Definition Of Employee

Section 2(9) in The Employees' State Insurance Act, 1948

(9) Eemployee means any person employed for wages in or in
connection with the work of a factory or establishment to which this
Act applies and
(i)who is directly employed by the principal employer, on any work
of, or incidental or preliminary to or connected with the work of, the
factory or establishment, whether such work is done by the
employee in the factory or establishment or elsewhere; or
(ii) who is employed by or through an immediate employer, on the
premises of the factory or establishment or under the supervision of
the principal employer or his agent on work which is ordinarily part
of the work of the factory or establishment or which is preliminary to
the work carried on in or incidental to the purpose of the factory or
establishment; or
(iii) whose services are temporarily lent or let on hire to the principal
employer by the person with whom the person whose services are
so lent or let on hire has entered into a contract of service;
17 [and includes any person employed for wages on any work
connected with the administration of the factory or establishment or
any part, department or branch thereof or with the purchase of raw
materials for, or the distribution or sale of the products of, the
factory or establishment]
18 [or any person engaged as apprentice, not being an apprentice
engaged under the Apprentices Act, 1961 (52 of 1961),

19 [and

includes such person engaged as apprentice whose training period

is extended to any length of time] but does not include]
(a) any member of 20 [the Indian] naval, military or air forces; or
21

[(b)

any

person

so

employed

whose

wages

(excluding

remuneration for overtime work) exceed 22 [such wages as may be

prescribed by the Central Government] a month:
Provided that an employee whose wages (excluding remuneration
for overtime work) exceed 22 [such wages as may be prescribed by

the Central Government] at any time after (and not before) the
beginning of the contribution period, shall continue to be an
employee until the end of that period;]
The

promulgation

of

Employees'

State

Insurance

Act,

1948

envisaged an integrated need based social insurance scheme that

would protect the interest of workers in contingencies such as
sickness, maternity, temporary or permanent physical disablement,
death due to employment injury resulting in loss of wages or
earning capacity. The Act also guarantees reasonably good medical
care to workers and their immediate dependants.
Following the promulgation of the ESI Act the Central Govt. set up
the ESI Corporation to administer the Scheme. The Scheme,
thereafter was first implemented at Kanpur and Delhi on 24th
February 1952. The Act further absolved the employers of their
obligations under the Maternity Benefit Act, 1961 and Workmen's
Compensation Act 1923. The benefit provided to the employees
under the Act are also in conformity with ILO conventions.

History
In March 1923, B. P. Adarkar was appointed by Government of
India to create a report on health insurance scheme for industrial
workers. The report became the basis for the Employment State
Insurance (ESI) Act of 1948. The ESI Act was enacted in 1948 and
came into effect from 24 February 1952. The act was initially
intended for factory workers but later became applicable to all
establishments having 10 or more workers. As of 2011-12, the total
beneficiaries are 65.5 million.

The Employee State Insurance Act, 1948

Employees' State Insurance Corporation (ESIC), established by ESI
Act, is an autonomous corporation under Ministry of Labour and
Employment, Government of India. As it is a legal entity, the

corporation can raise loans and take measures for discharging such
loans with prior sanction of the central government and it can
acquire both movable and immovable property and all incomes from
the property shall vest with the corporations. The corporation can
set up hospitals either independently or in collaboration with state
government or other private entities, but most of the dispensaries
and hospitals are run by concerned state governments.
The Government of India through notification in the Official Gazette
has amended the Employees State Insurance (Central) Rules, 1950.
Accordingly, as per rule 50, the wage limit for coverage of an
employee under Employees State Insurance Act has been enhanced
from Rs. 10,000 to Rs. 15,000 with effect from 1 May 2010.

Applicability
The ESI Act, 1948 in the first instance, applies to:
Factories using power in the manufacturing process and employing
10 or more persons Non-power using factories or establishments
employing 20 or more persons for wages.
The Act contains an enabling provision under which Appropriate
Government is empowered to extend the provision of the ESI Act,
1948 to other classes of establishments.

Industrial

Commercial

Agricultural or otherwise
Under these provisions the State Governments have extended the
provisions of the ESI Act to the following classes of establishments.

Shops

Hotels & Restaurants

Cinemas including preview Theaters

Road Motor Transport Undertaking

News Paper Establishments

Wage Ceiling
Employees of covered units and establishments drawing wages upto
Rs. 15,000 per month come under the purview of the ESI Act 1948
for multi dimensional social security benefits.
Contribution
ESI scheme is financed by contribution raised from employees
covered under this scheme and their employers as a fixed
percentage of wages. Rates of contribution are as follows:

Employees contribution 1.75% of wages ( Employees earning

up to Rs. 50 per day are exempted from payment of their

contribution)
Employers contribution 4.75% of wages.
Social Security Benefits
Various benefits that the insured employees and their

dependents are entitled to are as follows

Medical Benefits
Sickness Benefits
Maternity Benefits
Disablement Benefits
Dependent Benefits

Other Benefits (like

funeral expenses, vocational rehabilitations,

free supply of physical aids etc).

