Section 14: Employees’ State Insurance Scheme

Overview

Section 14 of the Code on Social Security, 2020, establishes the Employees’ State Insurance (ESI) Scheme. This scheme is a crucial component of India’s social security framework, providing financial and medical benefits to employees in organized sectors and their families during times of sickness, maternity, disability, or death. It aims to protect workers from economic distress arising from these contingencies.

Who is Covered?

• Classes of employees and establishments covered: The ESI Scheme generally covers employees working in factories and other establishments employing 10 or more persons (this threshold may be revised by the Government). It extends to workers earning wages up to a specified wage ceiling (currently ₹21,000 per month, but subject to change).
• Any eligibility conditions such as length of service or wage limits: Eligibility primarily depends on the wage limit and the size of the establishment. There is no specific length of service requirement for becoming insured, but continuous employment is necessary to maintain benefits. The Government has the power to extend coverage to other categories of workers, including those in the gig economy and unorganized sectors.

Benefits and Contributions

• What benefit the employee gets: The ESI Scheme provides a range of benefits, including medical benefit (sickness, maternity, and treatment for occupational diseases), disability benefit (temporary and permanent), dependent benefit (payable to dependents of deceased insured persons), unemployment allowance (under specific conditions), and funeral expenses.
• Contribution responsibilities of employer, employee and government: Contributions are made by both the employer and the employee. The employee’s contribution is a fixed percentage of their wages, currently 1.5% (subject to change). The employer contributes a significantly larger percentage, currently 3.25% (subject to change). The Government may also contribute towards certain benefits or to support the scheme financially.

Procedure and Compliance

Compliance with the ESI Scheme involves several steps:

1. Registration: Covered establishments must register with the Employees’ State Insurance Corporation (ESIC).
2. Contribution Payment: Employers are responsible for deducting the employee’s contribution from their wages and remitting both the employee’s and employer’s share to the ESIC within the prescribed timelines.
3. Claim Filing: Insured persons can file claims for benefits through their employer or directly with the ESIC, providing necessary documentation (medical certificates, death certificates, etc.).
4. Digital Health Cards: The ESIC is promoting the use of digital health cards (e-Shram cards) to streamline claim processing and access to medical services.

Practical Examples

• Example 1: Employee becoming eligible for benefit: Ramesh works in a factory earning ₹18,000 per month. He falls sick and requires hospitalization. Because his factory is covered under the ESI Scheme and he is a contributing member, he is entitled to medical benefits, including hospitalization expenses and sickness allowance, as per the scheme’s provisions.
• Example 2: Non-compliance by an employer: A small manufacturing unit employing 15 workers fails to remit the ESI contributions deducted from their employees’ wages to the ESIC for three consecutive months. This constitutes non-compliance and can lead to penalties, including fines and legal action by the ESIC.

Disclaimer

This article is for basic understanding of the Employees’ State Insurance Scheme under the Code on Social Security, 2020, and should not be treated as legal advice. For specific legal guidance, consult with a qualified legal professional.