esi scheme in india: an overview!
TRANSCRIPT
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30 October 2013
Welcome
to the Training session.
Overview of the
ESI Scheme
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Note: The presentation is uploaded in public
interest. It does not contain all the details,pertaining to every issue, which are explained
during the lecture. Presentation-slides are
prepared only to aid and supplement the delivery
of lecture by highlighting certain aspects for
clarity and understanding. There need not be
continuity between the contents of the slides, as
Presentation is different from Write-up.
The clips used in the presentation were from free
sources of the internet and it is acknowledged with
gratitude that these clips helped make the
presentation effective.
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ESIC
The protective umbrella for the employers
Provides means for the economic growth of the nation
The safety net for the employees
Provides proper living conditions for the work-force
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The scheme was conceived originally by some
employers
They took concerted action for formal legislative
protection by nations
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Is the ESI Act, 1948a compulsory
provision?
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The ESI Act, 1948 isnot
a compulsory provision for any
factory or establishment
There are provisions for exemption.
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the benefits provided by him to his
employees aresubstantially similar
or
superior
to those provided for in the ESI Act,
1948.
AN EMPLOYER CAN RIGHTLY
DEMAND EXEMPTION,IF
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This condition must be reallyfulfilled.
The assertion will be verified withreference to the past records, in
spite of the exemption alreadygiven.
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What was the position when
there was no social securitysystem and no ESI Corporation?
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Industrial Revolution
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One side
In the 1820s, income levels for most workers began to improve, andpeople adjusted to the different circumstances and conditions. Bythat time, Britain had changed forever.
The economy was expanding at a rate that was more than twice the
pace at which it had grown before the Industrial Revolution. Although vast differences existed between the rich and the poor,
most of the population enjoyed some of the fruits of economicgrowth.
The widespread poverty and constant threat of mass starvation
that had haunted the preindustrial age lessened in industrial Britain.
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The other side• Employment
“Many parents were willing to allow their children to work in these new textile factories becausethey needed the extra money for their farm life. However, more workers were still needed. Onesolution to the problem was to obtain children from orphanages and workhouses. These children became known as pauper apprentices. This involved those signing contracts that virtually madethem the property of the factory and the factory owner. Children were expected to work from as young as four years old. Most child factory workers were orphans and had no other choice.Children usually weren't paid as much as grown men were. Their salaries usually came out to beone-third of the typical wage. There are some accounts of children being paid $0.25 per day fordelivering newspapers. Also, some of these children died from the hard work.”
• Punishments“Children were sometimes hit with a strap to make them work faster. In some factories children were dipped head first into the water cistern if they became drowsy. Children were also punishedfor arriving late for work and for talking to the other children. Apprentices who ran away from thefactory were in danger of being sent to prison. Children who were considered potential runaways were placed in irons. They would also have weights tied to their necks if they weren't workingquick or well enough.”
• Accidents
“One of the main concerns about the number of textile workers was the safety of the factories.Unguarded machinery was a major problem for children working in factories. There were reportsthat every year there were nearly a thousand people treated for wounds and mutilations caused bymachines in factories. Many of the workers were often abandoned from the moment the accidentoccurs.”
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Robert Owen – Philanthrophist businessman – Welsh – pleaded
for international agreement on social security.
Jerome Blanqui – 1838
Villerme – 1839 – France – Pleaded for international agreement.
Daniel Legrand – 1847 – Switzerland – “Men are men; not
producing machines”.
Karl Marx and Engels - 1848
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• George Cadbury – 1860
• Louis Wollowiski -1873- France – introduced the first bill on
labour legislation before the French parliament.
• Ottowan Bismark – Germany - Accident Insurance, 1883,Maternity, 1884, Sickness and Oldage Pension, 1889
• German Emperor – 1890 – convened the first International
Labour Conference in Berlin.
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• Another conference at Brussels – 1897
• International Association for Labour Legislation by
a voluntary organisation – 1900
• Two more conferences at the instance of the same Association at Berne, Switzerland – 1905 and 1906.
• National Insurance Act, 1911 – passed in the UK.
• Another International Conference at Berne
recommends action programme – 1913
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Upton Sinclair
In 1904 Sinclair spent seven weeks in disguise, working undercover in Chicago's meatpacking plants to researchhis fictional exposé, The Jungle. When it appeared in 1906, it became a best-seller.
The Jungle is a 1906 novel written by author and journalist Upton Sinclair. Sinclair wrote this novel to highlight
the plight of the working class and to remove from obscurity the corruption of the American meatpacking industry
during the early-20th century.
The novel depicts in harsh tones the poverty, absence of social programs, unpleasant living and working
conditions, and hopelessness prevalent among the working class, which is contrasted with the deeply-rooted
corruption on the part of those in power. The sad state of turn-of-the-century labor is placed front and center for the American public to see, suggesting that
something needed to be changed to get rid of American “ wage slavery”.
