Section 5: Constitution of the Employees’ State Insurance Corporation (ESIC)

Overview

Section 5 of the Code on Social Security, 2020, deals with the Employees’ State Insurance (ESI) Scheme. This scheme provides social security benefits – primarily medical, disability, maternity, and dependent benefits – to workers in organized sectors. The section establishes and defines the structure, powers, and responsibilities of the Employees’ State Insurance Corporation (ESIC), the body responsible for administering the ESI Scheme.

Who is Covered?

• The ESI scheme generally covers employees working in factories and other establishments employing 10 or more persons. The Code on Social Security, 2020 aims to lower this threshold, but the exact number is yet to be notified.
• Eligibility typically requires employees to be drawing wages up to a specified wage ceiling (currently ₹21,000 per month, but subject to change).
• Certain classes of employees, like casual workers or those employed for less than a specified period, may have different eligibility criteria.

Benefits and Contributions

• Employee Benefits: The ESI scheme provides a range of benefits including sickness benefit, maternity benefit, disablement benefit (temporary and permanent), dependent benefit, unemployment allowance (under specific conditions), medical benefit, and funeral expenses.
• Contribution Responsibilities: Contributions are made by both the employer and the employee. The employee’s contribution is a fixed percentage of their wages, currently 1.25%. The employer contributes a significantly larger percentage, currently 3.25% of the employee’s wages. The Government of India also contributes towards certain benefits and administrative expenses.

Procedure and Compliance

Here’s a simplified overview of the process:

1. Registration: Employers covered under the scheme must register with the ESIC.
2. Contribution Payment: Employers are responsible for deducting the employee’s share of the contribution from their wages and remitting both the employee’s and employer’s share to the ESIC regularly (typically monthly).
3. Claim Filing: Employees can file claims for benefits through their employer or directly with the ESIC, providing necessary documentation (medical certificates, accident reports, etc.).
4. Inspections: The ESIC conducts inspections to ensure compliance with the scheme’s provisions.

Practical Examples

• Example 1: Employee Eligibility for Medical Benefit – Ramesh works in a factory covered under the ESI scheme and earns ₹18,000 per month. He falls ill and requires hospitalization. Because he is a contributing member of the ESI scheme, he is entitled to medical benefits, including hospitalization expenses and medical treatment, without direct financial burden.
• Example 2: Employer Non-Compliance – A factory owner fails to remit the ESI contributions deducted from their employees’ wages for three consecutive months. The ESIC can initiate legal proceedings against the employer, including penalties and prosecution, for non-compliance.

Disclaimer

This article is for basic understanding of the Employees’ State Insurance Corporation (ESIC) and the relevant provisions of the Code on Social Security, 2020. It should not be treated as legal advice. For specific legal guidance, consult with a qualified legal professional.