Section 16: Eligibility and Benefits Under ESI

Overview

Section 16 of the Code on Social Security, 2020, focuses on the Employees’ State Insurance (ESI) scheme, a self-financing social security and health insurance scheme for Indian workers. It details the various benefits available to insured persons and their dependents, aiming to provide financial and medical assistance during times of sickness, maternity, disability, or death. This section is crucial for both employees seeking to understand their entitlements and employers ensuring compliance with ESI regulations.

Who is Covered?

• Classes of employees and establishments covered: The ESI scheme generally covers employees earning wages up to a specified wage ceiling (currently ₹21,000 per month, but subject to change via notification). It applies to factories and other establishments employing 10 or more persons. Certain establishments are exempted based on existing social security provisions.
• Any eligibility conditions such as length of service or wage limits: To be eligible, an employee must be covered under the scheme and must have contributed for a qualifying period, which varies depending on the specific benefit claimed. Generally, a minimum contribution period is required before benefits like sickness or maternity can be availed. The wage limit is a key factor; employees earning above the wage ceiling are not eligible.

Benefits and Contributions

• What benefit the employee gets: The ESI scheme provides a comprehensive range of benefits including sickness benefit (cash compensation during illness), extended sickness benefit, maternity benefit, unemployment allowance (under specific conditions), temporary and permanent disability benefits (providing financial assistance in case of work-related injuries), funeral expenses, and comprehensive medical care for insured persons and their families.
• Contribution responsibilities of employer, employee and government: Contributions are primarily made by the employer and the employee. The employee’s contribution is a fixed percentage of their wages, deducted at source. The employer contributes a significantly larger percentage. The Government of India also contributes a portion towards certain benefits, particularly administrative expenses and medical benefits. The exact contribution rates are subject to change via government notifications.

Procedure and Compliance

Registration: Establishments covered under the ESI Act must register with the Employees’ State Insurance Corporation (ESIC). Contributions: Employers are responsible for deducting employee contributions and remitting both employee and employer contributions to the ESIC within the prescribed timelines. Claims: Employees can claim benefits by submitting the required documentation (medical certificates, wage slips, etc.) to the local ESIC office or through designated network hospitals. The ESIC is increasingly focusing on digital processes, including e-prescription systems and online claim submissions, to streamline service delivery. Doorstep healthcare delivery is also being emphasized through mobile medical units and network hospitals.

Practical Examples

• Example 1 showing an employee becoming eligible for benefit: Ramesh works in a factory covered under the ESI scheme and earns ₹18,000 per month. He has been contributing to the ESI fund for the past 12 months. He falls ill and requires medical treatment. Because he meets the contribution period requirement and is within the wage limit, he is eligible for sickness benefit and medical care under the ESI scheme.
• Example 2 involving non-compliance by an employer: A textile mill owner fails to remit the ESI contributions deducted from his employees’ wages to the ESIC for three consecutive months. This constitutes non-compliance with the Code on Social Security, 2020, and the employer may face penalties, including prosecution and interest charges on the outstanding contributions.

Disclaimer

This article is for basic understanding of social security law and should not be treated as legal advice. Laws and regulations are subject to change, and it is recommended to consult with a qualified legal professional for specific guidance related to your situation.