Mitali Singh, Asian Law College, Noida
"An act to provide for certain benefits to employees in case of sicknesses, maternity and employment injury and to make provisions for certain other matters in relation thereto"
India has a working population of around 54 crore people. Few works in an organised sector but most of the workforce are in the unorganised sector, without any social security benefits. If we talk about the people who are covered under social security or who are eligible for the benefits under the ESI Act are very few, let's take a look in the government sector and public sector, only 3% are covered under social security. And if we talk about the total workforce only 11% is covered under the social security schemes.
The Employee's State Insurance scheme was introduced in order to provide the social and economical protection to employees in the time of sickness, disablement and death due to employment injury. This is a multi-dimensional scheme which aims at providing full medical care to employees, in times of incapacity of the employees to work. This scheme also provides financial assistance to the employees registered under this Act, when they are not in a position to earn their wages due to sickness, maternity and employment injury.
This act deals with the provisions related to the employees in case of employment injury, sicknesses, maternity and other cases related to the employment thereto. This act extends to the whole of India. ESI act basically covers everything that would protect the interests of the workers in contingencies, for example, temporary or permanent physical disablement, death due to employment injury resulting in loss of wages or salaries. This act also ensures good medical care to workers and their immediate dependants.
The central government has set up the ESI Corporation to administer the scheme and follow the promulgation of the ESI Act.
This Article will highlight the important sections of the Act along with the landmark cases to know how it worked for the benefit of the employees at times of need.
APPLICATION OF THE ACT :
This act guarantees the financial backing and support to the employees working under the factories registered under the ESI Corporation. This act provides the medical support in case of:
● Maternity Leave
● Disorders (mental or physical)
This scheme was initiated for the well-being of the employees to protect them from any financial crisis arising out of the above mentioned medical problems. We can termed this scheme as a type of social security scheme, means protecting employees from any medical financial crisis because if anything happens to the employee at a workplace, then it is the duty of the organisation itself to protect their employees because employees are working for the benefit of the organisation.
The ESI act performs its functions through the Employee's State Corporation, "a body to maintain the social security", which was established by the Central Government under the Section 3 of the ESI Act.
The law says that every company needs to employ more than 10 employees, in some states the number is 20 with salary upto Rs 21,000 in order to register the company with the ESIC.
NECESSARY DOCUMENTS FOR REGISTRATION:
Name of the employees working in an organisation/ company
List of directors and shareholders of the company/organisation/factory
PAN card of the company and the employees working in it.
Memorandum of association of the company.
Articles of the association of the company.
Certificate of Registration obtained under Factories Act or other relatable acts.
The compensation details of all the employees.
Is only the employer contributes to the ESI fund or employee also ?
This article will give you a clear picture on how the contribution is done in the ESI fund. It is the determinant amount payable by both the parties i.e. employees and the employers to the corporation established, as per the situation. The rate of the contribution is prescribed by the Central Government from time to time. The contribution of the employer depends upon the rates prescribed by the Central Government and rates are subject to change from time to time.
If we talk about the determinant factor of the contribution from the employees then it would be the wage period in relation to the respective employees.
Recently from 1 July, 2019 onwards, the Ministry Of Labour And Employment decided the contribution rates. The contribution rates have been reduced from 4.75% to 3.25% for employers and from 1.75% to 0.75% for the workers. The state government and federal government also contributes in the ESI Fund:
● State government: 1/8th
● Federal Government: 7/8th
In case, if the employee's wage falls down below the wage prescribed by the central Government, then the employees shall not be liable for the contribution and it shall not be payable.
The government gave the logic behind the reduction of the contribution rates in the past year and the logic of the Government is based on the few facts which need to be studied.
One of the major factors for the reduction in the contribution rate is the Government has reduced its spending on workers. In recent times, many changes had been made in the ESI scheme which led to the curtailment of benefits under this scheme, which mainly include the super speciality treatment and this resulted in the huge reduction in ESI expenditure. Apart from it, the eligibility criteria for the super speciality treatment also went under changes, earlier it was three months of joining the scheme, and was changed to two years of service.
Once the employee gets registered under the ESI Act, then he has many advantages. There are many benefits which are available to the registered employees under this scheme. Section 46 of ESI Act grants Benefits. There are thousands of dispensaries providing medical facilities to the ESI registered employees. Inpatient medical treatment is available in 145 ESI hospitals, thousands of beds are available to avoid any inconvenience to the patients. Apart from it, there are 840 ESI centers.
Compensation till the employee is absent from work due to sickness, employment injury or other medical reasons.
Sickness benefits at the rate of 70% (in the form of salary)
An insured women can claim the amount in periodical payments in case of the below mentioned cases :
● Premature birth of child
● Sickness or any injury arising out of pregnancy
The maternity benefit is payable for three months (with extension of one month) if required. In order to claim this benefit, the minimum work duration required is 70 days in the year preceding the year of pregnancy.
The definition of an insured woman is A woman who as a biological mother wishes to have a child or a woman who legally adopts a child of upto three months of age. It is important to note that the women who are receiving wages during their maternity under the provisions of the ESI Act are not eligible to receive the benefits under the Maternity Benefit Act, 1961 or any other act or enactment.
These Benefits are the benefits made to the dependant/family members of the person who dies during the employment due to employment injury, or any hazardous incident. Section 46(1)(d) prescribes the payment procedure. It is often made monthly and compensation is 90% of the employee's wages.
Disablement benefits are enjoyed by the employee if he suffers any injury during his/her course of employment, whether the disablement is temporary or permanent. The one advantage is that, unlike the other benefit there is no minimum work condition required to avail this benefit. Though, the eligibility and the percentage will be determined by the medical board.
Apart from the 5 major benefits available for the employees under the ESI scheme, there are other miscellaneous Benefits also which can be availed by the employees, and these are :
Compensation of Rupees 10,000 to the eldest surviving member of the employee's family.
Old Age Medical Care:
This can be availed by the retired employees or those who left the job due to employment injury or something.
This benefit is for the disabled employees undergoing rehabilitation.
Apart from the Benefits, this act also deals with the misuse of the Benefits provided under this Act, In case, if any insured person misuse the benefits then the Central Government may by notification in the official Gazzetta publish a notice to disentitles such person from the benefits that they have under the ESI Act.
Let's take a look into one of the landmark cases to have a better understanding about this article.
Mr. A. Tehan V/S M/S. Associated Electrical Agencies & Anr.
In this leading case, the plaintiff was an employee under the employment of the defendant 1 for the purpose of carrying out television repairs. During the course of employment on july 17, 1987, he got injured while repairing a television set, and he suffered severe injuries on his face.
After claiming the relief from the ESIC Corporation under the Section 46 of the ESI Act, he filed a suit, asking for the compensation under the Workmen's Compensation Act, This was challenged by the defendant in the High Court of Bombay which contested their payment of the compensation, fell into the usage Sections 38 and 46 of the ESI Act which lay the foundation for the insurance under this act.
Further, this was verified by the High Court and the bench stated that the worker's appeal for the amount to be paid by the plaintiff could not be upheld, Instead, he would receive appropriate relief to be determined by the ESIC.
In India, the ESI Act is an essential utility that works in the favour of working- class employees and also being beneficial for sectors outside that of the working class. This Act is an act which works for the benefit of both the employer and the employees, while the employees are insured under this act and get the medical and financial assistance in case of employment injury, the employers on the other hand are free from being jeopardized twice in lieu of paying compensation.