Is There Any Option Apart From ESIC - CiteHR
Harsh Kumar Mehta
Consultant In Labour Laws/hr
Manager - Human Resource
Korgaonkar K A
Sr. Hr Manager
+1 Other

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My organization want to switch to private insurance as the services of ESIC are not satisfactory i just wanted to know the legality of this. Can we switch from ESIC to other option
Dear Santosh,
If gross salary of any employee is more than 15K per month, then, you are automatically excluded from ESIC & workman compensation act, will be applicable, so, you have to provide the insurance to such employees.
Secondly, if still employees' salary is below 15K, then it is mandatory for ESIC. but, still you may get the exemption for ESIC, until & unless, provided insurance's benefits are better than provided by ESIC or as per ESIC,
Tushar Swar.

The simplest way to switch out of ESIC purview is to raise the gross salary of all your employees to above 15K, if that is possible ! Otherwise, i see no escape from the clutches of ESI, whether u like it or not.
Hi all,

As i have said, you may get the exception even if your company is applicable under the ESIC.

Subject to provided benefits are similar to ESIC's benefits or superior & employees are agreed on the same.

So, Once the ESIC authority satisfy with you response, they may grand you the exemption certificate under the same.

Please refer the Section 87

As per section 87:-

There appropriate government may, by notification in the official gazette and subject to such conditions as may be specified in the notification, exempt any factory or establishmnt, or class of factories or establishment of any specified area from the operation of this act for the period not exceeding one year and may from time to time by like notification renew any such exemption for periods not exceed one year at a time.

1(Provided that such exemptions may be granted only if the employees in such factories, or establishment are otherwise in receipt of benefits substantially, similar or superior to the benefits provided under this act.)

(For More clarity refer the section 87, 88, 89, 90, 91, 91-A, 91-AA, 91-B, 91-C)


Tushar Swar

Dear Tushar ji,
While appreciating your answer, I would like to invite discussion on how many such establishments are granted exemption under section 87; what is the criteria for grant of such exemption in detail and procedure for it.


It is difficult to prove by any private factory or establishment covered/ coverable under ESI Act, 1948 that the benefits they are providing are "substantially, similar or superior" to as provided under ESI Act, 1948.

Though the services especially medical services as provided through ESIC institutions can be called not satisfactory, but one must not forget that when the question arises for meeting expenses through commercial insurance/private insurance there is a cap of expenses and the insured persons or employers have to bear the expenses in excess to what is within such contract.

Further more, in cases of serious and fatal accidents it becomes difficult for smaller employers/establishments to bear and comply with the Employees's Compensation Act.

In addition, the services or benefits as available under ESI Act, 1948 and availed by the insured persons and their family members are availed as a matter of their legal right, whereas the benefits under commercial insurance depends upon sweet will/discretion of the employer and there is always a cap on such benefits.

In my opinion, it is better to point out the short-comings/defects in the existing ESIC medical institutions to higher authorities of ESIC, rather than to leave the employees/insured persons in the hands of private insurance companies.

yes but you have to prove that your schemes are superior to esic
Dear Korgaonkar,
Criteria for exemption is only guideline to grant exemption would be the superiority or similarity of benefits provided by the employers and not because of any other reasons.
I totally agree with Mr. Haresh, that, going for private insurance is better to go for ESIC, but, if you think about Service delivery of ESIC, it will prefer to go for private as far as private sectors behave as responsibly.
In same time i would like share with you that, if getting exemption its a difficult, then, you may take declaration from all respective employees that, they are happy & satisfied with provided benefits of privates insurance company & service delivery of ESIC is not satisfactory. once you get the declaration from all employees, it will be easier to get the exemption.
Tushar Swar.

Dear Tushar ji, Could you please give a single case wherein such kind of declaration is considered for getting exemption?
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