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Employee’s State Insurance(ESI) is a self-financing social security and health insurance scheme for Indian workers. For all employees earning less than Rs. 21,000 per month as wages, the employer contributes 3.25 percentage and employee contributes 0.75 percentage, total share 4.00 percentage.
This fund is managed by the ESI Corporation (ESI) according to rules and regulations framed therein under ESI Act 1948, which oversees the provision of medical and cash benefits to the employees and their family through its large network of branch offices, dispensaries and hospitals throughout India. ESI is an autonomous corporation under Ministry of Labour and Employment, Government of India. But most of the dispensaries and hospitals are run by concerned state governments.
Employees registered under the ESI enjoy a range of benefits under the scheme. Employee enjoy medical attendance and treatment for the person insured and their families including full range of medical, surgical and obstetric treatment, supply of all drugs, ambulance services, super-specialty consultation, etc., In addition, to the medical care, insured persons also enjoy sick pay benefits. Registration with ESI provides the employee with tremendous benefits and improves worker morale and retention. Registration SEVA can help your Company obtain and manage ESI Registration.
Who require ESI Registration?
The following establishments which employs 10 or more persons attract ESI coverage:
- Hotels or restaurants not having any manufacturing activity, but only providing service.
- Newspaper establishments.
- Roadside Motor Transport Establishments;
- Private Educational Institutions and Medical Institutions
In some states the minimum employees required for coverage is for 20 or more. Few of the State Governments have not extended scheme to include Medical & Educational Institutions.
ESI provided a number of benefits which includes:
- Medical benefit:
Full medical care is provided to an Insured person and his family members from the day he enters insurable employment. Medical care is also provided to retired and permanently disabled insured persons and their spouses on payment of a token annual premium of Rs.120.
- Sickness Benefit:
Sickness Benefit in the form of cash compensation at the rate of 70 per cent of wages is payable to insured workers during the periods of certified sickness for a maximum of 91 days in a year.
- Maternity Benefit:
Maternity Benefit for pregnancy is payable for Twenty-Six (26) weeks, which is extendable by further one month on medical advice at the rate of full wage subject to contribution for 70 days in the preceding Two Contribution Periods.
- Temporary disablement benefit:
From day one of entering insurable employment & irrespective of having paid any contribution in case of employment injury. Temporary Disablement Benefit at the rate of 90% of wage is payable so long as disability continues.
- Permanent disablement benefit:
The benefit is paid at the rate of 90% of wage in the form of monthly payment depending upon the extent of loss of earning capacity as certified by a Medical Board.
- Funeral Expenses:
An amount of Rs. 10,000/- is payable to the dependents or to the person who performs last rites from day one of entering insurable employment.
- Un-Employment allowance:
ESIC Provides monthly cash allowance for a duration of maximum 24 months in case of involuntary loss of employment or permanent invalidity due to non-employment injury.
ESI registration requires the following documents which needs to be mandatorily submitted by the employer:
- Registration Certificate or License issued under the Factories Act and Shop and Establishment Act
- Address Proof which must include Rent receipts of the occupied space, further indicating its capacity
- Copy of latest Bank Statement
- Copy of PAN Card
- Memorandum of Association and Articles of Association in case of company
- Partnership deed/Trust deed depending on the applying entity
- Copy of Certificate of commencement of production/ Certificate of Incorporation
- Registration Number of CST/ST/GST
- Month wise employment position, salary etc.
- E-mail id and Mobile number of the firm/company.
- Family Photo in Duplicate of employee
Registration of employers under ESI Act is fully online, without requirement of submission of anyphysical application documents either before the registration or after it. Below you can find the step by step procedure of the registration process of ESI:
- Step one: Submission of Form 1 and Form 3
Once the documents as mentioned above are ready, the entity needs to submit the application in Form 1, which is the Employer’s registration form, to the relevant Regional Office. A declaration, along with Form 3, is also required to be submitted along with Form 1.
