Help Center
Locate us
ESIC Full Form: History, Benefits & Documents All You Need To Know
Popular Products
Show More
Quick Help
Show More
Frequently Asked Questions
Show More
Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
Success
Failure
ESIC is a commonly used term when it comes to employee benefits for those working with private as well as government organisations. ESIC means Employees' State Insurance Corporation, established under the ESI Act 1948. This statutory body ensures the implementation of the ESI Scheme, a self-financed safety net designed to protect employees from financial hardships arising from sickness, disablement, or employment-related injuries.
With its headquarters in New Delhi and an extensive nationwide network, ESIC plays a major role in securing the well-being of covered employees. This blog will talk about what ESIC is and its history, ESIC eligibility, benefits, and more.
What is the ESI Act?
The ESI Act, or Employees' State Insurance Act of 1948, is the legislative foundation for the Employees' State Insurance Corporation (ESIC). This act empowers ESIC to administer the comprehensive ESI Scheme, offering social security to employees. Its key focus is protecting employees from financial challenges arising from sickness, disablement, or employment-related injuries. The ESI Act establishes the legal framework that ensures the welfare of covered employees, marking a crucial milestone in India's social security landscape.
History and Evolution of ESI
In 1943, Professor B.N. Adarkar laid the foundation of ESI, envisioning the health security of labourers in India. The ESI Act of 1948 emerged from this vision, protecting workers from the challenges of illness, disabilities, maternity concerns, and work-related injuries.
Initially launched in 1952 in Kanpur, the scheme was initially for labourers, but it evolved to include all employees below a Rs 21,000 wage threshold. ESI goes beyond a scheme; it symbolises the intrinsic link between employee well-being and a resilient Indian workforce, emphasising health and financial stability during tough times.
ESIC: Coverage and Benefits
The ESIC covers factories and establishments with 10 or more employees (20 or more in some states). As per the ESI, it applies to employees with monthly wages not exceeding Rs 21,000 (Rs 25,000 for persons with disabilities).
Benefits of ESIC:
Medical Care and Attention:
ESIC Offers comprehensive medical care and attention to registered employees during incapacity. It focuses on health restoration and the revival of working capacity.
Financial Assistance:
It provides crucial financial aid during absenteeism due to illness, maternity, or factory accidents. The scheme aims to compensate for wage loss during the specified periods.
Family Coverage:
ESIC extends medical care benefits to the family members of the registered employees. As of March 31, 2022, the scheme covered 12.04 crore beneficiaries.
Benefit Categories:
ESIC has various benefits, including sickness, maternity, disability (temporary and permanent), funeral expenses, rehabilitation allowance, vocational rehabilitation, and medical bonus.
Self-Financing Nature:
It operates as a self-financing scheme, relying on employee and employer contributions. Employee contribution is 0.75% of wages, while employers contribute 3.25%.
Payment Process:
Employers play a key role in payment, contributing and deducting within 15 days. The contributions can be made online or through designated banks, ensuring a smooth financial process.
What Are the Required Documents for ESI Registration?
Here are the documents required for ESI registration:
1. Registration Certificate:
Registration Certificate, obtained under the Factories Act or Shops and Establishment Act.
2. Certificate of Incorporation:
- For companies: Certificate of Company Registration.
- For partnership firms: Partnership deed.
- GST certificate for the establishment.
3. Corporate Documents:
- Memorandum of Association and Articles of Association for companies.
- Address proof: Utility bills, rental agreement, or property tax receipts (not exceeding three months).
4. Employee Information:
- List of all employees.
- PAN Card of the business establishment and all employees.
- Compensation details of all employees.
5. Financial Information:
- A cancelled cheque from the company's bank account.
- List of company directors and shareholders.
6. Attendance Records:
- A register containing the attendance of employees.
How do you get to know your ESIC Number?
Now, what is an ESIC number and how to get it? An ESIC number is a unique identifier that is like a verification identity number for all ESIC users. Searching for your ESIC Insurance Number is simple, offering simplicity and significance. A quick visit to the ESIC website opens the door to hassle-free tracking. Here are the steps you need to follow:
How is The ESI Scheme Funded?
The ESI scheme operates on a self-financing model, ensuring sustainability and autonomy. Its funds are predominantly generated through monthly contributions from employers and employees, calculated as a fixed percentage of the salary paid. This collective financial commitment forms the backbone of the scheme, facilitating the provision of comprehensive benefits to covered individuals.
It is also important to remember that State Governments also play a role by contributing a 1/8th share of the cost of Medical Benefits. This financial synergy establishes a robust foundation, allowing the ESI scheme to effectively deliver medical and social security services to its beneficiaries while maintaining financial stability.
Is ESIC Compulsory For All Employees?
ESIC is mandatory for specific employees within certain parameters. In short, organisations with a workforce of 10 or more individuals fall under the scheme's coverage. It's important to note that for an employee to be eligible, their monthly wages should not exceed Rs. 21,000 (or Rs. 25,000 for those with disabilities).
If you find yourself within these criteria, ESIC becomes a compulsory inclusion. This mandatory nature ensures a considerable workforce can access fundamental medical and social security benefits, emphasising the significance of a healthier and more secure work environment.
Read Also: DA: DA Full Form, Meaning, Types And Calculation
Frequently Asked Questions
1. What is ESIC?
ESIC, or Employees' State Insurance Corporation, is a social security scheme providing medical and financial benefits to employees. It ensures protection against health and employment-related contingencies.
2. Who is Covered Under ESIC?
Employees in establishments with 10 or more individuals and monthly wages not exceeding Rs 21,000 (Rs 25,000 for persons with disabilities) are covered.
3. What Benefits Does ESIC Provide?
ESIC offers medical and cash benefits, covering sickness, maternity, disablement, and more, ensuring financial and health security for employees and their families.
4. Are Employers Required to Contribute to ESIC?
Yes, employers contribute to ESIC to fund the scheme, helping in providing essential benefits to covered employees.
5. How are ESIC Contributions Calculated?
ESIC contributions are calculated as a fixed percentage of wages, with both employers and employees contributing monthly.
6. Is ESIC Mandatory?
Yes, ESIC is mandatory for eligible employees, ensuring broader access to essential medical and social security benefits and boosting a secure work environment.
OK