Registration Under Employee State Insurance (ESI)

Employee State Insurance or ESI is a scheme commenced by the Government of India to offer medical, monetary and other advantages to workers. ESI is managed by an autonomous authority – Employee State Insurance Corporation – which lies under the jurisdiction of the Ministry of Labour and Employment.

The ESI Scheme is a self-financing scheme. The ESI funds are primarily built out of contribution from employers and employees payable monthly at a fixed percentage of wages. The State Government concerned also contributes its share to meet the cost of Medical Benefit.

Applicability of Employee State Insurance Scheme-

By law, any company/ factory/ establishment that has more than 10 employees mandatorily need to have ESI. In some states, the number of employees is 20.

It is the statutory responsibility of the employer under Section 2-A of the Act read with Regulation 10-B, to register the Factory/Establishment under the ESI Scheme within 15 days from the date of its applicability to them.

Employees Covered under ESI Scheme-

Employees drawing the salary up to INR 21000/- per month is covered under this scheme. Now, items which are included to compute salary under this scheme is given underneath:-

• Basic Pay, Wages, Salary;
• A./HRA/CCA/Overtime/officiating allowance /Night shift allowance/efficiency allowance/Heat, Gas, Dust allowance/Education allowance/Food & Tea allowance/conveyance allowance;
• Wages/salary/pay for weekly off and public holidays;
• Commission paid to sales staff;
• Subsistence allowance paid to an employee during the period of suspension;
• Attendance Bonus or incentive or ex gratia in lieu of Attendance Bonus or production incentive;
• Regular Honorarium or salary or remuneration paid to a Director;
• Collection Batta paid to run staff.
• Actual payments made towards leave Salary lay off compensation or wages for the strike period.

ESI wage limit has been increased to Rs. 21000 from Rs 15000 per month with effect from 1st January 2017. It was INR 15,000 per month from 1st May 2010 to 1st January 2017 and 1sy May 2010 INR 7500/- per month. The Salary Limit keep is changed by Central Government from time ti time keeping in mind the inflation rate, economic growth, and other indirect factors.

Benefits of ESI Registration-

ESI Registration ensures that employees enjoy the following advantages under the Employees’ State-

• Medical aid- Medical Benefits to an employee and his family members
• Maternity aid - Maternity Benefit to the women who are pregnant (paid leaves)
• Disablement benefits- Disabled employees can get 90% of their monthly salaries as disablement benefits.
• Sickness benefits- Absence from work during illness can be taken for a maximum of 91 days per year along with 70% of the monthly wages.
• Dependent benefits- In the unfortunate event of the demise of an employee during the employment, the dependents of the deceased will receive 90% of his/her monthly salary.
• Funeral expenses- The family of the deceased employee is entitled to an additional amount of Rs.10,000 towards funeral expenses.
• Physical rehabilitation - Available to employees in the case of physical disablement due to an employment injury or occupational hazards.
• Old age medical care- An annual payment of Rs.120 ensures medical care benefits for retiring ESI employees or for those who are opting for VRS/ERS. Insured ESI members retiring on account of permanent disabilities are also entitled to the same benefits.

Contribution under ESI Scheme-

The current rate of contribution for ESI stands at 4.75% of the wages paid/payable to the employees in every wage period – for employers. 1.75% of the wages – for employees.

Registration under ESIC Scheme- 

Registration is the process by which every employer/factory and its every employee employed for wages, is identified for the purpose of the Scheme, and their individual records are set up for them. 

ESI registration is mandatory once a company or any other entity employs 10 or more low-earning employees. According to the Act, any employee earning less than Rs. 15,000 per month needs to contribute 1.75% of his/her pay towards the ESI, while 4.75% will be contributed towards his/her ESI by the company.