Employees' State Insurance is a self-financing social security and health insurance scheme for Indian workers. Employees’ State Insurance Scheme of India is a multidimensional social system tailored to provide socio-economic protection to worker population and their dependents covered under the scheme. Besides full medical care for self and dependents, that is admissible from day one of insurable employment, the insured persons are also entitled to a variety of case benefits in times of physical distress due to sickness, temporary or permanent disablement etc. resulting in loss of wages or earning capacity, the confinement in respect of insured women, dependents of insured persons who die in industrial accidents or because of employment injury or occupational hazard are entitled to a monthly pension called the dependents benefit. In short, the benefits are broadly classified into two:
(1) Medical benefits and
(2) cash benefits.
For all employees earning ₹21,000 (US$310) or less per month as wages, the employer contributes 4.75 percent and employee contributes 1.75 percent, total share 6.5 percent. This fund is managed by the ESI Corporation (ESIC) according to the rules and regulations stipulated in the ESI Act 1948, which oversees the provision of medical and cash benefits to the employees and their family through its large network of branch offices, dispensaries and hospitals throughout India. ESIC is an autonomous corporation under Ministry of Labour and Employment, Government of India. But most of the dispensaries and hospitals are run by concerned state governments.
The Employees' State Insurance Scheme (ESI Scheme) of the Indian Government sanctioned under the Employees' State Insurance Act aims to accomplish the task of would protecting the interest of workers in contingencies such as sickness, maternity, temporary or permanent physical disablement, death due to employment injury and to provide medical care to insured persons and their families. Initially the ESI Scheme was implemented in 1952 only at Kanpur and Delhi. Once the scheme became successful, there was no looking back and its geographic reach and demographic coverage widened. As of now, the total beneficiary population stands at about 35 million. The Scheme has already been implemented in most of the states. The ESI Scheme comes under the purview of the Ministry of Labour and Employment. It confirms with International Labour Organisation (ILO) conventions, which makes it a scheme of global standing.
This scheme covers all employees working in factories running on non-seasonal power that employ 10 or more persons, and factories not using power that employ 20 or more persons. It also includes those working in shops, hotels, restaurants, cinemas, road motor transport undertakings and newspaper establishments. The wage-limit for coverage under the Act is ₹21,000 per month, as on date. Each insured employee and their employer are required to contribute a certain percentage of their wages to the ESIC every month. These rates are revised from time to time.
Once an employee is recruited in an ESI Scheme covered establishment, he/she is required to fill a Declaration Form. The employee is then allotted a Registration Number, which distinguishes and identifies the person for the purposes of the Scheme. A person is registered once and once only upon his entry in insurable employment. The person is then issued a Temporary Identification Certificate, which is valid for a period of 3 months (it may be extended). During this period, the insured Person is given a permanent "family photo Identity Card" in exchange for the Certificate. This certificate has to be produced at the time of claiming medical care at the dispensary/clinic and cash benefits. If the Identity Card gets lost, a duplicate card is issued on payment.
The payments are to be made on a monthly basis. An employee covered under the scheme has to contribute 1.75% of the wages whereas; an employer contributes 4.75% of the wages payable to an employee. The total contribution in respect of an employee thus works out to 6.5% of the wages payable. However, employees earning less than Rs 50/- a day are exempted from payment of contribution.
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