Navigating ESIC Exemption: Private Insurance Options and Legalities

My organization wants 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 another option?

Dear Santosh,

If the gross salary of any employee is more than 15K per month, then you are automatically excluded from ESIC and the Workman Compensation Act will be applicable. Therefore, you have to provide insurance to such employees.

Secondly, if employees' salaries are still below 15K, then it is mandatory for ESIC. However, you may still get an exemption from ESIC unless the benefits provided by the insurance are better than those provided by ESIC or as per ESIC regulations.

Regards,
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 you like it or not.

Hi all,

As I have said, you may get the exemption even if your company is applicable under the ESIC. Subject to provided benefits are similar to ESIC's benefits or superior, and employees are agreed on the same.

So, once the ESIC authority is satisfied with your response, they may grant you the exemption certificate under the same.

Please refer to Section 87:

As per Section 87:

The 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 establishment, or class of factories or establishments of any specified area from the operation of this act for a period not exceeding one year. They may from time to time, by like notification, renew any such exemption for periods not exceeding one year at a time.

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

(For more clarity, refer to sections 87, 88, 89, 90, 91, 91-A, 91-AA, 91-B, 91-C).

Regards,

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 are the criteria for the grant of such exemption in detail, and the procedure for it.

Dear Sirs,

It is difficult to prove that any private factory or establishment covered or coverable under the ESI Act, 1948 provides benefits that are "substantially, similar, or superior" to those provided under the ESI Act, 1948.

Although the services, especially medical services, provided through ESIC institutions may be considered unsatisfactory, it is important to note that when it comes to covering expenses through commercial insurance or private insurance, there is a cap on expenses. This means that insured persons or employers would have to bear expenses exceeding what is outlined in such contracts.

Furthermore, in cases of serious and fatal accidents, smaller employers or establishments may find it challenging to bear the costs and comply with the Employees' Compensation Act.

Additionally, the services and benefits available under the ESI Act, 1948, and utilized by insured persons and their family members, are obtained as a matter of their legal rights. On the other hand, benefits under commercial insurance depend on the employer's discretion, and there are usually limitations on such benefits.

In my opinion, it is preferable to address the shortcomings or defects in the existing ESIC medical institutions to the higher authorities of ESIC rather than leaving the employees or insured persons at the mercy of private insurance companies.

Kind regards,
[Your Name]

Yes, but you have to prove that your schemes are superior to ESIC.

Dear Korgaonkar,

The criteria for exemption is only a guideline; the key to granting 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 opting for private insurance is better than choosing ESIC. However, when considering the service delivery of ESIC, it may be preferable to opt for private insurance as long as private sectors behave responsibly.

At the same time, I would like to share with you that if obtaining an exemption is difficult, you may obtain a declaration from all respective employees stating that they are happy and satisfied with the benefits provided by the private insurance company, and the service delivery of ESIC is unsatisfactory. Once you have obtained the declaration from all employees, it will be easier to secure the exemption.

Regards,
Tushar Swar.

Dear Tushar ji,

Could you please provide a single case where such a declaration is considered for obtaining an exemption?