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The Employee State Insurance Corporation (ESIC) is a statutory body that provides social security and health insurance to workers in India.
ESIC Registration applies to companies with 10 or more employees based on the business type and location. In this article, we will discuss ESIC Registration.
Employees’ State Insurance Corporation (ESIC) was incorporated under the Employees State Insurance Act. It is an autonomous corporation which comes under the Ministry of Labour’s supervision. It is responsible for the administration and management of the Employees’ State Insurance (ESI) scheme.
ESI scheme is a social security scheme offered by GOI to provide employees’ socio-economic protection. Individuals that are covered under ESIC scheme can avail medical benefits for injury, sickness, maternity and health. Being a self-financing scheme, the employees who contribute to this scheme regularly through their wages can avail themselves of these benefits. The fixed contribution rate for ESIC is 0.75% of an employee’s wages and the employers’ contribution is 3.25% for 2024. The insured employees and their dependents are provided medical care under the ESIC scheme.
All the factories and organizations which are covered under the ESI Act, employing more than 10 or more employees and paying them wages of up to Rs. 21,000 (per employee) must enroll with the ESIC and make regular contributions. Employees are exempt from this scheme if they earn less than Rs. 137 per day as daily wages.
The Employee State Insurance Act, 1948, is a law which provides social security. This act provides for certain benefits to employees in case of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto. Professor B.P. Adarkar, in 1943, had been appointed by GOI to create a report on industrial workers’ health insurance scheme. The cornerstone of the ESI Act was laid by this report.
This Act envisioned a social insurance program to shield workers against illness, pregnancy, disability, accidents, and death—all of which can reduce an employee's ability to make a living. It also included insurance for the close relatives of the workers. The ESIC was created by the Central Government after the ESI Act was declared, and it was then applicable to all establishments covered by the Act, not just industrial workers.
ESIC registration refers to the registration under the ESI scheme of ESIC. By registering under the ESI scheme, the employees of an employing entity having 10 or more employees can avail wide-range of medical, monetary and other benefits.
The facility of ESIC is in fact quite efficient in terms of improving and boosting the well-being, productivity, morale, retention, and advancement of workers. Any entity operating in any economic field is considered to have a statutory obligation to register under the ESI plan.
When a corporation, firm, or organization employs ten or more people, with individual wages or salaries falling below the threshold limit of Rs. 15,000 per month (in a few Indian States and UTs, this number is twenty), ESI registration is required. Following registration, the employing organization and its staff are recognized by ESIC by being assigned a 17-digit unique identity code.
The registered employing entity must contribute 4.75% of the total monthly salaries/wages payable to its employees in order to make the benefits offered under this ESI scheme available, while eligible individual employees must only contribute 1.75% of their monthly salaries to the ESIC funds each month of the year. Employees are free from paying their portion of the ESI scheme's contribution if they make up to Rs. 100 per day.
The benefits of ESI registration are offered by ESIC through efficient support of its large network of branch offices, dispensaries and hospitals which are located throughout India. The major benefits to the contributing employees are the following:
The sickness benefit is 70% of a worker's wages. If the insured employees fall sick, they can draw this compensation benefit. It covers 91 days in a year, which is about 3 months. To avail this benefit, it is necessary for a worker to have worked for at least 78 days during the contributing period.
Apart from this, ESI scheme also provides extended sickness benefits which can be extended up to 2 years at an increased contribution rate of 80%. This is applicable for 34 long-term diseases. If the insured employee is undergoing sterilization for family planning up to 7 days for vasectomy and 14 days of tubectomy, the sickness benefit is enhanced to 100%.
Here is a list of the 34 long-term diseases, classified into 11 categories, for which extended sickness benefit can be availed under ESI scheme:
ESI scheme also provides disablement benefit for temporary disablement as well as permanent disablement. When it comes to temporary disablement, monthly compensation is provided by ESIC until the injury lasts. The contribution rate is a person’s wages’ 90%. This benefit can be claimed by the employees even if they haven’t made their contribution. When it comes to permanent disablement, the compensation amount is determined by the Medical Board depending on the injury or disability’s extent.
The maternity benefit under ESI scheme is payable for 26 weeks of pregnancy. However, this period can be extended by a month, considering that the person has contributed for 70 days, at the rate of full wages.
No expenditure limit has been set on the medical treatment of the insured employee. The medical benefit under ESI scheme is extended to the immediate family members of the insured. Retired employees or permanently disabled employees, on an annual premium of Rs. 120, can avail medical care under this scheme.
ESI scheme gives compensation to the deceased employees’ dependents in cases where the death occurs because of employment injury or work hazards.
Apart from the ESIC registration benefits mentioned above, there are some other benefits as well:
The compensation for the funeral is made to the dependents of the deceased or the person who is responsible for the performance of the last rites of the deceased. The compensation amount payable in case of funeral is Rs. 15,000 under the ESI scheme.
An amount is payable to the insured if the confinement happens in a place where the necessary medical facilities, which are listed under ESI scheme, are unavailable.
The insured employees having a permanent disability and undergoing vocational rehabilitation training are provided with vocational rehabilitation benefits under the ESIC scheme. When it comes to the physical rehabilitation benefits, they are extended to those requiring specialized care due to employment-related injuries.
This benefit is payable to employees who are retiring due to their old age or infirmity, under voluntary retirement scheme or employees who are unemployed because of a permanent injury. Rs. 120 as a compensation amount is paid as a benefit per month under ESIC scheme.
Conclusion
The Employees’ State Insurance Scheme is a leading social security programme. ESIC registration must be applied for by all the eligible employees due to the holistic health and income protection it offers to the formal sector workers and their families. The ESIC scheme cushions individuals against vulnerabilities by covering medical needs, disabilities, loss of wages and deaths through its large network of facilities and cash benefits. The ESIC registration, since 1952, has significantly enhanced labor welfare through its low premium and comprehensive cover.
Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.
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