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Employee State Insurance Act1948

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Emergence of Employee State Insurance Act:Right from 1927 onwards a health insurance scheme for the

industrial workers was considered as an essential requirement.

The Royal Commission of Labor in its report suggested such ascheme in 1931. In 1943 the task of designing such a schemewas given to Prof B P Adarkar. Prof Adarkar prepared andsubmitted his report to the Government in December 1944. The

Adarkar Plan along with various other suggestion wereinstrumental the emergence of Workmen State Insurance Bill1946. This bill was referred to a select committee who madesome modifications and also changed its name to EmployeeState Insurance Bill. The Employee State Insurance Act was

passed by the Government on 19th

April 1948.The Scheme under the Act aims at providing for certain cashbenefits to employees in the case of sickness, maternitybenefit, employment injury, and medical facilities in kind, and tomake provisions for certain other matters in relation thereto.The Act was amended from time to time

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Contribution process

Employee whose average daily wage is below Rs 15, areexempted from payment of the employees contribution; onlyemployers contribution will be payable at the rate 4.75% inrespect of such employees.

The State Government contributes a minimum of 12.5% of the total expenditure on medical care of their respectivestates.

The average daily wage of a person is worked by dividing hismonthly, fortnightly or weekly earnings by 26, 13, and 6respectively. If the average daily wage worked out turns outto be Rs15/- or more, then contribution will be recoverable

from the person for the wage period.

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The contribution in respect of all wage period which end in acalendar month are deposited to the ESI Fund A/c No 1 in theauthorized bank, by 21 st of the following month.

Return of contribution for a contribution period is required to besubmitted to the appropriate regional office within 30 days of the end of the relevant contribution period.

Contribution Period Corresponding Benefit Period1 st April to 30 th September 1 st January to 30 th June of

the year following.

1 st October to 31 st March of the 1 st July to 31 st December year following of the year following

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Applicability: The Act applies in the first instance to all factoriesusing power and employing 20 or more persons for wages. Theprovisions of the Act have also been extended to cover:-

(a) Smaller power using factories employing 10 to 19 persons.(b) Non power using factories using 20 or more persons.(c) Shops(d) Hotels and restaurants(e) Cinema houses(f) News paper establishments(g) Road motor transport undertakings employing 20 or more

persons.

The Act however does not apply to mine or railway runningshed and specified seasonal factories. The state governmentmay extend the provisions of the Act to cover other establishments or class of establishments, industrial,

commercial, agricultural or otherwise in consultation with theCorporation and with the approval of the Central Government.

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Sources of Finance: The main sources of finance are thecontributions from employers and employees and one eighthshare from the Government towards the cost of medical care.

The Corporation generates its own resources and neither receives nor it needs any subsidy. A contribution paid under the Act are to be deposited into funds called the EmployeesState Insurance Fund. The accounts of the Corporation areto be audited by auditors appointed by the CentralGovernment.

Administration: The administration of the scheme is entrustedto corporate body, consisting of the Minister of Labor at thecentre as its chairman, Union Health Minister as its vice

chairman and the representatives of the state governmentemployers and employees and medical professionnominated by the Central government. The affair of thecorporation are directly administered by a StandingCommittee constituted from among its members. There isalso a medical benefit council to give advise on medical care.

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Registration: Registration of a factory/establishment with theEmployees State Insurance Corporation is the Statutoryresponsibility of the employer under Section 2-A of the Act. The

employer applying for the first time is liable to furnish to theappropriate local office the declaration form of the employeecoverable under the Act, within 10 days of his employment.Besides this the employer is required to furnish separately thename and address of the factory/establishment, number of employees, nature of duty and name designation and address of the manager, controlling such persons. An employee can beregistered and insured under the ESIA only once. On registrationthe employee is issued an Identity card

Employee & Employer Contribution: Contribution will be payablefor every wage period. Employees contribution has to becalculated individually for each employee at the rate of 1.75%of wage paid/payable for every wage period. Employerscontribution will be 4.5% of the total wages paid to all employeescovered under ESIA Scheme in each wage period

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The total value of the combined employers and employeesshare has to be deposited in the State Bank of India or in anyother authorized bank branch through a challan in

quadruplicate on or before the 21st

of the month following thecalendar month in which the wages fall due

Benefits Provided under the Scheme: The benefits provided

under the Scheme are:-1. Sickness and Extended Sickness Benefit2. Maternity Benefit.3. Disablement Benefit.

