In a historic decision, the Union government has cut the contributions made by employers and employees toward the health insurance scheme of Employees’ State Insurance Corporation (ESIC). The total contribution has been cut to 4 per cent from the current 6.5 per cent. The contribution rate cut is expected to help firms save around Rs 5,000 crore per year, benefitting 3.6 crore employees and 12.85 lakh employers. The new ESIC rate would be effective from July 1, 2019, the Ministry of Labour & Employment said on Thursday.

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 ESI Act 1948 under the labour ministry covers employees with salary up to Rs 21,000. Aiming to increase the country’s formal workforce, the government had raised the wage ceiling in December 2016 to Rs 21,000 from Rs 15,000.

The ESI Act provides for medical, cash, maternity, disability and dependent benefits to the insured persons funded by the contributions made by the employers and the employees. The Employees’ State Insurance Corporation, under labour ministry, administers the scheme.

Labour ministry data shows 36 million workers were insured under the scheme in 2018-19, with a contribution of Rs 22,279 crore.

MINISTRY OF LABOUR AND EMPLOYMENT

NOTIFICATION

New Delhi, the 13th June, 2019

G.S.R. 423 (E).—Whereas a draft containing certain rules further to amend the Employees’ State Insurance (Central) Rules, 1950 were published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (i), vide number G.S.R. 121(E), dated the 15th February, 2019, as required by sub-section (1) of the section 95 of the Employees’ State Insurance Act, 1948 (34 of 1948), inviting objections or suggestions from all persons likely to be affected thereby before the expiry of a period of thirty days from the date on which the copies of the Official Gazette containing the said notification was published were made available to the public;

And whereas, the copies of the said Official Gazette were made available to the public on the 15th February, 2019;

And whereas, objections or suggestions received from the public in respect of the said draft rules within the period specified above have been considered by the Central Government;

Now, therefore, in exercise of the powers conferred by section 95 of the said Act, the Central Government, after consultation with the Employees’ State Insurance Corporation, hereby makes the following rules further to amend the Employees’ State Insurance (Central) Rules, 1950, namely:-

1. (1) These rules may be called the Employee’s State Insurance (Central) Amendment Rules, 2019;

(2) They shall come into force on the 1st day of July, 2019.

2. In the Employees’ State Insurance (Central) Rules, 1950, in rule 51, –

(a) in clause (a), for the words “equal to four and three-fourth per cent of the wages”, the words “equal to three and one-fourth per cent. of the wages” shall be substituted;

(b) in clause (b), for the words “equal to one and three-fourth per cent of the wages”, the words “equal to three-fourth per cent. of the wages” shall be substituted.

[F. No. S-38012/01/2016-SS-I)

VIBHA BHALLA, Jt. Secy.

Note: The principal rules were published in the Gazette of India, Part-II, Section 3, Sub-section (i), vide number S.R.O. 212, dated the 22nd June, 1950, and last amended by notification number G.S.R. 605 (E), dated 3rd July, 2018.

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