The pressure and the public outcry, led to the passage of the Meat Inspection Act and the Pure Food and Drug Act
of 1906,
Upton Sinclair originally intended to expose "the inferno of exploitation [of the typical American factory worker
at the turn of the 20th Century]," but the reading public instead fixated on food safety as the novel's most pressing
issue.
In fact, Sinclair bitterly admitted his celebrity rose, "not because the public cared anything about the workers, but
simply because the public did not want to eat tubercular beef“
Sinclair rejected the legislation, as he viewed it as an unjustified boon to large meat packers partially because the
U.S., rather than the packers, was to bear the costs of inspection at $30,000,000 a year. He famously noted the
limited effect of his book by stating, "I aimed at the public's heart, and by accident I hit it in the stomach."
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Sweatshops of 1845 - Punch
Courtesy: wikipedia
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National Insurance Act, 1911 – passed in theUK.
Another International Conference at Berne
recommends action programme – 1913
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Chronology of events
1918 – First World War is over
1919 –International Labour Organisation is
formed – Treaty of Versailes on28.6.1919
1920 – Ratification of ILO convention by
various nations followed byimplementation.
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Preamble of the Constitution
of the
International Labour Organisation
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Whereas universal and lasting peace can be established only if itis based upon social justice;
And whereas conditions of labour exist involving such injusticehardship and privation to large numbers of people as to produceunrest so great that the peace and harmony of the world areimperilled;
and an improvement of those conditions is urgently required; as, forexample, by the regulation of the hours of work including the establishment of a maximumworking day and week, the regulation of the labour supply, the prevention of unemployment,the provision of an adequate living wage, the protection of the worker againstsickness, disease and injury arising out of his employment the
protection of children, young persons and women, provision for old age and injury, protection ofthe interests of workers when employed in countries other than their own, recognition of theprinciple of equal remuneration for work of equal value, recognition of the principle of freedomof association, the organization of vocational and technical education and other measures;
Whereas also the failure of any nation to adopt humaneconditions of labour is an obstacle in the way of other nationswhich desire to improve the conditions in their own countries;
The High Contracting Parties, moved by sentiments of justice andhumanity as well as by the desire to secure the permanent peaceof the world , and with a view to attaining the objectives set forthin this Preamble, agree to the following Constitution of theInternational Labour Organization:
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1920 As per the ILO Conventions
Labour welfare legislations are
enacted the world over.
But India hesitates
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1922 – Indian reluctance is criticised in the
ILO. One member went on record saying that
among the civilised countries, India is the
only country where no social security
measures is in existence. Immediately, the embarrassed Indian
representatives gave an assurance that
steps would be taken to enact legislation
for insurance in respect of accidents.
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The earlier enactments like the Fatal
Accidents Act, 1885 or The WorkersBreach of Contract Act, 1859 or the
Employer and the Workmen’s (Disputes) Act, 1860 did not significantly help the
working population in India as they did
in England.
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“At the last session of the Indian Legislative Assembly, a resolution, tabled byMr. Joshi, helps to illustrate the condition of servitude in which Indian workers
still are, despite the attempt at organisation begun by the Trades Union
Congress. This resolution contained the demand for the repeal of the
Workmen’s Breach of Contract Act, and the removal from the Indian Penal
Code of sections 490 and 492, which permit imprisonment for certain
breaches of contract. Under the Breach of Contract Act a worker who fails tofulfil his contract of service, having received an advance of money from his
employer, is liable to be called on to repay the advance or fulfil his contract,
failing which he can be imprisoned. This law was passed shortly after the
Indian Mutiny, and embodies in fact the chief feature of indentured labour.
The Assembly, after much debate, agreed that there was a strong case for
the repeal of these laws, and consented to introduce legislation to that effectif, after consulting the Local Governments, the majority favoured repeal. “
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“State intervention in labour matter can
be traced back to the enactment of theEmployers and Workmen’s Disputes Act
1860 which provided for the speedy
disposal of the dispute relating to thewages of workmen engaged in railways,
canals and other public works, by
Magistrates. After World War-1 however,
State intervention in Dispute Resolution
became more systematic and effective.”
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Are they social security enactments?
Fatal Accidents Act, 1855
The Workers Breach of Contract Act,
1859 the Employer and the Workmen’s
(Disputes) Act, 1860
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The Fatal Accidents Act, 1855
• An Act to provide compensation to families for loss
occasioned by the death of a person caused by actionablewrong.
• Preamble.
• Whereas no action or suit is now maintainable in any court
against a person who, by his wrongful act, neglect, ordefault, may have caused the death of another person, and
it is often-times right and expedient that the wrong-doer in
such case should be answerable in damages for the injury so
caused by him; It is enacted as follows:30 October 2013
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1-A. SUIT FOR COMPENSATION TO THE FAMILY OF A PERSON FOR LOSS
OCCASIONED TO IT BY HIS DEATH BY ACTIONABLE WRONG.
