who is covered under The Employees’ State Insurance Act ? | COVERAGE UNDER THE ESI ACT, 1948

COVERAGE UNDER THE ESI ACT, 1948

Under Section 2(12) The Act is applicable to the factories employing 10 or more persons irrespective of whether power is used in the process of manufacturing or not.

Under Section 1(5) of the Act, the Scheme has been extended to shops, hotels, restaurants, cinemas including preview theatre, road motor transport undertakings and newspaper establishment employing 20 or more persons.

Further, u/s 1(5) of the Act, the Scheme has been extended to Private Medical and Educational Institutions employing 20 or more persons in certain States .

The State Govt. has been requested to issue notification under Section 1(5) on the lines of Section 2(12) keeping the threshold limit for coverage as 10 employees instead of 20.

The existing wage-limit for coverage under the Act, is Rs.15,000/- per month (with effect from 01.05.2010).

AREAS COVERED

The ESI Scheme is being implemented area-wise by stages. The Scheme has already been implemented in different areas in the following States/Union Territories

STATES

All the States except Nagaland, Manipur, Tripura, Sikkim, Arunachal Pradesh and Mizoram.

UNION TERRITORIES

Registration is the process by which every employer/factory and its every employee employed for wages, is identified for the purpose of the Scheme, and their individual records are set up for them.

The first step in the process is the obtaining of particulars about each coverable factory/shop/establishment, and its identification by allotment of a number i.e. Code No. by the R. O. so as to facilitate keep track of contributions payable/paid and the connected obligations of the employers. Subsequent step is the registration of employees of covered factories by the R. O/L. O. (where the work of registration of employees is decentralised), and identifying them by allotment of a number i.e., insurance number, and setting up of necessary records for recording the benefits for which the insured employee may be entitled under the Scheme according to eligibility. Individual record of each employer/employee will facilitate necessary changes in future from time to time and proper watch for obtaining compliance from the employers and benefits to concerned insured persons.

Registration of Employers

1.2 Section 2A of the ESI Act states as under:-

2A. Registration of factories and establishments-Every factory or establishment to which this Act applies shall be registered within such time and in such manner as may be specified in the regulations made in this behalf.

1.3. As a follow-up of this provision in the Act, Regulation 10B was inserted in the ESI (General) Regulations, 1950. This regulation states as under: –

10B- Registration of factories or establishments. –

(a) The employer in respect of a factory or establishment to which the Act applies for the first time and to which an Employers’ Code No. is not yet allotted, and the employer in respect of a factory or an establishment to which the Act previously applied but has ceased to apply for the time being, shall furnish to the appropriate R. O. not later than 15 days after the Act becomes applicable, as the case may be, to the factory or establishment, a declaration of registration in writing in form 01(hereinafter referred to as employers’ registration form).

(b) The employer shall be responsible for the correctness of all the particulars and information required to be furnished on the employer’s registration form.

(c) The appropriate Regional Office may direct the employer who fails to comply with the requirements of paragraph (a) of this regulation within the time stated therein, to furnish to that office employer’s registration form duly completed within such further time as may be specified and such employer shall, thereupon, comply with the instructions issued by that office in this behalf.

(d) Upon receipt of the completed employer’s registration form, the appropriate R. O. shall, if satisfied that the factory or the establishment is one to which the Act applies, allot to it an employer’s code number (unless the factory or the establishment has already been allotted an employer’s code number) and shall inform the employer of that number.

(e) The employer shall enter the employer’s code number on all documents prepared or completed by him in connection with the Act, the rules and these regulations and in all correspondence with the appropriate office.

Contribution

E.S.I. Scheme being contributory in nature, all the employees in the factories or establishments to which the Act applies shall be insured in a manner provided by the Act. The contribution payable to the Corporation in respect of an employee shall comprise of employer’s contribution and employee’s contribution at a specified rate. The rates are revised from time to time. Currently, the employee’s contribution rate (w.e.f. 1.1.97) is 1.75% of the wages and that of employer’s is 4.75% of the wages paid/payable in respect of the employees in every wage period. Employees in receipt of a daily average wage upto Rs.70/- are exempted from payment of contribution. Employers will however contribute their own share in respect of these employees.

Collection of Contribution

An employer is liable to pay his contribution in respect of every employee and deduct employees contribution from wages bill and shall pay these contributions at the above specified rates to the Corporation within 21 days of the last day of the Calendar month in which the contributions fall due. The Corporation has authorized designated branches of the State Bank of India and some other banks to receive the payments on its behalf.

Contribution Period and Benefit Period

There are two contribution periods each of six months duration and two corresponding benefit periods also of six months duration as under.

Contribution period Corresponding Cash Benefit period

1st April to 30th Sept. 1st January of the following year to 30th June.

1st Oct. to 31st March 1st July to 31st December of the year following