ESIC and Applicability of ESIC

What is “ESIC”?

Employees’ State Insurance Corporation (“ESIC”) is a statutory corporate body set up under the ESI Act 1948, which is responsible for the administration of the ESI Scheme.

The ESI scheme is a self-financed comprehensive social security scheme devised to protect the employees covered under the scheme against financial distress arising out of events of sickness, disablement or death due to employment injuries.

Composition of Committee:

A.???? Chairman (Union Minister of Labor heads the ESIC)

B.???? Chief Executive Officer (Director General appointed by Central Government)

C.????? Standing Committee (Executive Body)

a.????? 3 members of the Central and State Governments

b.????? 3 members representing employers and employees

c.????? 1 member representing Parliament and the medical profession

Applicability of ESIC Scheme:

ESIC Scheme applicable to all factories and other establishments as defined in the ESI Act with 10 or more persons (20 or more in some states) employed in such establishments. However, only those employees are covered under the ESI scheme whose monthly wages do not exceed Rs.21,000 (Rs.25,000 in the case of a person with a disability).

Steps for Checking the Applicability as mention below:

1.????? Whether 10 or more workers Employer? If Yes

2.????? Wage of the worker is not more than Rs. 21,000? If Yes

3.????? Covered in ESIC Scheme.

Non-Applicability of ESIC Scheme:

1.????? Seasonal Factory or mine

2.????? Not Covered in the definition of factory as defined in the Act, with in implemented area

3.????? Less than 10 Worker Employees

The scheme under the ESI Act also applies to the following:

1.????? Shops

2.????? Restaurants

3.????? Hotels

4.????? Cinema theatres

5.????? Road motor transport undertakings

6.????? Newspaper establishments and undertakings

7.????? Educational institutions

8.????? Medical institutions

9.????? Contract and casual employees of Municipal Corporations or Municipal Bodies.

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It also applies to the following establishments under the Central Government employing 20 or more persons engaged in:

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1.????? Insurance business

2.????? Non-Banking Financial Companies (NBFCs)

3.????? Airport authorities

4.????? Port trusts

5.????? Warehousing establishments

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ESIC Contribution Rates:

Employer Share ?????????????? 3.25%

Employee Share ????????????? 0.75%

Total Contribution ????????? 4.00%

Benefits Under the Scheme: There are 2 Categories

1.????? Cash benefits (which includes sickness, maternity, disablement - temporary and permanent, funeral expenses, rehabilitation allowance, vocational rehabilitation and medical bonus) and,

2.????? Non-cash benefits through medical care.

Compliances:

The employer is required to pay his contribution and deduct employees’ contribution from wages and deposit the same with ESIC within 15 days from the last day of the calendar month in which the contribution falls due. The payment can either be done online or through designated and authorized public sector banks.