1[1A.] Suit for compensation to the family of a person for loss occasioned to it
by his death by actionable wrong.—Whenever the death of a person shall becaused by wrongful act, neglect or default, and the act, neglect or default is such as
would (if death had not ensued) have entitled the party injured to maintain an
action and recover damages in respect thereof , the party who would have
been liable if death had not ensued, shall be liable to an action or suit for damages,
notwithstanding the death of the person injured, and although the death shall have
been caused under such circumstances as amount in law to felony or other crime. 2[***] Every such action or suit shall be for the benefit of the wife, husband, parent
and child, if any, of the person whose death shall have been so caused, and shall be
brought by and in the name of the executor, administrator, or representative of the
person deceased; and in every such action the Court may give such damages as it
may think proportioned to the loss resulting from such death to the parties
respectively, for whom and for whose benefit such action shall be brought; and the
amount so recovered, after deducting all costs and expenses, including the costs notrecovered from the defendant, shall be divided amongst the before-mentioned
parties, or any of them, in such shares as the Court by its judgment or decree shall
direct.
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Workmen’s Breach of Contract Act, 1859
At the last session of the Indian Legislative Assembly, a resolution, tabled by
Mr. Joshi, helps to illustrate the condition of servitude in which Indian workers
still are, despite the attempt at organisation begun by the Trades Union
Congress.
This resolution contained the demand for the repeal of the Workmen’s
Breach of Contract Act, and the removal from the Indian Penal Code of
sections 490 and 492, which permit imprisonment for certain breaches of
contract.Under the Breach of Contract Act a worker who fails to fulfil his contract of
service, having received an advance of money from his employer, is liable to
be called on to repay the advance or fulfil his contract, failing which he can
be imprisoned.
This law was passed shortly after the Indian Mutiny, and embodies in fact the
chief feature of indentured labour. The Assembly, after much debate, agreed
that there was a strong case for the repeal of these laws, and consented to
introduce legislation to that effect if, after consulting the Local Governments,
the majority favoured repeal.
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Employers and Workmen’s Disputes Act
1860
State intervention in labour matter can be
traced back to the enactment of the Employers
and Workmen’s Disputes Act 1860 which
provided for the speedy disposal of the dispute
relating to the wages of workmen engaged in
railways, canals and other public works, by
Magistrates. After World War-1 however, State intervention
in Dispute Resolution became more systematic
and effective.30 October 2013
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ENGLAND
• Factory Acts were introduced to protect working people fromemployers who permitted dangerous practices in workplaces.
• The first Acts of 1809 and 1823 failed to include effective
enforcement clauses.
• In 1833 Lord Ashley (later earl of Shaftesbury) introduced the firsteffective law, establishing an inspectorate with powers to enter
premises and require compliance with restrictions on the
employment of women and children.
• A coherent law relating to safety at work was not achieved until1969 when the Health and Safety Executive was set up.
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The factory reform movement spurred
the passage of laws to limit the hours that
could be worked in factories and mills. The first aim of the movement was for a
"ten hours bill" to limit to ten hours the
working day of children. Richard Oastler was one of the
movement's most prominent leaders.
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Factories Act 1802
The Factories Act 1802 (sometimes also called the"Health and Morals of Apprentices Act") was an Actof the Parliament of the United Kingdom whichregulated factory conditions, especially in regard to
child workers in cotton and woollen mills. It was the culmination of a movement originating in
the 18th century, where reformers had tried to pushseveral acts through Parliament to improve thehealth of the workers and apprentices.
The act had the following provisions:
Factory owners must obey the law.
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All factory rooms must be well ventilated and lime-washed twice a year.
Children must be supplied with two complete outfitsof clothing.
Children between the ages of 9 and 13 can workmaximum 8 hours.
Adolescents between 14 and 18 years old can work
maximum 12 hours.Children under 9 years old are not allowed to work
but they must be enrolled in the elementary schoolsthat factory owners are required to establish.
The work hours of children must begin after 6 a.m.,
end before 9 p.m., and not exceed 12 hours a day.
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Children must be instructed in reading, writing andarithmetic for the first four years of work.
Male and female children must be housed indifferent sleeping quarters.
Children may not sleep more than two per bed.
Factory owners are also required to tend to anyinfectious diseases.
Fines of between £2 and £5 could be imposed onfactory owners, but the Act established no inspection regime to enforce conditions.
The act failed to provide a clear law of the hoursone is permitted to work and failed to includesupervision to make sure the law was beingfollowed.
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India has not done enough in social security space:
ILO report: 2010
GENEVA: India has performed poorly in providingsocial security protection to its people until recentlywith "very high vulnerability" to poverty and informallabour practices in the world, according to a report
released by the International Labour Office (ILO)today, 16.11.2010, Times of India.
