If you are able to provide better medical and other benefits to your employees, certainly, you will get exemption from the operation of ESI. But before that you have to ensure that the facilities provided by you are better in all means. Let it be in the form of taking care of employees on the happening of their accident on duty, giving 90 or more days of leave, medical benefits to dependents of the employees, pension in case of permanent incapacity due to employment injury,compensation to dependents in case of death of employee or such other benefits which are not generally covered by any mediclaim policy in practice. There may be a number of insurance policies which are all framed with some hidden points. If you go through them you will find that the ESI will be a better choice for an employer.
Workmen( Employees) Compensation Act is a general enactment directing the employers to pay compensation in case of death or permanent incapabilities caused to the employees while on duty. No one can predict when an accident takes place or when the liability comes in to being. If at the time of death or accident the employer finds that he is not having enough money to meet the liability, then the purpose of the enactment will not be met. It is with a view to making the employer financially sound that a policy to cover such untoward happening has been incorporated in the Act itself. The employer may be sound enough to meet any unexpected expenditure but it cannot be predicted or taken for granted by the law enforcing authorities.
Now the role of ESIC in workmen compensation is just like any other insurance company. That is, the ESI Corporation takes the entire responsibility of the employer with regard to payment of compensation in case of death or injury against a consideration paid or payable monthly. Therefore, if the employer is operating in a notified area, then ESIC will absolve all the liabilities of the employer in respect of workmen's compensation (as also maternity benefits payable under the Maternity Benefits Act) At the same time, if the employer is not in a notified area then naturally, the ESIC cannot do anything but the employer has to find a solution, ie, to take a suitable policy which will bring in sufficient fund to pay off its liability towards compensation without hampering its working capital. Since the ESI Act has also put some restrictions with regard to coverage based on the salary of the insured (employees) the employer has also to find out alternative as said above in respect of those who are out of purview of ESI.
9th August 2011 From India, Kannur