Are Insurance and Hospitalization Policies Mandatory for High-Paid IT Employees in India?

Hi,

I want to know if:

1. Is insurance coverage (Personal Accidental and Mediclaim Hospitalization Policy) for IT company employees with high salary packages statutory under Indian Labour law?
2. If "Yes," under which Act does it fall?
3. Is Personal Accidental coverage statutory?
4. Is Hospitalization policy statutory or given as an added benefit to employees?

Please guide me on the above-mentioned issues; your advice would be appreciated.

Thanks & Regards,
Anu

Hi Anuraadhaa,

ESI is a mandatory requirement under the ESI Act. Companies that do not provide the benefit of ESI should have an alternate plan approved by the government. As the ESI benefit is not appreciated by the employees, especially those with high salary packages, companies use health insurance and cashless hospitalization packages to comply with the law and attract employees.

Hi Ajmal,

Thanks for the reply, but I want to know if this "health insurance, cashless hospitalization packages" are statutory by nature? So if the employee earning Rs.7500/- more is not covered under ESI, but most employees working in IT companies are not covered under ESI because their salaries are more than Rs.7500/-, is it mandatory by law that employees not covered under ESI should be covered under other health insurance?

Regards,
Anuraadhaa

Hello All,

According to the Indian Factories Act of 1948, the following provisions are outlined for first aid:

There shall be provided and maintained in every factory, first-aid boxes or cupboards equipped with the prescribed contents. The number of such boxes or cupboards shall not be less than one for every one hundred and fifty (150) workers ordinarily employed in the factory at any given time. Only the prescribed contents are allowed to be kept in these first-aid boxes or cupboards. Each box or cupboard must be under the charge of a responsible person holding a first-aid treatment certificate recognized by the State Government, who must be readily available during working hours.

For factories employing more than five hundred (500) workers, an ambulance room of prescribed size with necessary equipment and medical staff must be provided and maintained, always accessible during working hours.

Regarding the ESI Act (Employees' State Insurance Act), it offers benefits to employees in cases of sickness, maternity, and employment injury. The Act applies to all factories employing ten or more persons carrying out a manufacturing process with power, or twenty or more persons without power. It also applies to establishments specified by the Government.

Exceptions to the Act include factories with fewer than ten employees using power, fewer than twenty employees without power, seasonal factories engaged in specific activities, mines under the Mines Act of 1952, railway running sheds, and certain government or military establishments. The appropriate Government has the authority to grant exemptions.

Every employee, including casual and temporary workers, earning wages up to Rs. 6,500 per month is entitled to be insured under the E.S.I. Act. However, apprentices under the Apprentices Act are not eligible for E.S.I. benefits. The coverage of part-time employees under the ESI Act depends on the nature of their contract with the employer.

Source: http://www.helplinelaw.com/docs/emp-...ate-ins1.shtml

Hi Anuradha,

Sorry, I overlooked the upper limit criteria of ESI. I think that the main reason behind giving medical facilities to employees by IT companies is:

1. The contract the company has with their clients (mostly US/Europe-based) specifically states that they should have health insurance for all employees.
2. As it has now become an industry standard to attract and retain employees.