In its first comprehensive 'World Social SecurityReport', the ILO has suggested that India has notdone enough in the arena of social securityprotection, which is reckoned as the "human face ofglobalisation, in line with its fiscal status".
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INDIA
PENSIONS' ACT, 1871
FACTORIES ACT, 1881
PROVIDENT FUNDS ACT, 1925 PAYMENT OF WAGES ACT, 1936
INSURANCE ACT, 1938
EMPLOYMENT OF CHILDREN ACT, 1938
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Insurance Act 1938
Law relating to the business of insurance.
3*[(4) "auditor" means a person qualified
under the Chartered Accountants Act,
1949 (38 of 1949), to act as an auditor ofcompanies;]
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1923 – Workmen’s Compensation
Act,1923 comes into existence.
1927 – ILO Convention for Sickness
Insurance.
1928 – Government of India refuses to
ratify the ILO convention of 1927.
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Reasons given by the Government
in 1928.
1. Migratory nature of Indian labour;
2. Preference to Indigenous system of
medicines;
3. Want of qualified doctors;
4. Resistance of workers to any
compulsory deduction;
5. Lack of financial resources with
the Government.
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Centre, then, asked for the comments of the
States.
Punjab: Recommended Sickness Insurance, but
no administrative machinery was recommended.
West Bengal: Did not say anything, as the
Royal Commission of Labour was to visit Indiasoon.
Chennai: Suggested PF for all contingencies.
All the States were against the Governments’
financing of the Scheme.
The Royal Commission of Labour has also
recorded these details extensively in Page 266
of its report (Chapter XIV).30 October 2013
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Royal Commission of Labour
1929-31
“The question of making provision
for workers during sickness, even if ithad not been previously raised by
Government, would have been forced
on us by what we found in every
industrial centre.”
45
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Royal Commission of Labour
1929-31
“Of the great need of the workers for something of this kind, there can be no
doubt. By common consent the incidence of sickness is substantially higher
than in Western countries; the medical facilities are much less adequate and
the wages generally paid make it impossible for most workers to get through
more than a very short period of illness without borrowing. Indeed, sickness is
an important contributory cause of indebtedness, with all that debt entails
under existing conditions; for often, at his time of greatest need, the worker
may find himself destitute of resources, unable to take proper measures to
restore his health and in difficulties regarding even the means of subsistence.The situation calls for the exploration of all methods that may lead to the
alleviation of the existing hardships.”
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“Of the great need of the workers for something of this kind, there can
be no doubt.
By common consent the incidence of sickness is substantially higher
than in Western countries;
the medical facilities are much less adequate and the wages generally
paid make it impossible for most workers to get through more than a
very short period of illness without borrowing.
Indeed, sickness is an important contributory cause of indebtedness,
with all that debt entails under existing conditions;
for often, at his time of greatest need, the worker may find himself
destitute of resources, unable to take proper measures to restore his
health and in difficulties regarding even the means of subsistence.
The situation calls for the exploration of all methods that may lead to
the alleviation of the existing hardships.”
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Royal Commission of Labour
Its recommendations were considered by the Government
of India
In consultation with
The Standing Advisory Committee of the Labour and
Industries Department
And
The Government Actuarial Department in London.
It was, then, decided to
Drop the matter for the time-being.
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But,
Labour movements pressed for the
insurance scheme;
The Textile Labour Enquiry committee set up
by Mumbai Government, The Kanpur Textile Labour Enquiry
committee set up by the UP Government and
The Bihar Labour Enquiry Committee
Recommended introduction of a contributory
sickness insurance scheme.
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U.S. Social Security Act, 1935
New Zealand Social Security Act, 1938
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1939-1945 - The Second World War.
1945- Germany is apportionedamong four powers. The Germaneconomy gets reduced to ashes.
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1971 – The Hindu headline reads, “German DM attains full value”.
The economic miracle of West Germanyhas been attributed to the splendid socialsecurity system of that country.
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1941- Second World War was on.
Winston Churchill entrusts the work of formulating
a comprehensive labour welfare legislation for thepost war Britain.
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• Ernest Bevin, Minister of Labour, asked Beveridge tolook into existing schemes of social security, whichhad grown up haphazardly, and make
recommendations.• The Report to the Parliament on Social Insurance
and Allied Services was published in 1942.
• It proposed that all people of working age should
pay a weekly national insurance contribution.• In return, benefits would be paid to people who
were sick, unemployed, retired or widowed.
• Beveridge argued that this system would provide a
minimum standard of living "below which no oneshould be allowed to fall".
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Beveridge said that the government shouldfind ways of fighting the five ‘Giant Evils’ of
Want,
Disease, Ignorance,
Squalor and
Idleness. Which one of the five is easier to tackle?
