Dear Friends and Seniors,
Please clarify my doubts regarding EC Act, ESI, other forms of medical and death/disability that can be provided by a company.
My Organisation has two types of Medical cover and death/disability benefit, as follows:-
a) Medical Cover: For employee out of ESI limit, we provide a Group Medical Policy upto a certain cover. Employees who are eligible for ESI are of course under ESI.
b) Death & Disability Benefit: The "employees who are working in our office" are covered under a Group Personal Accident Policy. Employees who are working in the Factory site of our "Principal Employer" are covered under EC Act (one reason for this is that the PE has asked specifically for coverage under EC Act for our employees working at his site).
My Doubts are:-
a) is it necessary to cover every employee (irrespective of work location) under EC Act?
b) Is this arrangement of Death & Disability benefit okay?
Would appreciate advice.
Thanks & Regards

From India, Kochi
Labour Law & Hr Consultant
Labour Consultant
Korgaonkar K A
+1 Other


Dear ARUN,
I don't understand why such queries when your very post itself clearly distinguishes the scope and the extent of the coverage of the different insurance policies referred to therein. Anyway, for the sake of clarity by way of further explanation, let me answer the queries as follows:
1) EC Act,1923 covers the risks of employment accidents in respect of only those employees who are within the ambit of the definition of the term "employee" as defined u/s 2(1)(dd) of the Act read with the exhaustively enumerated list in the Schedule II of the Act and not others. The factor for compensation under the Act is the extent of the loss of earning capacity as a result of disability caused by the employment accident based on the last-drawn wages only. On the contrary, the Group Personal Accident Policy, if I were correct, would cover all those insured irrespective of the place and cause of accident and the amount of compensation is limited to the maximum sum assured only. Therefore, it can not be a substitute for the statutory compensation under the E.C Act,1923 but can be an addition only.
2) It is okay for those employees who are not covered by the E.C Act,1923.

From India, Salem

Dear Arun,
If your Principal Employer is covered under ESI act and or his factory is situated in implemented area of ESI, then you should cover your employees under ESI and the Principal Employer cannot insist upon you for coverage under the EC Act, and you cannot escape from ESI liability.
PE can insist coverage of Employees drawing salary >Rs.21,000/- under EC Act.

From India, Thane
korgaonkar k a

Dear Arun ji,
Shri. Umakanthan ji rightly said that claim under PA policy can not be a substitute for the statutory compensation under the E.C Act,1923 but can be an addition only.
Employees covered under ESIS, liability to pay or settle any claim or extend the benefits under the Act lies with the ESI Corporation. Employees who are not covered under ESIS are covered by EC Act, subject to falling under the definition of workmen and to such employees, liability to pay compensation in case of employment injury, is of employer. The employer has to pay it from his own pocket.
However, if the employer has insured his such employees who are covered under EC Act, by EC policy then only his liability is absorbed by the insurer otherwise not.
Settlement of claim under mediclaim and PA policy is an additional benefit to employee.
Hope your query is resolved with the answer by Shri. Umakanthan ji supplemented by me.

From India, Mumbai

Thank you Mr. Umakanthan, Mr. Suresh and Mr. Korgaonkar, for your replies.
The kind of work we do fall under Serial (vii) of Schedule II and we have covered our EC Liability with an appropriate policy with a GIC.
From the replies received it is clear that people covered under ESIC need not be covered under EC Act. As I understand, ESI is like a medical policy (There is no lump sum benefit to dependents in case of Death of IP) and EC act is like a Term Life Insurance (in which the employees dependents get a Lump Sum Benefit)
Having said that, please allow me to ask few more questions.
a) Is there any thing in either ESI Act or EC Act (or any other act) which precludes an employee from claiming benefits simultaneously under both Acts for disablement allowable under the acts?
b) Is there any thing in either ESI Act or EC Act (or any other act) which precludes a deceased employee's dependents from simultaneously claiming Dependents benefit under ESI Act and also Lump sum benefits under EC Act?
c) Fundamentally, from the point of view of company risk management, is it legally alright to have all employees as defined by Schedule II of EC Act to be covered by a policy so that company statutory liability arising out of EC Act is taken care of, irrespective of whether the employee is covered under ESI or not?
Please pardon my doubts, but would appreciate if experts in this forum can satisfy my curiosity. I am still learning!
Thanks and regards,

From India, Kochi

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