Employees' State Insurance Act & The Scheme, 1948

Applicability

  • The Act is extended in area-wise to factories using power and employing 13 or more persons and to non-power using manufacturing units and establishments including educational institations employing 10 or more person.
  • It has also been extended upon shop, hotels, restaurants, roads motor transport undertakings, etc.

Eligibility

All Employees drawing wages/salary upto Rs.15,000/ - per month engaged either directly or thru' contractor, are covered under the Scheme.

Contribution Period

  • 1st April to 30th September, and
  • 1st October to 31st March

Benefit Period

If the person joined insurable employment for the first time, say on 5th January, his first contribution period will be from 5th January to 31st March and his corresponding first benefit will be from 5th October to 31st December.

Benefits

  • ESI Scheme takes care of following needs of the member:
  • Medical sickness, extended sickness for certain diseases, enhanced sickness, dependants maternity, besides funeral expenses, rehabilitation allowance, medical benefit to insured person and his or her spouse.

Membership

If an insured person's wages/salary becomes more than 15,000/- per month, even then he/she remains covered till the end of a Contribution Period which is either April to Septermber & October to March.

SCHEME OF CONTRIBUTION

Employer's Share: 4.75%
Employee's Share: 1.75% of wages/salary.

Wages/Salary

  • Basic pay
  • Dearness allowance
  • House rent allowance
  • City compensatory allowance
  • Overtime wages (but not to be taken into account for determining the coverage of an employee)
  • Payment for day of rest
  • Production incentive
  • Bonus other than statutory bonus
  • Night shift allowance
  • Heat, Gas & Dust allowance
  • Payment for unsubstituted holidays
  • Meal/food allowance
  • Suspension allowance
  • Lay off compensation
  • Children education allowance (not being reimbursement for actual tuition fee)

Not As Wages/Salary

  • Contribution paid by the employer to any pension/provident fund or under ESI Act
  • Sum paid to defray special expenses entailed by the nature of employment - Daily allowance paid for the period spent on tour.
  • Gratuity payable on discharge
  • Pay in lieu of notice of retrenchment compensation
  • Benefits paid under the ESI Scheme
  • Encashment of leave
  • Payment of Inam which does not form part of the terms of employment
  • Washing allowance for livery
  • Conveyance :
    • - Amount towards reimbursement for duty related journey.
    • - Reimbursement of journey on production of ticket.
    • - Maintenance of vehicle subject to producton of record.
    • - Fixed when paid at an interval exceeding 2 months.

Manner And Time Limit

for making payment of contribution

The total amount of contribution (employee's share and employer's share) is to be deposited with the authorised bank through a challan in the prescribed form in quadruplicate on or before 21st of month following the calendar month in which the wages fall due.

Penal Provision

Different punishments have been prescribed for different types of offences in terms of section 85 : (i) (six months imprisonment and fine Rs. 5,000), (ii) (one year imprisonment and fine), and
85-A :(five years imprisonment and not less to 2 years) and
85-C(2) of the ESI Act, which are self-explanatory.
Besides these provisions, action also can be taken under section 406 of the IPC in cases where an employer deducts contributions from the wages of his employees but does not pay the same to the corporation which amounts to criminal breach of trust.