ESIC is a self-financed social security and healthcare insurance scheme for the working class, which has benefited a large number of workers in the unorganized sector who cannot afford the medical expenses. ESIC is mandatory for a company with 9+ employees.
The ESIC department may leverage data from various sources and issue notices which may come as a bolt from the blue. Here are the top 3 mistakes companies should avoid while computing their ESIC applicability.
Top 3 Features That MSME//Startup/Business Entrepreneurs Should Make Note While Computing ESI
1. Erroneous Employee numbers:
For example, a company XYZ applied for coverage from April 2020 when its employee on roll was 12. However, during inspection, the ESIC enforcement officer traced back records to January 2018 where the number of employees already exceeded 10 by counting:
Employees on Roll -5
- Contract Employees including your Housekeeping Security & Manpower 6
- Directors drawing salary 3
The above scenario may attract penalty from the ESIC officer dating effective from January 2018 even though the numbers have dropped below the threshold limit of 10 later on.
- Leveraging data from departments such as PF, INCOME TAX & PT they are catching discrepancies in Employee number . Information gathered from Labour Department, Professional Tax monthly returns, PF returns etc this will give the number of employees. ESIC department will survey based on this and during the course of survey will match the Employee Attendance System/ Attendance Registers of both the contract workers as well as on-roll employees with the data leveraged from above-named PF returns, Professional Tax monthly returns etc. Sometimes they further probe by taking a view of your balance sheet, salary statement, attendance register, professional tax registration copy, professional tax returns, shops & establishment registration copy. Huge discrepancies between the employee number declared in any of the above documents and that on record with ESIC may lead to fines
- Some key points to be noted while computing the ESIC is that ESIC is applicable on gross salary with a ceiling limit of Rs. 21,000/-(Rs. 25,000/- in case of physically challenged). Employer contribution is 3.25% and employee contribution is 0.75%. If gross salary is above Rs. 21,000, (Rs. 25,000/- in case of physically challenged) ESIC is not applicable.
TOP SIX BENEFITS OF ESIC
The ESIC was established to provide medical insurance for eligible workers/employees and to his/her immediate family members. Here are the top 6 benefits that an employee/worker registered under ESIC is eligible for:
MEDICAL BENEFIT: Some key features:
1. Medical benefits are extended to the family members namely dependent brothers, parents and sister (until marriage).
2. No limit on the expenditure of the treatment.
3. On annual payment of Rs. 120, the retired, permanently disabled insured employees and their spouses are eligible for free medical treatment benefits.
4. The employee/worker insured can opt for treatment at the nearest ESI facility available to them.
- About 70% of wages are payable to the insured worker/employee for sickness up to a max of 91 days/year (Member should have contributed for at least 6 months).
- Extended sickness benefit of 80% of wages is provided up to two years in case of select (34) malignant long-term diseases.
- Enhanced sickness benefit amounting to full wage for a period of 7 days (male), 14 days (female) for sterilization.
For pregnant employees/workers, a period of 26 weeks extendable by another month maternity benefit is paid @ full wages for the above period (employee must have contributed at least 70 days).
1. Temporary disablement benefit: @ the rate of 90% of wage until disablement lasts.
2. Permanent disablement benefit: @ the rate of 90% of wage proportionate to the nature of disablement.
Paid at the rate of 90% of wage to the dependents in case of death due to employment injury or occupational hazards.
A sum of Rs. 15,000/- payable to dependents or individual who performs last rites on the death of the employee/worker.
In addition, vocational and physical rehab, old age medical care and Rajiv Gandhi Shramik Kalyana Yojna unemployment allowance scheme are also some of the benefits of ESIC.
Thus, ESIC is a boon to employees/workers who cannot afford medical treatment to avail free good quality medical facilities for both himself/herself and to their family members.