Is It Necessary for Companies to Pay ESIC When Offering Better Coverage Through GMC and GPA?

Hi,

This doubt came to me some time back, and I thought of voicing it out here to get some feedback on the same!

If an organization covers all employees under a GMC (Group Medical Scheme) and a GPA (Group Personal Accident Scheme), is the organization liable to also pay the ESIC amount? The reason I ask this is that employees get better coverage through the organization, including free hospitalization for themselves and their family members at good private hospitals (not that I mean that the ESIC hospitals are bad!). But if the individual is receiving better health treatment through the GMC and GPA, does it make sense to also put them under ESIC?

Looking forward to your replies and feedback.

Thanks,
Chanchal

Hi Chanchal,

Please do not confuse ESIC with GMI/GPAI (Group Mediclaim Insurance/Group Personal Accident Insurance). GMI/GPAI is an additional benefit that the company provides to its employees, whereas ESIC is a statutory compliance. If the gross salary of an employee is less than or equal to Rs. 10,000 monthly, he is covered under ESIC. Generally, the company opts for GMI/GPAI to protect employees who are not covered under ESIC and to provide extra benefits to them.

I hope I have clarified your query to some extent.

AMATYA

There is no exemption for ESIC. They need to be covered under ESI if their wages are less than Rs 10,000.

Siva

If you prove that the company is providing facilities and benefits superior to that provided by the ESIC, you can get an exemption from the operation of the ESI Act as provided in the proviso to subsection 4 of section 1 of the ESI Act.

Normally, the leave benefits provided by the ESIC are much higher than what management can offer under normal circumstances. Some organizations prioritize those in managerial and highly skilled positions, but they seldom provide any benefits to those working on the shop floors. However, ESIC cares for those who are paid less than 10K.

Can you determine the compensation payable to a workman in case of an employment injury? If covered by ESI, it becomes the responsibility of ESIC to pay compensation and not the management.

Regards,
Madhu.T.K

T.K Madhu,

You are right. But it is difficult to get exemption as it is hard to prove that benefits are more. If I am correct, TISCO was one company where they got exemption.

On two accounts, it is difficult to prove:

1. Medical benefits: There is no age limit in ESI, so dependents keep getting this benefit, whereas in general insurance, there is a limitation on age.

2. Compensation on death: Some pension is payable in ESI, whereas in the Workmen's Compensation Act, there is no such provision.

Siva

Dear Mr. Siva,

As you said, in normal circumstances, one cannot avail exemption from ESI and EPF. Certainly, there are companies getting exemptions from EPF, like Mathrubhumi Printing & Publishing Company, Bhagirata Engineering, etc., but it is very rare to find companies exempted by ESI. Personally, I feel that concerning workmen (for whose benefit it is set up), ESI will be a better option than any other schemes because leave taken under ESI will be counted as a day of work for the purpose of continuous service under the Industrial Disputes Act, Maternity Benefit Act, Gratuity Act, and Factories Act (for the determination of annual leave earned) and for deciding eligibility for a bonus under the Payment of Bonus Act.

Regards,
Madhu.T.K

Hi Chanchal,

Your view is really correct, but there is no exemption for ESIC even if you cover the employees under GMA/GPA, up to the salary limit of 10 thousand. The employees drawing above ten thousand will be out of the ESIC scheme.