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The most remarkable asset of the Report was the
convincing manner of Beveridge's argument which madeit so widely acceptable:
Beveridge appealed to conservatives and other doubters
by arguing that the welfare institutions he proposed wouldincrease the competitiveness of British industry in the
post-war period, not only by shifting labour costs like
healthcare and pensions out of corporate ledgers and onto
the public account, but also by producing healthier,
wealthier and thus more motivated and productive
workers who would also serve as a great source of demand
for British goods.
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The report of Sir William Beveridge came
to be described as a monumental
document on social security.
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From its inception, the ILO has recognizedsocial justice as a prerequisite to worldpeace.
After the Second World War, its aims andpurposes were reasserted andstrengthened in The Declaration ofPhiladelphia , adopted on May 19, 1949,which states:
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Money Today 27.11.2008
―My boss was candid enough to say that onecan stay only as long as one is useful,‖ saysDelhi-based A. Gaurav.
―Product life-cycles are short. Constantinnovation and product repositioning are thenorm. It’s essential to keep moving just to
survive,‖ says Dony Kuriakose, director, EdgeExecutive Search.
The product Kuriakose is talking about is
you —the employee.
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Declaration of Philadelphia
1. Labour is not a commodity;
2. Freedom of expression and associationare essential to sustained progress;
3. Poverty anywhere constitutes a dangerto prosperity anywhere; [and]
4. All human beings, irrespective of race,creed or sex, have the right to pursueboth their material well-being and theirspiritual development in conditions offreedom and dignity, of economicsecurity and equal opportunity.
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A Canadian study suggests that the
wealthiest nations do not have the
healthiest people; instead, it is countries
with the smallest economic gap between
the rich and poor. (Mark Bourrie – Inter
Press Service -23.7.1999).
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The wealthiest nations do not have the
healthiest people;
instead, it is countries withthe smallest economic gap between the
rich and poor .
(Mark Bourrie – Inter Press Service -23.7.1999).
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While addressing businessmen, in
the year 1945, after the Second
World War, UK Minister ErnestBevin stressed on the need for
providing basic economic security
to create fairer conditions of living
for the working population also.
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“If profit can be the only
motive, the natural corollary iseconomic disorder, and
economic disorder will bring
you back to the same position
you are in now, ever recurring,
and future generations will
again pay, in the same form or
another, the bitter price we arepaying now…” he said.
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Indian Government asks Prof. B.P. Adharkar
to prepare such a report for India.
He submits his report “Planning on Social
Security in India”
on
15.8.1944.
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Universal Declaration of
Human Rights
Everyone, as a member of society,has the right to social security
• -Article 22
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Consequently, the ESI Act, 1948 isborn as part of the first package oflabour welfare measures
immediately after Indianindependence.
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Fundamental Principles
1. The proposed scheme must not be tooambitious in the beginning;
2. It must be simple, clear and
straightforward,3. It must be financially sound, economical
in working and actuarially balanced;
4. It must minimize disputes and litigation;
5. It must be workable in the peculiarcircumstances of Indian labour andindustry;
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Courtesy: Times of India
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Fundamental Principles (Contd.)
6. It must be in conformity withinternational labour conventions;
7. It must not be saddled with financial
responsibilities which belong toother measures of social securityand finally
8. It must be sufficiently flexible.
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Not to be saddled
For the success of the ESI Scheme, Prof.Adarkar wanted certain extra measures tobe taken. His stand was that the ESI
Scheme should not be “saddled withburdens legitimately belonging toother branches of social insurance”.Therefore, while formulating the ESI
Scheme, he made four assumptions forits success.
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Four Assumptions
(a) Adoption of a scheme for Unemployment Insurance and
creation of new employments in the post war period,
(b) Establishment of a scheme of Old Age Pension,
(c) Adoption of certain pre-medical measures like education inhealth and improvement in environment hygiene besides
regulation of wages and rigorous enforcement of factory laws and,
finally,
(d) National Health Drive.
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Art. 41 of the Constitution
The State shall, within the limits of
its economic capacity and
development, make effective
provision for securing publicassistance in case of unemployment,
old-age, sickness, disablement and
other cases of undeserved wants.
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What is Art. 42?
Why is it there in the Directive Principles?
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The social security system of a
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The social security system of acountry is
the symbol of civilisation.
The extent of its success depends upon thedegree of maturity of the society as a
whole.
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• “The political costs of inequalityare recognized and accepted as
being too high. The economic costs
of fighting the effects are also high.Citing some research, the BBC also
noted that for each dollar spent on
poverty causes, seven dollars weresaved on consequences.”
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addresses and
provides solutionprecisely to
this problem30 October 2013
ESI Act, 1948
Statement of Objects and Reasons
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Statement of Objects and Reasons
Bill No. 54 of 1946
Workmen’s State Insurance Bill
“1. The introduction of a scheme of Health
Insurance for Industrial Workers has been under
the consideration of the Government of India for
a long time. The necessity for such a scheme hasbecome more urgent in view of the conditions
brought about by war.”
