12/4/2018 All about Employee State Insurance (ESIC) Act, 1948 | TaxGuru

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All about Employee State Insurance (ESIC) Act, 1948

Wage Limit increased from Rs. 10,000 to Rs. 15,000 for coverage of an employee under
the ESIC Act:- The Government of India through notification in the O cial Gazette has
amended the Employees' State Insurance (Central) Rules, 1950. Accordingly, as per rule
50, the wage limit for coverage of an employee under Employees State Insurance Act
has been enhanced from Rs. 10,000 to Rs. 15,000 with e ect from 1st May 2010.

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Wage Limit increased from Rs. 10,000 to Rs. 15,000 for coverage of an employee under
the ESIC Act:- The Government of India through notification in the O cial Gazette has
amended the Employees’ State Insurance (Central) Rules, 1950.  Accordingly, as per rule
50, the wage limit for coverage of an employee under Employees State Insurance Act
has been enhanced from Rs. 10,000 to Rs. 15,000 with e ect from 1st May 2010.

The Employees State Insurance Act, ESI Act for short, was enacted by the Government
of India in 1948.  The major objective of the Act was to provide certain benefits to
employees in case of sickness, maternity and injury (during employment) and for
providing other benefits in relation to the main objectives.

The Employee State Insurance Act, 1948

The Government of India through notification in the O cial Gazette has amended the
Employees’ State Insurance (Central) Rules, 1950. Accordingly, as per rule 50, the wage limit for
coverage of an employee under Employees State Insurance Act has been enhanced from Rs.
10,000 to Rs. 15,000 with e ect from 1 May 2010.

Applicability

The ESI Act, 1948 in the first instance, applies to:

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Factories using power in the manufacturing process and employing 10 or more

persons
Non-power using factories or establishments employing 20 or more persons for
wages.

The Act contains an enabling provision under which Appropriate Government is

empowered to extend the provision of the ESI Act, 1948 to other classes of
establishments.

Industrial
Commercial
Agricultural or otherwise

Under these provisions the State Governments have extended the provisions of the ESI
Act to the following classes of establishments.

Shops
Hotels & Restaurants
Cinemas including preview Theaters
Road Motor Transport Undertaking
News Paper Establishments

Wage Ceiling

Employees of covered units and establishments drawing wages upto Rs. 15,000 per
month come under the purview of the ESI Act 1948 for multi dimensional social security
benefits.

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Contribution

ESI scheme is financed by contribution raised from employees covered under this
scheme and their employers as a fixed percentage of wages. Rates of contribution are as
follows:

Employees contribution 1.75% of wages ( Employees earning up to Rs. 50 per day are
exempted from payment of their contribution)
Employer’s contribution 4.75% of wages.

Social Security Benefits

Various benefits that the insured employees and their dependents are entitled to are as
follows

Medical Benefits
Sickness Benefits
Maternity Benefits
Disablement Benefits
Dependent Benefits
Other Benefits  (like    funeral expenses, vocational rehabilitations, free supply of
physical aids etc).

Safeguard for Insured Employees:

Right to receive payment of any benefit under the Act are not transferable.
Employer    shall  not    dismiss, discharge or reduce the wages or otherwise punish a
covered employee during the period he/she is in receipt of Sickness Benefit or
Maternity Benefit etc.
By reason of his liability to pay his share of contribution under the ESI Act, no
employer shall directly or indirectly reduce the wages of a covered employee.
Right to register their grievances / complaints at any level for immediate redressel.
Right to approach ESI Court against any action/decision of the Medical Board etc
Cash Benefits payable under the Act are not liable to attachment or sale in execution
of any decree or order of any court

Duties of Employer

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An employer shall apply in Form-01 for coverage under the ESI Act, within 15 days
after the Act becomes applicable to a factory or establishment.
The employer shall submit Declaration Form in respect of all coverable employees in
the unit.
The employer shall deposit both employees’ and employers’ contribution as per
specified rates within 21 days of the following month.
The Employer shall maintain all such records and registers as are required under the
Act and produce them for verification / inspection before the authorised o cers of
the Corporation.

The employer shall submit half-yearly Return of Contributions (RC) by 12th May/11th
November every year with all columns properly filled.
The employer will report any change in business activity, address, ownership or the
management to ESIC authorities forthwith.
An employer will also ascertain the liability towards ESI dues, while taking over the
ownership of a factory/establishment through purchase, gift, lease, licence or
otherwise as the new owner is liable to discharge past liabilities.
An employer will also ascertain the liability towards ESI dues, while taking over the
ownership of a factory / establishment through purchase, gift, lease, licence or
otherwise as the new owner is liable to discharge past liabilities.

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View Comments (11)

vishal s parate1 says: November 19, 2010 at 5:15 pm

Please define WAGES for the calculation of ESIC

rajesh vora says: August 31, 2012 at 4:34 pm

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if whole contribution (including employees contribution) of esi is borne by employer,then what

would be accounting traetment and if the contribution is shown as expenses of employer then

employees contribution is allowable under incometax act?

Bolbanda Chetananand says: October 12, 2012 at 2:25 pm

how esic is calculated and also some elaboration about the sickness benefit,disablebenefit these

all should mention in the esic.

Nethravathi says: December 22, 2012 at 12:17 pm

please mention recent amendments in this act and also need more information about benefits

m.murali says: July 5, 2015 at 9:36 am

for better understanding could have created an example taking any industry where more than 50
people are employed and they were covered under the old provisions. could have generated a

mock statement and generated challans and further instructions how to conclude the payment

and record keeping.

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