What is Employee’s State Insurance Scheme?
The welfare of the working class remains a major concern in a country as vast and diverse as India. To address this, the government implemented the Employee’s State Insurance Scheme, a comprehensive social security program designed to provide employees and their dependents with medical and financial benefits. While the scheme has been in place for several years, its impact and effectiveness must be evaluated. The ESI Scheme is a self-funded health insurance program that provides employees and their dependents with medical and social security benefits.
ESI Act, 1948
The ESI Act, 1948, is a significant legislation in India that governs the Employee’s State Insurance (ESI) Scheme. It was enacted to provide social security and health insurance benefits to employees and their dependents. The act establishes the legal framework for the administration and implementation of the ESI Scheme. It mandates the coverage of certain specified employees, sets contribution rates, and outlines the benefits and services provided. The Employee’s State Insurance Act, 1948, aims to ensure the well-being and welfare of employees by offering medical, financial, and other social security benefits.
Key Features of the ESI Scheme
1. Scope: The ESI Scheme applies to factories, shops, hotels, cinemas, road transport companies, and other establishments with ten or more employees. The scheme covers both permanent and temporary employees earning up to Rs. 21,000 per month.
2. Contribution: Both employers and employees make contributions to the ESI Scheme. The employer contributes 3.25% of the employee’s salary, while the employee contributes 0.75%. These contributions are made monthly and are calculated based on the employee’s gross salary.
3. Medical Benefits: The ESI Scheme’s primary goal is to provide comprehensive medical care to insured employees and their dependents. Individuals who are insured are entitled to medical treatment, including outpatient, inpatient, and specialist services, as well as essential medicines and diagnostic facilities, under the scheme.
4. Cash Benefits: In addition to medical benefits, the ESI Scheme provides cash benefits to insured individuals in the event of sickness, maternity, disability, or death. Employees and their dependents are eligible for sick leave, maternity leave, disability leave, and dependent benefits.
5. Disability Pension: The ESI Scheme provides a disability pension to insured individuals who are permanently disabled as a result of work-related injuries or diseases. The amount of the pension is determined by the degree of disability and the insured person’s average daily wage.
6. Funeral Expenses: In the unfortunate event of an insured person’s death, the ESI Scheme will pay for funeral expenses. The scheme provides a lump sum payment to the dependents or nominees of the deceased insured person.
Benefits of ESI coverage
1. Medical Coverage: The ESI Scheme covers insured people and their dependents for a variety of medical services, such as hospitalization, specialist consultations, diagnostic tests, and ambulance services. Coverage includes both indoor and outdoor treatment.
2. Sickness Benefits: During periods of certified sickness, insured individuals are entitled to cash benefits equal to 70% of their average daily wage. This benefit is available for up to 91 days per year.
3. Maternity Benefits: Female-insured individuals are entitled to maternity benefits, which include up to 26 weeks of paid leave. They receive cash benefits equal to their average daily wage during this time.
4. Disablement Benefits: Insured individuals are entitled to cash benefits if they are temporarily or permanently disabled as a result of work-related injuries or diseases. The amount varies according to the degree of disability.
5. Dependent Benefits: The ESI Scheme provides financial assistance to insured individuals’ dependents in the event of their death. Dependents receive monthly cash benefits to help them meet their financial obligations.
Contribution and Compliance
- Both employers and employees contribute towards the ESI Scheme.
- The employer’s contribution is a percentage of the employee’s wages, while the employee’s contribution is a fixed percentage of their salary.
- Employers are responsible for deducting and depositing the employee’s contribution and their own contribution to the ESI Corporation.
In India, the Employees’ State Insurance Scheme has played an important role in providing social security and healthcare benefits to employees and their dependents. The ESI Scheme protects workers’ welfare by ensuring access to quality medical services and providing financial assistance during periods of sickness, disability, maternity, and death. The program not only meets healthcare needs but also fosters a sense of security and well-being among the working population.
