Overview of Employee State Insurance Scheme or ESI scheme (ESI Act 1948)

Employee State Insurance or ESI is a scheme commenced by the Government of India to offer medical, monetary and other advantages to workers. ESI is managed by an autonomous authority – Employee State Insurance Corporation – which lies under the jurisdiction of the Ministry of Labour and Employment.

APPLICABILITY OF ESI SCHEME

The ESI Act, (1948) applies to following categories of factories and establishments in the implemented areas:

* Non-seasonal factories using power and employing ten (10) or more persons
* Non-seasonal and non power using factories and establishments employing twenty (20) or more persons

And, their monthly wage does not exceed Rs 21,000 are covered under this scheme.

An employer is liable to pay its own contribution for every employee and deduct the employee’s contribution from wages bill and pay these contributions to the ESI within 15 days of the last day of the calendar month in which the contributions are due.

NON APPLICABILTY OF ESI SCHEME

  • The ESIC scheme currently does not cover workers or employees earning more than Rs.21,000 per month
  • In the case of persons with a disability, the maximum wage is capped at Rs.25, 000 per month.
  • In Maharashtra and Chandigarh, the current threshold for coverage is still 20 employees and not 10 employees in the case of other states or UTs.

Procedure for ESI Registration:

The procedure for ESI registration by the employers is completely online and does not require submission of physical application either before or after the registration. Below are the steps to register your establishment or company with the ESIC:

Step 1: Visit the ESIC Portal and click on ‘Login’.

Step 2: On the new page, click on ‘Sign Up’.

Step 3: Enter your company name, employer name, state, region, email ID (which will be your username), and your phone number.

Step 4: Click on the checkbox to confirm your establishment or factory is under an exclusive labour contract, manpower suppliers, security agencies or contractors supplying labour categories.

Step 5: Click on ‘Submit’. An email will be sent with login credentials or details.

Step 6: Now that you have signed up, you need to visit the ESIC Portal to login.

Step 7: Enter the username and password received by email and click on ‘Login’.

Step 8: Click on ‘New Employer Registration’.

Step 9: Select the type of unit and click on submit.

Step 10: On the new page, enter the name of the unit, complete postal address of the factory or the establishment and the police station under whose jurisdiction your unit is.

Step 11: Enter if the building or the premises of the factory or the establishment is owned or hired and click on ‘Next’ to proceed.

Step 12: Enter the nature of the business and category, PAN details, etc. and click on ‘Next’.

Step 13: On the next page, enter the date of commencement of the factory or establishment and license details (if any).

Step 14: Now, select the constitution of ownership and details of owners and then click on ‘Save’ after entering all the designation of owners and then click on ‘Next’.

Step 15: Here, enter the number of employees working in your establishment or factory and the number of employees earning less than Rs.21, 000 and click on ‘Save’.

Step 16: In the new page, enter the date when the first 10/20 employees were employed and then click on ‘Employee Declaration Form’.

Step 17: Select ‘Yes’ if the insured person is already registered and enter IP number and date of joining. Select ‘No’ if IP is not registered and click on ‘Continue’.

Step 18: Enter the name of the IP and father’s name, address, date of birth, gender, marital status, family details and date of joining.

Step 19: Now, click on the checkbox and click on ‘Submit’.

Step 20: Once all details are duly filled, click on ‘Close’ on the new page.

Step 21: On the new page, select the respective ESI branch office and the inspection division.

Step 22: Now, click on the checkbox to declare that information provided is correct and then click on ‘Submit’. You’ll be redirected to a new page.

Step 23: On the new page, you will have to click on ‘Pay Initial Contribution’ and click on ‘Submit’. You will be provided with a Challan Number for future reference.

ESIC CONTRIBUTION:-

The government has reduced the contribution under the Employees’ State Insurance (ESI) Act to 4% from 6.5%, a move expected to increase the take home salary of workers as well as reduce the financial burden of employers. The decision will benefit 36 million workers and 1.28 million employers.

This includes a reduction of 1.5% in employers’ contribution to 3.25% from 4.75% and 1% reduction in employees’ contribution to 0.75% from 1.75%, the labour ministry said in a statement.

DISCLAIMER: The entire contents of this article have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws.

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