Safeguard for Insured Employees:

Right to receive payment of any benefit under the Act are not

transferable.
Employer
shall

not

dismiss, discharge or reduce the

wages or otherwise punish a covered employee during the

period he/she is in receipt of Sickness Benefit or Maternity

Benefit etc.
By reason of his liability to pay his share of contribution under
the ESI Act, no employer shall directly or indirectly reduce the

wages

of

covered

employee.Right

to

register

their

grievances / complaints at any level for immediate redressel.

Right to approach ESI Court against any action/decision of the

Medical Board etc

Cash Benefits payable under the Act are not liable to
attachment or sale in execution of any decree or order of any
court

Duties of Employer
An employer shall apply in Form-01 for coverage under the ESI
Act, within 15 days after the Act becomes applicable to a factory or establishment.
The employer shall submit Declaration Form in respect of all
coverable employees in the unit.
The employer shall deposit both employees and employers
contribution as per specified rates within 21 days of the
following month.
The Employer shall maintain all such records and registers as
are required under the Act and produce them for verification /
inspection before the authorised officers of the Corporation.
The employer shall submit half-yearly Return of Contributions
(RC) by 12th May/11th November every year with all columns
properly filled.
The employer will report any change in business activity,
address, ownership or the management to ESIC authorities
forthwith.
An employer will also ascertain the liability towards ESI dues,
while taking over the ownership of a factory/establishment
through purchase, gift, lease, licence or otherwise as the new
owner is liable to discharge past liabilities.
An employer will also ascertain the liability towards ESI dues,
while taking over the ownership of a factory / establishment
through purchase, gift, lease, licence or otherwise as the new
owner is liable to discharge past liabilities.

Benefits

For all employees earning 15,000 or less per month as wages, the
employer contributes 4.75 percent and employee contributes 1.75
percent, total share 6.5 percent. State government's share is 1/8th
and that by central government is 7/8th. This fund is managed by
the ESI Corporation (ESIC) according to rules and regulations
stipulated there in the ESI Act 1948, which oversees the provision of
medical and cash benefits to the employees and their family. ESI
scheme is a type of social security scheme for employees in the
organised sector.
The employees registered under the scheme are entitled to medical
treatment for themselves and their dependents, unemployment
cash benefit in certain contingencies and maternity benefit in case
of women employees. In case of employment-related disablement or
death, there is provision for a disablement benefit and a family
pension respectively. 67 Outpatient medical facilities are available in
1418

ESI

dispensaries

and

through

1,678

private

medical

practitioners. Inpatient care is available in 145 ESI hospitals and 42

hospital annexes with a total of 19,387 beds. In addition, several
state government hospitals also have beds for exclusive use of ESI
Beneficiaries. Cash benefits can be availed in any of 830 ESI centres
throughout India.
Recent years have seen an increasing role of information technology
in ESI, with the introduction of Pehchan smart cards as a part of
Project Panchdeep. In addition to insured workers, poor families
eligible under the Rashtriya Swasthya Bima Yojana can also avail
facilities in ESI hospitals and dispensaries. There are plans to open
medical, nursing and paramedical schools in ESI hospitals.

New amendment (fresh look)

The Employees State Insurance Corporation (ESIC) raised the
monthly wage limit to Rs 21,000, from the existing Rs 15,000, for
coverage with effect from October, 2016.

Right to Information
Instructions / Circulars / Orders
Publications
News and Events
Multi Media Gallery
ESIC Radio
ESIC Video
Insured Person/Employer
Insured Person Registration
Insured Person/Employer Login
Press Release
Immovable Property Returns
ESIC Pensioners

Under Section 2(12) the Act is applicable to non-seasonal factories

employing 10 or more persons.
Under Section 1(5) of the Act, the Scheme has been extended to
shops, hotels, restaurants, cinemas including preview theatres,
road-motor transport undertakings and newspaper establishments
employing 20* or more persons.
Further under section 1(5) of the Act, the Scheme has been
extended to Private Medical and Educational institutions employing
20* or more persons in certain States/UTs.

State Govts. / UTs have reduced the threshold limit for coverage of
shops and other establishments from 20 to 10 or more persons.
Remaining State Governments/UTs are in the process of reducing the
same.
The existing wage limit for coverage under the Act is Rs. 15,000/per month
Employees' State Insurance Corporation raises wage threshold to Rs
21,000.