Employees’ State Insurance (ESI) scope to be expanded: Check eligibility, benefits

Finance Minister Nirmala Sitharaman in her press conference today, while announcing the second tranche of relief measures, talked about the steps being taken towards the Employees’ State Insurance (ESI) for the welfare of workers. These are, however, outside the economic package as these are still under discussion in Parliament. Currently, ESI is only for those organizations which employe more than 10 people with them. The FM said that the task are on to make available the ESI scheme on voluntary basis for those firms employing even less than ten people.

Also, the government is considering to make ESI scheme mandatory for employees working in hazardous industries which will come into effect after the government issues the notification. The ESI Act primarily applies to premises where 10 or more persons are employed and therefore applies to both organised and unorganised sectors. The ESI applicability is also to non-seasonal factories employing 10 or more persons and since 2011 it has been extended to shops, hotels, restaurants, private medical and educational institutions, cinemas and newspaper establishments employing 20 or more persons.

The ESI benefits include medical, cash, maternity, disability and dependent benefits to the Insured Persons under the ESI Act. The contributions made by the employee and the employer fund these ESI benefits. The scheme provides full medical care to the employee registered under the ESI Act, 1948 during the period of his incapacity, restoration of his health and working capacity. It provides financial assistance to compensate for the loss of wages during the period of his abstention from work due to sickness, maternity and employment injury and during the hospitalization in any ESI hospital. The scheme provides medical care to the employee family members also.

Earlier in February 2019, the income limit for availing the medical benefit for the dependent parents of an Insured Person covered under ESI Scheme has been enhanced from the existing Rs.5000 per month from all sources to Rs.9000 per month. Employees whose monthly wages are Rs 21,000 or below are covered under the ESI Act. The wage limit for coverage under the Act had been increased from Rs 15,000 per month to Rs 21,000 in December 2016. An employer is liable to pay its own contribution for every employee and deduct the employee’s contribution from wages bill and pay these contributions to the ESI within 15 days of the last day of the calendar month in which the contributions are due.

Under the Employees’ State Insurance Act 1948 (the ESI Act) the rate of contribution has been reduced from 6.5 per cent to 4 per cent of the wages. The employers’ contribution is being reduced from 4.75 per cent to 3.25 per cent and employees’ contribution being reduced from 1.75 per cent to 0.75 per cent effective from 01.07.2019.

Source: Financial Express