78
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The ESI Corporation runs an importantscheme which is the bedrock of societyas a whole . The scheme provides the
basic structure for the nation’seconomy.
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The World Bank's report in 1994 hadidentified the existence of the linkbetween the sound social security
system of a country and its ability tocompete effectively in the worldmarket.
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FRAGILE DEMOCRACIES INEQUALITY
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FRAGILE DEMOCRACIES, INEQUALITY
“TURN GOOD PEOPLE TO EVIL”
• In May 2002, the BBC aired a documentary related to inequality,called “The Experiment”, where they showed in detail howinequality can “turn good people to evil”.
• Inequality is also characterized by a concentration of wealth, whichmeans concentration of political power.
• Historically, one of the main reasons for continued poverty has been
the desire to maintain this power.
• The ESI Corporation, precisely, provides solution in that context.
“ h h i h k
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“Everyone has the right to work, to
just and favourable conditions of work
and to protection for himself and hisfamily [and] an existence worthy of
human dignity … Everyone has the
right to a standard of living adequatefor the health and well being of
himself and his family, including food,
clothing, housing and medical care.”
-Who said this?
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And, in the year 2012
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Sweatshops
The chemicals used in the processing of --------products in the
sweatshops in a foreign country, are at 177 times the legal limit. 77
percent of workers in these shops are subject to respiratory, liver,kidney problems.
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"The Human Racehas improved
everythingexcept the human
race."- Adlai Stevenson
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E i H t it?
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Experience – How to use it?
We must use our experience and notget tied down by experience.
-Beveridge
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PROVIDINGSOCIAL SECURITY
ISTHE RESPONSIBILITY OFTHE STATE
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ESI C ti
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ESI Corporation
The scheme is administered by a dulyconstituted corporate body called the
Employees’ State Insurance Corporation (ESIC).
It comprises members representing Central and
State Governments, Employers, Employees,Parliament and the medical profession.
Union Minister of Labour functions as Chairman
of the Corporation whereas the Director
General, as chief executive, discharges the dutyof running the day-to-day administration.
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ESI Corporation
Constitution
6 10 1948
St di C itt
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Standing Committee
A Standing Committee representingall stakeholders is elected from the body
corporate for managing the affairs of the
scheme and monitoring the progress ofimplementation of various decisions
and policies from time to time.
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Medical Benefit Council
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Medical Benefit Council
A statutory body advises theCorporation on matters related to
administration of medical benefit under
the ESI scheme.
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• Can the Chairman be authorised toexercise the powers of the ESI
Corporation by the ESI
Corporation?
ESI Act is applicable to
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ESI Act is applicable to
Non-seasonal factories, using power in themanufacturing process, employing 10 or morepersons in receipt of monthly wages notexceeding Rs.15,000/- (excluding overtimeallowance)
Hotels/Restaurants., Shops, Cinema housess,Newspaper establishments, Road MotorTransport establishments employing 20 or
more persons for wages not exceedingRs.15,000/- per month in Tamil Nadu
30/10/201393
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Sec.1(4)
Sec. 1(5)
Sec.1(5) casts the security net wider than Sec. 1 (4).
94
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SE 1 5)
Extension of all or any of the provisions of the Act. To any establishment,
To any class of establishments, Such establishments may be
industrial,
commercial,
agricultural or
otherwise.
95
Sec. 1 (5)
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Sec. 1 (5)
The types of establishments notified as coverable byState G0vernments: Hotels, Restaurants, Cinema houses including preview theatres,
Road transport establishments (Running staff can beexempted under Sec.88) News paper establishments as defined in the
WJ(CS&MP) Act,1955 Shops.
Factories employing 20 or more persons without theaid of power in the manufacturing process (upto1989)
96
Coverage of „Employees‟
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Coverage of Employees
All persons employed for wages inconnection with the work of a factoryor an establishment to which the Actapplies
All employees under Sec. 38 impliescoverage of all, whether they areregular or casual or temporary workeror time rated or piece rated worker,part-time workers, trainees, etc.,
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Categories of Employees
Directly employed by the Principal Employer eitherin factory /establishment or elsewhere
Employed by / through immediate employer
(contractor) in the premises or outside thepremises under the supervision of PrincipalEmployer
Those, whose services are temporarily lent or leton hire to the Principal Employer
All employees within the wage limit are coverable.
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Employed in connection with theadministration, purchase of rawmaterials, distribution or sale of theproduct of the factory /
establishment. Part time employees on contract of
service
Outsourced process – Element of
supervision is essential.
Contract of Service Vs. Contract forservice.
99 30/10/2013
Contribution Benefit Period
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Contribution
Period
Benefit Period
From 1.4.2012 to 30.9.2012 From 1.1.2013 to 30.6.2013
From 1.10.2012 to 31.3.2013 From 1.7.2013 to 31.12.2013
Contribution Payable=
Employer’s share of contribution @ 4.75% of employee’s wages
Employee to pay @ 1.75% of employee’s wages +
Eligibility for Sickness Benefit = on the contribution being
payable / paid for 78 days in the corresponding contribution
period.
