Employee State Insurance is a social security labour legislation aiming at labour welfare. It is a self-financing scheme in which both the employer and the employee together contribute. It provides medical as well as financial assistance to the employees at the time of need. It covers sickness benefits, maternity benefits, disability benefits and has provisions for related matters. It is a statutory legal responsibility on the employer failure of which is an offence under Section 406 of the Indian Penal Code. It is important for the employers to timely collect the ESI Registration documents and register their establishment.

Registration Criteria

Employers that have more than 10 workers (in some cases 20) with a salary up to Rs 21,000 working in its establishment, then they have to register their establishment under the ESI Act. Under this act, the employer makes a contribution of 4.75% of the wages payable to their employees while the employees have to contribute 1.75% of their wages. The state government makes a contribution of 1/8th share cost of allocated medical benefit. An employee who gets a salary less than Rs. 100 per day is exempted from his share of contribution. The employer must apply within 15 days from the date on which this act becomes applicable to his establishment.

Establishments covered under this act

Following establishments are covered under the act, if they have more than 10 employees working in them –

  • Shops, restaurants and hotels that are engaged in sales and have more than 10 employees.
  • Newspaper establishments that are not covered under the Factories Act.
  • Private institutions in the field of education and the medical sector.
  • Cinemas and establishments on road motor with more than 10 employees.
  • Factories and other entities employing more than 10 employees.

Benefits of ESI registration

ESI registration gives a host of benefits including sickness and medical benefits. It provides financial security to the employees.

List of benefits that are available on ESI registration include –

  • Social Security Benefits

ESI is one of the most important social security schemes run by the government of India. It provides financial security and stability to the employee and covers various other risks.

  • Medical Benefits

After the registration, the employee and his family can avail medical benefits. This includes ambulance services, hospitalization services, etc. medical reimbursement is also provided under this act.

  • Sickness Benefits

In case the employee has a long-term disease, then the 80% of salary is paid up to 2 years and in case of certified sickness 70% of the salary is paid for a maximum of 81 days with an extension in some cases.

  • Maternity Benefits

Maternity benefits are available with a pregnant woman for 3 months which can be extended on the advice of the doctor.

  • Disablement Benefit

90% of the wage is payable if the employee is permanently disabled and if the employee dies on the premise of his employment, then 90% of his salary is paid by the employer to his dependents.

  • Funeral and Old Age Benefits

Under this scheme, funeral and old age sickness benefits are also available.

  • Dual Contribution

Under this scheme both the employer and the employee contribute towards ESI. While the employer contributes 4.75%, the employee contributes only 1.75%, making it a total contribution of 6.5%. Comparatively, an employer contributes more than the employee.

  • Pehchan Smart Cards

Under this scheme, the government provides them with identity cards so that the dispensaries and hospitals can identify them. This enables them to avail subsidised schemes all over India.

  • Easy Registration Process

ESI registration can now be done online which eases down the cumbersome registration process.

  • Continuity

Organizations covered under the ESI act must file an annual to show the changes that have occurred in the previous year. Return of contributions along with the copy of total ESI contributions paid must be submitted once in every six months.

  • Legal obligation of the employer

Any sum which has been contributed by the employee to the employer will be deemed to have been paid for paying towards the contribution to the ESI account. Non-payment or delayed payment by the employer after the wage deduction of the employee amounts to ‘Breach of Trust’ which is a criminal offence punishable under S406 of the Indian Penal Code.

Documents Required for ESI Registration

The registration process under the ESI Act can be quickly completed with the help of a lawyer. Registration under the ESI act requires a number of documents.

These include –

1. The registration certificate obtained by the employer after registering the entity under the

a. Factories Act

b. Shops and Establishment Act, is the primary documents required.

2. If the registering entity is a company then the certificate of registration is required, if it is a partnership firm then partnership deed is required.

3. MOA and AOA or partnership deed or trust deed depending upon the ownership are the other documents required.

4. A complete and updated list of all employees working in the establishment is required. Complete details like name, address, etc is required from each employee.

5. PAN Card of the Business Entity along with the PAN Card details of all the Employees working under the entity is required.

6. The details of compensation of all the employees

7. A cancelled cheque or complete bank statement of the company from the bank in which it holds a permanent account

8. A complete list of names of Directors or Partners of the Company

9. A complete and updated list of the total number of Shareholders of the Company

10. Muster roll and attendance details of the employees

11. Proof of date of commencement of business

12. Address proof of the establishment

So, with the help of a lawyer one can easily register under the ESI Act. The lawyer can help you at all the stages, especially when any claims require further proof or justification. It is an important legislation for the labour welfare and hence the employers must not avoid registration.

Amit Yadav

Author Bio: Amit Yadav is a modern day writer who writes about the marketing, economics and social issues relevant to the development of India and its people.