4. Dependents Benefit5. Funeral Benefit and6. Medical Benefit which is given in kind.

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Sickness and Extended Sickness Benefit : For sicknessoccurring during any period, an insured person is entitledsubject to contributory conditions to receive sickness cash

benefits at the standard benefit rate for a period of 91 days inany two consecutive benefit periods. Sickness benefit is notpaid for an initial waiting period of two days unless the insuredperson falls sick again and is certified sick within 15 days of thelast spell in which sickness benefit was paid. An insured personsuffering from any long term ailments like tuberculosis, leprosy,mental diseases, etc is eligible for extended sickness benefit atthe rate of 40% more than the sickness benefit. After exhausting the sickness benefit up to 91 days an insured

person suffering from tuberculosis, cancer, malignant diseases,or other specified long term diseases, is entitled to averagedaily wage for a further period of 309 days provided he hasbeen in continuous employment for a period of 2 years or morein a factory or establishment to which the Act apply.

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The Director General has been empowered to enhance theduration of extended sickness benefit beyond the presentlimit of 400 days(91+ 309 days of sickness and extendedsickness benefit) to a maximum period of 2 years indeserving cases duly certified by a medical board. Aninsured person is paid cash assistance at practically fullwage rates for 7 days for vasectomy and 14 days for

tubectomy operations.Maternity Benefit : For entitlement to maternity benefit theinsured woman should have contributed for 80 days in theimmediately preceding two consecutive contribution periodscorresponding to the benefit period in which the confinementoccurs or is expected to occur. An insured woman is entitledto maternity benefit at double the standard benefit rate. Thisis practically equal to full wages for a period of 12 weeks of which not more than 6 weeks shall precede the expected

date of confinement.

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Dependents Benefit : The dependents of insured workmanwho is dies as a result of accident or occupational diseasearising out of and in course of employment receive timelyhelp. Pension at the rate of 40% more than standard benefitrate will be paid periodically to widow (s) and children. Thewidow (s) share is 3/5 th of the benefit and the legitimate or adopted son and daughters share is 2/5 th of each of the

benefits. In their absence pension may be paid to other dependents such as dependent parents and grand parents at3/10 th of the full rate and if there are two or more parents or grand parents, the amount payable will be equally dividedamong them. It will be available to the widow for life time or

until she marries, sons and daughters up to the age of 18, or infirm children above the age of 18.

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Funeral Benefit: An amount not exceeding Rs 1500.00 ispayable as funeral benefit to the eldest surviving member of the family of the deceased insured person. If the insured

person did not have a family then it will be payable to theperson who actually incurred the funeral expense of thedeceased insured person.Medical Benefit : It is provided in terms of medical attendanceand treatment of insured persons and their families. Thisbenefit has been divided into three parts :

(a) Restricted Medical Care: It consists of outpatient medicalcare at dispensaries and panel clinics. In these institutions,facilities of consultation with medical officers, supply of drugs,

pre-natal and post-natal care, family planning andimmunization services are available. The beneficiaries arealso entitled to call a doctor to their house to see a seriouscase.

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(b) Expanded Medical Care: This consists of consultation withspecialists and supply of medicines and drugs as may be

prescribed by them. This also includes facilities for speciallaboratory tests and X-ray examinations.(c) Full Medical Care: It consists of hospitalization facilities,

services of specialists and drugs and diet as are requiredfor inpatients.

An insured person and members of his family are entitledto medical care of all the above three varieties Medicalcare and it continues to be available for a period of 9months, if contribution has been paid for half the number

of days in a contribution period. Insured person sufferingfrom chronic ailments of long duration like tuberculosis,leprosy etc are eligible for treatment for a further period of one year.

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An insured women and an insured person in respect of hiswife shall be paid a sum of Rs 250/- per case as medical

bonus if confinement occurs at a place where necessarymedical facilities under the ESI Scheme are not available.Insured persons are also provided artificial limbs. Allservices forming part of benefit are provided free of anyextra charge. It is administered by respective stategovernments except in Delhi where the Corporation has itsown network of hospitals and dispensaries.7/8 th of the expenditure on medical benefit is borne by theCorporation and 1/8 th by the state government.