- Step two: Obtaining Unique code number
After the verification of form and the documents, the applicant will receive a 17-digit unique number. Further ESI filings can be done once you receive this unique code number.
- Step three: Submission of forms by Employee
Employees need to fill and submit Form 1 along with two copies of a family photo to the employer. Post which the employees will get an ESI card with which an employee can avail the various benefits as included under ESI. The employer needs to submit these to the relevant ESI branch Officer.
- Step four: Allotment of Insurance Number
For identification under the ESIC scheme, an insurance number is allotted to the employee.
Due Dates for ESI:
- Payment: 15th of every month
- Returns: May 11th and November 11th
Once the entity is covered under ESIC, it needs to comply with mandatory guidelines as issued by the Act:
How can we help in getting registration?
When you consult Registration SEVA, you get the following benefits:
01. What is ESI Scheme?
Employees’ State Insurance Scheme of India is a multi-dimensional Social Security Scheme tailored to provide Socio-economic protection to the ’employees’ in the organized sector against the events of sickness, maternity, disablement and death due to employment injury and to provide medical care to the insured employees and their families.
02. How does the scheme help the employees?
The scheme provides full medical care to the employee registered under the ESI Act, 1948 during the period of his incapacity, restoration of his health and working capacity. It provides financial assistance to compensate the loss of his/ her wages during the period of his abstention from work due to sickness, maternity and employment injury. The scheme provides medical care to his/her family members also.
03.What are the establishments that attract coverage under ESI?
The following establishments employing 10 or more persons attract ESI coverage.
- Hotels or restaurants not having any manufacturing activity, but only engaged in ‘sales’.
- Cinemas including preview theatres;
- Road Motor Transport Establishments;
- Newspaper establishments. (that is not covered as factory under Sec.2(12));
- Private Educational Institutions (those run by individuals, trustees, societies or otherorganizations and Medical Institutions (including Corporate, Joint Sector, trust, charitable, andprivate ownership hospitals, nursing homes, diagnostic centres, pathological labs).
In some states coverage is still for 20 or more persons employed under sec 1(5). A few State Governments have not extended scheme to Medical & Educational Institutions.
04. Is it mandatory for the Employer to register under the scheme?
Yes, it is the statutory responsibility of the employer under the to register their Factory/ Establishment under the ESI Act within 15 days from the date of itsapplicability to them.
05.How much does employee contribute towards ESI?
Out of the total 4.0% amount that goes towards ESI, only 0.75% is deducted from the employee’s salary, rest is contributed by the employer.
06. What are the incentives introduced by the government for ESI members?
The government has introduced various health care benefits for poor families. The families covered under NHPS scheme can access medical facilities via ESI Hospitals. Besides, employees covered under the ESI scheme are entitled to medical treatment for them and their dependents.
07. How does ESI registration contribute in pension?
The employees covered under the ESI scheme are entitled to a family pension.
08. What is a Code number?
It is a 17-digit unique identification number allotted to each of the factory/establishment registered under the provisions of the Act. Such a number is generated through ESIC portal on submission of the required information by the employer. It can also be generated on receipt of Survey Report from the Social Security Officer.
09. Can a factory or establishment once covered go out of coverage if the number of persons employed therein goes down to the minimum limit prescribed?
Once a factory or an Establishment is covered under the Act, it continues to be covered notwithstanding the fact that the number of persons/ coverable employees employed therein at any time falls below the required limit or there is a change in the manufacturing activity.
10. After ESI registration is completed, how many returns need to be filed per year?
Once a factory or establishment is recognized within the ESIC Act, it has to file ESI returns two times per year. For each return filed, the underlying documents have to be submitted:
- Wages Register
- Employee’s Attendance Register
- Form 6 Register
- Challans and returns of every month
- A register of any accidents that may have occurred on the premises of the business.
11. What are the penal provisions in case of delayed payments?
If the employer fails to pay the online contribution within 21 days of the end of the month, shall be liable to pay damages at the rate of 12% per annum for each day of such default in contribution.