It is a vast social security scheme designed to accomplish the task of providing social protection to the ’employees’ in the organised sector against the uncertain events of sickness, maternity, disablement and death due to injury sustained in the course of employment and to provide medical care to the insured employees and their dependents.
The scheme provides complete medical care to the employees registered under the scheme during the period of incapacity for recuperation of health and working capacity. It provides monetary assistance to compensate for the loss of wages during the period of absence from work due to sickness, maternity and employment injury. The scheme provides medical care to the employees’ dependents also.
All Establishments and Factories employing more than 10 employees are required to mandatorily apply for ESI registration within 15 days of the ESI Act, 1948 becoming applicable to them.
The ESI scheme is a self-financing scheme from the contributions. The ESI funds are primarily
built out of contribution from employers and employees monthly at a fixed percentage of
The State Governments also contributes 1/8th share of the cost of Medical Benefit.
Any sum deducted from wages under the ESI Act will be deemed to have been entrusted to the
employer by the employee for the purpose of paying the contribution for which it was
Non-payment or delayed payment of the Employee’s contribution after being deducted from the wages of the employee amounts to
‘ Breach of trust’ and is a criminal offence punishable under Section 406 of IPC.
The following establishments employing 10 or more persons attracts ESI coverage : Shops, Hotels or restaurants not having any manufacturing activity, but only providing service Cinemas, Roadside Motor Transport Establishments, News paper establishments, Private Educational Institutions and Medical Institutions. In some states the minimum employees required for coverage is for 20 or more.
Establishments or Factories must get themselves registered within 15 days of the Act becoming applicable to them by submitting an Employer’s Registration Form (Form-01) to the relevant Regional Office.
A 17-digit identification number called the Code number will be provided which must be used in all Correspondence relating to the Scheme. Form 3 (Return on Declaration) must also be submitted along with Form 1.
At the time of joining the insurable employment, employees are required to fill in aDeclaration Form (Form1) and submit two copies of a family photo to the employer, which must be submitted to the relevant ESI Branch Office by his employer.
The employee will then be allotted an insurance number for the purpose of his identification under the scheme.
The employees will also be issued a temporary identity card for availing medical benefit for him/herself and his/her family for a duration of three months.
Thereafter, he will be provided with a permanent photo identity card. A person once registered need not register again when there is a change of employment. The same registration can be transferred from one employment to another.