Understanding the ESI Act: How Does It Impact Your Workplace and Employee Benefits?

The Employee State Insurance (ESI) Act provides social security and health insurance to employees in India. It applies to establishments with 10 or more employees, working in a non-seasonal capacity. Employers contribute a percentage of wages, while employees also make a contribution. The criteria for coverage include salary thresholds and types of employment, ensuring that workers in specified industries have access to medical benefits, sickness pay, maternity leave, and more.

Dear Midhu,

Greetings!

Applicability of the Act & Scheme:

Is extended in area-wise to factories using power and employing 10 or more persons and to non-power using manufacturing units and establish-ments employing 20 or more person upto Rs.7500/- per month w.e.f. 1.4.2004. It has also been extend-ed upon shops, hotels, restaurants, roads motor transport undertakings, equip-ment maintenance staff in the hospitals.

Coverage of employees:

Drawing wages upto Rs.10000/- per month engaged either directly or thru' contractor.

Rate of Contribution of the wages

Employers' 4.75%

Employees' 1.75%

Benefits:

To the employees under the Act

Medical, sickness, extended sickness for certain diseases, enhanced sickness, dependents maternity, besides funeral expenses, rehabilitation allowance, medical benefit to insured person and his or her spouse.

Contribution period

1st April to 30th September.

1st October to 31st March

Penalties

Different punishment have been prescribed for different types of offences in terms of Section 85: (I) (six months imprisonment and fine Rs.5000), (ii) (one year imprisonment and fine), and 85-A: (five years imprisonment and not less to 2 years) and 85-C(2) of the ESI Act, which are self explanatory. Besides these provisions, action also can be taken under section 406 of the IPC in cases where an employer deducts contributions from the wages of his employees but does not pay the same to the corporation which amounts to criminal breach of trust.

Hope this clarifies. If u have query u can reply.

Rgds,

John N

Hi Midhu,

John is correct about the ESI Act.

Here are some details regarding the registration and other formalities at the employer's end.

For ESI, firstly, one has to fill the declaration Form-1 separately for both male and female employees. The employer shall then send a return of declaration forms in Form-3, in duplicate within 10 days from the date on which the declaration forms are submitted, along with the declaration forms. It is also prepared separately for male and female employees.

The deducted amount should be deposited every month into the ESI account with an Authorized SBI branch through a challan in quadruplicate on or before the 21st of the month.

The employer should prepare a Return of Contributions in Form-6, in quadruplicate, by entering details in the ascending number of insurance numbers and draw the totals. This return of contribution should be submitted along with receipt copies of monthly challans to the regional ESI office within 30 days of the end of the contribution period, i.e., half-yearly.

I hope it is clear now regarding the obligations of the employer related to ESI.

Regards,

Amit Seth