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.
The ESIC has its headquarters in New Delhi besides 23
regional offices, 26 sub-regional offices in the states and over 800 local
offices throughout the country to support the implementation of the ESI scheme.
In addition, the Medical Benefit Council, a specialized body that advises the
ESIC on the administration of medical benefit is functioning.
Applicability of the ESI Scheme
The ESI scheme is applicable to all factories and
other establishments as defined in the Act with 10 or more persons employed in
such establishment and the beneficiaries’ monthly wage does not exceed Rs
21,000 are covered under the scheme. Whether the employer has employed 10 or
more employees, all employees employed by the employer, agnostic of the salary
are reckoned. The applicability of the scheme is explained through a flow chart
under the act also supports restaurants, motor road transports, newspaper
establishments and undertakings, movies and purview theatres, hotels,
shops. The threshold for coverage of
establishment is 20 employees in Maharashtra.
Features of the ESI Scheme
Complete medical care and attention are provided by the
scheme to the employee registered under the ESI Act, 1948 at the time of his
incapacity, restoration of his health and working capacity.
During absenteeism from work due to illness, maternity or
factories accidents which result in loss of wages complete financial assistance
is provided to the employees to compensate for the wage loss.
The scheme provides medical care to family members also. As
of 31 March 2019, 3.14 crore employees are covered under this scheme with the
total number of beneficiaries summing up to 13.32 crore.
Broadly, the benefits under this scheme are categorized
Cash benefits (which includes sickness,
maternity, disablement (temporary and permanent), funeral expenses, rehabilitation
allowance, vocational rehabilitation and medical bonus) and,
Non-cash benefits through medical care.
The scheme is self-financing and being contributory in
nature. The funds under the ESI scheme are primarily built out of the
contribution from the employees and employers payable monthly at a fixed
percentage of wages paid.
Currently, the employee contribution rate is 0.75% of the
wages and that of employers is 3.25% of the wages paid.
The employer makes the contribution from his own share in
favour of those employees whose daily average wage is Rs 137 as these employees
are exempted from his own contribution.
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
ESIC contribution rates (Reduced w.e.f. 01/07/2019)
Frequently Asked Questions
How does the ESI scheme help the employees?
The ESI scheme provides complete medical care to the
employees registered with the ESIC during the period of his/her incapacity and
working capacity. It also provides financial assistance to compensate for the
loss of wages of the employee during the period of his/her abstention from work
due to sickness, maternity and employment injury. The ESI scheme provides
medical care to family members of the employee also.
Who administers the ESI scheme?
The ESI scheme is administered by a statutory corporate body
called the Employees’ State Insurance Corporation (ESIC), which has members
representing employers, Central Government, employees, medical professions,
state government, and the members of Parliament. The Director-General of the
ESIC is the chief executive officer of the ESIC and is also an ex-officio
How is the ESI scheme funded?
The ESI scheme is a self-financing scheme. The ESI funds are
primarily built from the monthly contributions of the employers and employees.
The monthly contributions are made at a rate of a fixed percentage of wages
paid. The state governments also bear 1/8th share of the cost of medical
What are the establishments that are covered under the
The Central Government issued a notification that all
factories where 10 or more persons are employed are covered under the ESI
scheme mandatorily. The following establishments employing 10 or more persons
are also mandatorily covered under the ESI scheme:
Hotels or restaurants not having any manufacturing activity, but only engaged in ‘sales’.
Cinemas, including preview
Newspaper establishments. institutions and medical institutions.
Who fixes the rate of contribution for the ESI scheme?
The Government of India revises and fixes the rate of
contribution for the ESI scheme. The rates are revised from time to time.
Currently, the government reduced the rate of contribution in June 2019,
effective from 1st June 2019. At present, the employee’s contribution rate
(w.e.f. 1.07.2019) is 0.75 % of the wages, and that of the employer’s is 3.25%
of the wages paid/payable in respect of the employees in every wage period.
Is ESIC compulsory for all employees?
Yes. All the establishments covered under the ESI Act and
all factories that employ more than 10 employees and pay wages below Rs.21,000
per month (Rs.25,000 for employees with disability) must register with the ESIC
and contribute towards the ESI scheme. All the employees earning more than
21,000 per month are exempted from the ESI contribution.
Disclaimer: The materials provided herein are solely for
information purposes. No attorney-client relationship is created when you
access or use the site or the materials. The information presented on this site
does not constitute legal or professional advice. It should not be relied upon
for such purposes or used as a substitute for legal advice from an attorney
