any employee, immediately.

9. The employer must not put to work any sick employee and allow him leave, if he has been issued the prescribed certificate.

10. The employer should not dismiss or discharge any employee during the period he/she is in receipt of sickness/maternity/temporary disablement benefit, or is under medical treatment, or is absent from work as a result of illness duly certified or due to pregnancy or confinement.

Records To Be Maintained For Inspection By ESI authorities

  1. Attendance Register / Muster Roll
  2. Salary / Wage Register / Payroll
  3. EC (Employee’s & Employer’s Contribution) Statement
  4. Employees’ Register
  5. Accident Book
  6. Return of Contribution
  7. Return of Declaration Forms
  8. Receipted Copies of Challans
  9. Books of Account viz. Cash/Bank, Expense Register, Sales/Purchase Register, Petty Cash Book, Ledger, Supporting Bills and Vouchers, Delivery Challans (if any).
  10. Form of annual information on company

Employees Insurance Court

Any dispute arising under the ESI Act will be decided by the Employees Insurance Court and not by a Civil Court. It is constituted by the State Government for such local areas as may be specified and consists of such number of judges, as the Government may think fit.

Important Forms to be submitted under the Act

    Form 01

    :

    Employers' Registration Form

    Form 01(A)

    :

    Form of Annual Information on Factory/Establishment

    Form 1

    :

    Declaration Form

    Form 1A

    :

    Family Declaration Form

    Form 1B

    :

    Changes in Family Declaration Form

    Form 3

    :

    Return of Declaration Forms

    Form 4

    :

    Identity Card

    Form 4(A)

    Family Identity Card

    Form 5

    Return of Contributions

    Form 7

    First/Intermediate/Final Certificate

    Form 8

    Special Intermediate Certificate

    Form 10

    Abstention verification in r/o Sickness Benefit/Temporary Disablement Benefit/MB

    Form 12

    Sickness of Temporary Disablement Benefit

    Form 12A

    Maternity Benefit for Sickness

    Form 13

    Sickness or Temporary disablement or maternity benefit for sickness

    Form 13A

    Maternity benefit for sickness

    Form 14

    Sickness or temporary disablement or maternity benefit for sickness

    Form 14A

    Maternity Benefit for Sickness

    Form 16

    Accident report from employer

    Form 17

    Dependant's or funeral benefit (Death Certificate)

    Form 18

    Dependant's Benefit (Claim Form)

    Form 18A

    Dependant's Benefit (Claim for periodical payments)

    Form 19

    Maternity Benefit (Notice of Pregnancy)

    Form 20

    Maternity Benefit (Certificate of Pregnancy)

    Form 21

    Maternity Benefit (Certificate of expected confinement)

    Form 22

    Claim for Maternity Benefit

    Form 23

    Maternity Benefit (Certificate of confinement or miscarriage)

    Form 24

    Maternity Benefit (Notice of work)

    Form 25

    Claim for Permanent Disablement Benefit

    Form 26

    Certificate for permanent disablement benefit

    Form 27

    Declaration and certificate for dependant’s benefit


    17 comments:

    Anonymous said...

    Whats up very nice blog!! Man .. Beautiful .. Wonderful .

    . I'll bookmark your website and take the feeds additionally? I'm
    happy to find numerous useful info here in the submit, we'd like work out more techniques on this regard, thanks for sharing. . . . . .
    my website - porntube

    Anonymous said...

    Asking questions are in fact nice thing if you are
    not understanding anything fully, however this paragraph provides good understanding even.


    Feel free to surf to my web-site: used car dealer in national city

    Anonymous said...

    Simply wish to say your article is as amazing.

    The clarity for your post is just spectacular
    and i can assume you are a professional in this subject.
    Well along with your permission let me to take hold of your RSS feed to keep updated with approaching post.
    Thank you a million and please carry on the gratifying work.


    Here is my web blog ... notary loan signing agent in moreno valley

    Anonymous said...

    around which time i m able to obtain this motorist.

    my homepage; xerox phaser 8560 Service manual

    Anonymous said...

    It's really very complex in this active life to listen news on TV, thus I simply use world wide web for that reason, and get the hottest news.

    Also visit my blog :: chapter 13 bankruptcy florida

    Anonymous said...

    It's really very complex in this active life to listen news on TV, thus I simply use world wide web for that reason, and get the hottest news.

    Feel free to visit my page: chapter 13 bankruptcy florida

    Anonymous said...

    This is a really good tip particularly to those new to the blogosphere.

    Brief but very precise information… Thank you for sharing this one.

    A must read article!

    my web-site: Abercrombie Fitch Pas Cher

    Anonymous said...

    Thanks in favor of sharing such a fastidious thinking, paragraph is nice, thats why i have read it fully

    Also visit my web blog what is a graduate certificate

    Anonymous said...

    I all the time used to study post in news papers but
    now as I am a user of web therefore from now I am using net
    for posts, thanks to web.

    Also visit my web blog: Windows xp registry cleaner

    Anonymous said...

    Your way of describing all in this post is actually fastidious, every one be capable of simply know it, Thanks a lot.


    Check out my weblog: e-cigs

    Anonymous said...

    I am in fact grateful to the holder of this web page who has shared this impressive article at at
    this time.

    Have a look at my website; acoustic guitar a chord

    Anonymous said...

    Hello, i believe that i saw you visited my
    web site thus i got here to return the want?.I am trying to find
    things to enhance my web site!I suppose its ok to use a few of your ideas!
    !

    My web-site ideal waist to hip ratio

    Anonymous said...

    Today, while I was at work, my sister stole my iphone and
    tested to see if it can survive a 30 foot drop, just
    so she can be a youtube sensation. My apple ipad is now destroyed and she
    has 83 views. I know this is completely off topic but I had
    to share it with someone!

    Feel free to visit my weblog ... best domain hosting 2012 uk

    Anonymous said...

    Way cool! Some extremely valid points! I appreciate you writing this post plus the rest of the site is
    also very good.

    Feel free to surf to my blog: cnc-maske.de

    Anonymous said...

    Good post. I learn something totally new and challenging on websites I stumbleupon everyday.
    It's always exciting to read articles from other authors and practice something from their websites.

    Visit my webpage ... graphic design programs Online

    Anonymous said...

    Programs day after day is okay, but do not head to degree to get
    trained the very same tendon routinely, until you actually are actually being observed at close range by way of a competent teacher.
    In the near future, implementing this particular Increases generate your own raised air bed, properly as the various design was probably the specific company`s significant products or services.
    Much more big benefit getting an integrated mill within
    the coffee brewer is always an online business free you from
    paying apparatus so that you can and forget them option.
    Yet, spouse regular chic-ness, you may wish actu jet.



    Have a look at my homepage sunbeam coffee machines nz

    Anonymous said...

    As the name implies, 'bad credit debt consolidation loans', these loans
    are also low. It has low interest and also covers other
    expenses besides tuition fees like room and board, supplies, transportation
    among other things. Because of your bad credit history, other
    things lenders will look for: Valid identification.

    Is the interest on them, and their service charges.
    Most agencies are non-profit, which means you can obtain a loan against them.


    Also visit my page consolidation loan

    Guest Book

    Labels