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FAQ'S FOR EMPLOYERS

What is the E.S.I Scheme?

The Employees State Insurance Scheme is an integrated measure of Social Insurance embodied in the Employees State Insurance Act and is designed to accomplish the task of protecting employees as defined in the Employees State Insurance Act against the hazards of sickness, maternity, disablement and death due to employment injury and to provide medical care to insured persons and their families. The Scheme covers employees of non-seasonal power-using factories employing 10 or more persons. There is, however, a built-in provision for its extension to other establishments or classes of establishments, industrial, commercial, agricultural or otherwise. The Scheme has been progressively extended to cover employees in non-power using factories employing 10 or more persons and to commercial establishments.

Whom does the Scheme protect?

The Scheme protects all employees - temporary, casual, contract, badli, etc. and trainees included, whose total wages does not exceed Rs. 15000/month, engaged in a factory/establishment to which the Act applies. Persons employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or purchase of raw materials, or distribution or sale of the product of a factory or establishment are also covered. Mines, Railway Running Sheds, Naval, Military and Air Force Workshops and specified seasonal factories are excluded. The Scheme also provides full medical cover to the dependants of insured persons. In the event of death of an insured person due to employment injury dependants become eligible to cash benefit.

What is Registration?

Registration is the process by which every employer/factory and all its employees employed for wages, are identified for the purpose of the Scheme, and their individual records are set up for them. The first step in the process is the obtaining of particulars about each coverable factory/shop/establishment, and its identification by allotment of a number, i.e. Code no., so as to facilitate keeping track of Contributions payable/paid and the connected obligations of the employers. Subsequent step is the registration of employees and identifying them by allotment of a number , i.e. Insurance Number, and setting up of necessary records for recording the benefits for which the insured employee may be entitled under the Scheme according to eligibility. Individual record of each employer/employee will facilitate necessary changes in future from time to time and proper watch for obtaining compliance from the employers and benefits to concerned insured persons.

Where do the funds for the Employees State Insurance Scheme come from?

The funds for the Employees State Insurance Scheme are primarily built out of employers contribution and employees contribution payable monthly as a fixed percentage of wages.

How are the employees registered under the Scheme?

Simultaneously with their entry into employment in a covered factory or establishment, an employee is registered online under ESI by their employers and the employee is then allotted a Registration Number, which distinguishes and identifies them for the purposes of the Scheme. A person is registered only once upon his entry in insurable employment.

What is an Identity Card?

All Insured Persons will be issued with two magnetic cards, one for the Insured person and the other for family members. The concept of Project Pehchan is to establish error free identification process with no room for subjectivity.

These are the key Benefits of the Pehchan Card: Central database will be made with demographic and biometric details of Insured persons and their families. Insured Persons and their family members can get medical treatment in any ESI Hospital or Dispensary across India.

Biometric details - or finger prints - to verify and authenticate Insured Persons and their families through card swipe.

What are the rates of ESI Contribution?

Contributions payable in respect of an employee comprise employers Contribution and employees Contribution prescribed in Schedule I of the Act. An employee covered under the scheme has to contribute 1.75 per cent of the wages whereas the employer contributes 4.75 per cent of the wages. The total contribution in respect of an employee thus works out to 6.5 per cent of the wages payable.

Who is exempted from payment of contribution?

Employees earning less than Rs 100/- a day are exempted from payment of Contribution. The employers share of Contribution is, however, payable.

How are the Contributions collected?

The Contributions are deposited by the employers online using internet banking facility. The responsibility for payment of all Contributions is that of the employer with a right to deduct the Employees share of Contributions from the wages of the employees relating to the period in respect of which the Contribution is payable.

What are Contribution Periods and Benefit Periods?

Workers, covered under the ESI Act, are required to pay Contribution towards the scheme on a monthly basis. A Contribution Period means a six-month time span from 1st April to 30th September and from 1st October to 31st March.Thus, in a financial year there are two Contribution Periods of six months duration.Cash benefits under the scheme are generally linked with Contributions paid. The Benefit Period starts three months after the closure of a Contribution Period. The two types of periods are iIIucidated below:

Contribution Period Benefit period
1st April to 30th September 1st January to 30th June of the following year
1st October to 31st March 1st July to 31 st December

What is Section 45-AA and who is Appellate Authority?

A new Section 45-AA has been added to the ESI Act, vide ESI Amendment Act 2010 which stipulates that if an employer is not satisfied with the order referred to in Section 45-A, they may prefer an appeal to the Appellate Authority as provided by Regulations, within 60 days of the date of such order after depositing with the Corporation 25 per cent of the Contribution so assessed or the Contribution as per their own calculation whichever is higher. It is further provided that if the employer finally succeeds in the appeal, the Corporation should refund such deposits to the employer.

Appellate Authority for the purpose of Section 45-AA for Thrissur Region:
Regional Director, E.S.I. Corporation Binnypet, Bangalore - 560023