Why Do Fewer Businesses Fall Under the ESI Act Compared to the EPFO Act?

Why are there fewer establishments covered by the ESI Act than the EPFO Act?

The reports from MOSPI indicate that there are over 4.5 crore EPF members and about 3 crore ESI members. How can this be when the EPFO registers all employees making less than 15,000 at establishments with 20 or more workers, but the ESIC registers all employees making less than 21,000 at establishments with 10 or more workers? Is it easy to get exempted from the ESI scheme?

Why ESI Coverage is Less Than EPF

Primarily because EPF is universal, ESI applies only in notified areas. In areas where ESI services are not provided, such regions remain excluded until services such as dispensaries are established there. ESI's geographical coverage has been expanding, with industries emerging even in remote areas, leading to an expansion of the covered area.

Exemptions from ESI

Regarding exemptions from ESI, although there is a provision for exemption if equivalent or superior facilities are available, it is practically unfeasible to provide matching benefits such as medical coverage for employees and their families, sickness benefits, etc. Another option is to increase salary levels above the ceiling limit, currently at Rs. 21,000 per month.

My view differs; over the years, EPF has improved its functioning with a focus on serving employees and providing benefits more quickly. However, ESIC has tough procedures for extending benefits to the needy due to a lack of reach and system upgrades.

Online Problem Resolution in EPF

For example, you can now resolve many of your problems online in EPF, but ESIC does not offer such a facility to reach out to those in need. Despite ESIC's large setup, employees often struggle to resolve health or benefit issues smoothly. In comparison to private health service providers, ESIC lacks in the speedy settlement of benefits, leading many companies to opt for private medical service providers.

Need for Swift Attention to Health-Related Issues

The key is that health-related issues require swift attention, more so than any other matters like EPF. ESIC should focus on improving in this aspect.

Thank you both! Is there a list of companies exempted from ESIC? (There is one on the EPFO website for PF, but I didn't find one for ESIC.)

The organization I worked with (a Navaratna PSU) had an exemption from ESI until the mid-90s. Our later applications were rejected because the medical leave provided was much less compared to the ESI Scheme, even though the medical benefits, facilities, and coverage for the family were much better. We have in-house medical facilities up to tertiary care, covering all family members. Both the employee and spouse are covered for their lifetime entirely free of charge for all medical eventualities.

ESIC and EPF Membership Rules

ESIC membership can be ceased after exceeding ₹21,000/-, but EPF membership continues until the age of 58. Once the active UAN is generated, the employee cannot be categorized as an excluded employee unless he/she attains the age of 58 or older.

Data Differences Between ESIC and EPF

ESIC data is only for contributory members, while the EPF data includes dormant members as well. These are members who have worked for a few years but are currently not working or are employed by a non-EPF organization. However, their PF accounts remain active and continue to accrue interest.