First Contribution Period and First Benefit Period
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The ESIC charges interest , if the employers
do not pay the contributions in time.
The ESIC imposes damages, if the employers
do not pay the contributions in time.
The ESIC recovers the arrears through
coercive measures, if the employers do not
pay the contributions, interest and damages.
The ESIC prosecutes too, in such cases.
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Benefits under
the ESI Act, 1948
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Medical Benefit
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Medical Benefit
It is admissible from the first day ofinsurable employment.
To the Insured Person and his family
members.Super speciality treatments as per theadministrative instructions.
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Sickness Benefit
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Sickness Benefit
Wages Rs. 5000 p.m. Standard Benefit Rate Divide the total wages paid during the
contribution period by the number ofdays for which these wages were paid 30000/ 183=163.93 Sickness Benefit = Rs. 163.93x70%One month sickness Benefit payable
is = Rs. 115x30=3450
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What is sickness?
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What is sickness?
Suffering from disease
Requiring medical
treatmentRequiring abstention of
medical grounds
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Eduardo Doryan
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y"The debt crisis of the 1980's in Latin America, and then therecent East Asia Crisis, have shown just how quickly people's
lives are turned upside down by steep recession, and how thepoor suffer the most during these times," says Eduardo Doryan,the World Bank's Vice President for Human Development, and aformer Costa Rican Education Minister, 1994-98.
"So social safety nets are vital to catch people who lose their
jobs, become hungry or sick.
But a system that solely concentrates on helping poor peopledeal with a crisis once it happens runs the risk of keeping themin a poverty trap by not providing any opportunities.
We need to embrace a more holistic approach that makes socialprotection more like a springboard that lets people jump intomore secure lives."
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Extended Sickness Benefit
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Extended Sickness Benefit
34 diseases Wages Rs. 5000 p.m.
S.B= 115.00x91=10465.00
309 days x Rs. 132 per day (163.93 x 80%)
330 days x Rs. 132 per day
Total 730 days
Eligibility: On payment of contribution for
183 days in preceding four contributionperiods and is eligible for SB in one period atleast.
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Enhanced sickness Benefit
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Enhanced sickness Benefit
to promote family welfare.
7 days for men
14 days for women
Benefit paid is equivalent to the
wages
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Temporary Disablement Benefit
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Temporary Disablement Benefit
• Wages Rs. 5000 p.m.• Any number of days x Rs.148 per day
• If disabled for 30 days
148x30=4440.
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Permanent Disablement
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Benefit
Wages Rs. 5000 p.m.
If disabled permanently
Monthly payment as per thepercentage of loss of earning capacity.
If it is 50%, then the monthly paymentis 50% of Rs. 4440.
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D d B fi
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Dependants Benefit
Wages Rs. 5000 p.m.
If the employment injury is a fatal one,
Monthly payment to his family members
Rs. 4440 is apportioned among wife and
children.
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Maternity Benefit
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Maternity Benefit
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Maternity Benefit
• Wages Rs. 5000 p.m.
• Standard Benefit Rate Rs. 163.93
• Maternity Benefit = SBR
• Cash Benefit for 84 days initially.
• Can be extended for another 30 days in
case of sickness due to pregnancy or
confinement.
• One month MB = 164x30 = 4920
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Maternity Benefit
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Maternity Benefit
Maternity Benefit is available formiscarriage also.
Cash benefit for 42 days which can be
extended to 30 more days in case ofsickness due to pregnancy or miscarriage.
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OTHER BENEFITS
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Funeral Expenses
Old Age Medical Care
Vocational Rehabilitation
Physical Rehabilitation
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UNEMPLOYMENT ALLOWANCE
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UNEMPLOYMENT ALLOWANCEUnique scheme for extending ―cash-assistance‖ to the
employees covered under the ESI Act (Insured Persons)while they become unemployed in certain contingencieshas been introduced by the ESI Corporation with effectfrom 1-4-2005.
According to this Scheme, cash payment will be given tothe affected insured persons to the maximum of one yearor till re-employed whichever is earlier.
This benefit is called as ―RAJIV GANDHI SHRAMIK KALYAN
YOJANA‖.
See Administrative instructions for more.
30 October 2013
ESIC – The benefactor par-excellence
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ESIC The benefactor par excellence
“The package (of benefits provided bythe ESIC) can rarely be matched byprivate employers on their own because
of the heavy costs involved – not tomention the disinclination amongemployers, with honorable exceptions, tooperate health care systems for theirworkforce”
– The Hindu (1.1.2005).30/10/2013117
Sec. 1 (5)
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Sec. 1 (5)
Sec. 1 (5) specifies that the scheme canbe extended to all. The phrase “any otherestablishment or class of establishments,
industrial, commercial, agricultural orotherwise ” shows that the intention of thegovernment is to extend the benefits to
everybody gradually in the order in whichit has been provided there.
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Some milestones in the history ofthe ESI Corporation
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1948
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1948
The ESI Act, 1948 was passed byDominion Legislature on 19th April 1948.
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1951
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The employers who were brought under coverage of the Actcomplained that there was rise in the cost of production and their
competitive capacity with the industries located in neighbouringcentres decreased.
The government , therefore, introduced the concept of Employers‟Special Contribution which necessitated the employers throughout thenation to pay a nominal contribution, ot exceeding 5% of the totalwage bill of the employer, to the ESI Corporation, with the intention tospread the incidence of cost of the scheme equitably. That was theprimary intention of the amendment of the year 1951.
On the 24th November, 1955, Chapter VA became applicable to the
whole of India except the State of Jammu and Kashmir. This Chapterprovides for Transitory Provisions. During the transitory period everyprincipal employer had to pay to the Corporation a special contributionsubject to the other provisions in the Chapter.
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1966
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Dependant parents of insured women were included in the definition of the tem „family‟.Dependant parents of insured persons had already been included.
Provision for the taking over by the ESI Corporation of the administration of the medicalbenefit from State Government was made.
Sec. 2-A to make it obligatory for the Principal Employer to have his factory orestablishment registered under the Act, was inserted. Reg. 10-B came later in the year
1968.
Sec. 45-A and Sec. 45-B were introduced.
Alternative Evidence of sickness concept was introduced.
Maternity Benefit provisions for miscarriage was introduced.
Maternity Benefit provisions were also extended to sickness arising out of pregnancy,confinement, premature birth of child, miscarriage.
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1970
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1970
The words “except the State of Jammu andKashmir” were omitted from Sec. 1(2).
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1975
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1975
Wage limit increased to Rs. 1000.
Provision for compulsory imprisonmentunder Sec. 85 was introduced.
Sec. 85-A, 85-B and 85-C were added. Sec. 405 IPC was amplified to cover non-
payment of contribution recovered by theemployers from their employees.
Sec. 93-A was added to saddle the liabilityon the transferee also.
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1984
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98
Wage limit was increased to Rs. 1600.
Employer‟s share of contribution was
delinked from the employee‟s share toreduce clerical work of the employers.
“Week” was changed and “wage period”concept was introduced.
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1989
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Children up to the age of 21 years and
infirm children without any age restrictionwere included as „family‟ members.
Number of employers and employees
representatives in the Corporation becameten.
Wage ceiling, rate of contributions, period
and conditions of grant of benefits andwage limit for exemption were taken toRules.
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Recovery machinery was set up exclusively for
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Recovery machinery was set up exclusively forthe ESI Corporation duly vested with the powers
available under the Income Tax provisions.
Retired insured persons and the persons who
leave insurable employment due to employmentinjury on payment of Rs. 120 was introduced.
Condition to deposit 50% of the claim in dispute
was introduced.
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2010
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Amendments were made extensively in variousspheres of activities of the Organisation. As theyare of recent events, the details are notprovided here. Suffice it to say that the
definition of the term factory has undergone asignificant change with the requirement ofpower having been removed and the phrase “forwages” deleted. The opening of medicalcolleges opens a new chapter in the functioningof the scheme.
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Has to be run only byGovernments
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Governments
The ESI Scheme in India which collects only1.75% of wages as Employees Contribution isstill viable for almost 6 decades without anyassistance from Central Government, only
because it is compulsory and also becausethe field of dispersal of benefit load islarger. This is in sharp contrast to the positionobtaining in smaller countries where theemployees contribution is much more, rangingfrom 27 to 73%.
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Robert Owen
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“What ideas individuals may attach to the term"Millennium" I know not; but I know that society may beformed so as to exist without crime, without poverty,with health greatly improved, with little, if any misery,
and with intelligence and happiness increased ahundredfold; and no obstacle whatsoever intervenesat this moment except ignorance to prevent such astate of society from becoming universal.”
- Robert Owen, 1.1.1816when he opened the
Institute for the Formation of Character.
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Courtesy: Wikipaedia
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Advantages to Employers
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Exemption from
a) Maternity Benefit Act
b) Workmen Compensation Act
Absolved of all liabilities of providingmedical facilities to employees and
their dependants in kind or cash or asfixed cash allowance
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Is the role of the Statenecessary in the scheme ofthings?
133
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Assures proper andcorruption-free
administration toachieve the purpose
of the Scheme.134
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―Health is one area in
which the public sectorconsistently does a better
job than the private sectorat controlling costs‖
-Paul Krugman
Nobel Prize winner
(The Hindu – 14.6.2011)135
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Now
you know
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the essential facts
pertaining to
the history of social security
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Congrats