Employee State Insurance (ESI Registration)

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  • Employee State Insurance Corporation or ESIC is a self-financing social security and health insurance scheme which provides medical benefit, sickness benefit, maternity benefit and various other benefits such as funeral expenses, free supply of physical aids etc. to the employees and their family.

  • Any factory or business establishment having 10 or more than 10 employees, irrespective of salary, have to register with ESIC. ESI contributions must be made for all employees having a salary of less than Rs. 21,000/- per month.

  • Employees with less than Rs. 21,000/- monthly wages get health and sickness benefits through this statutory scheme.

  • ESI registration is a statutory responsibility of the employers of the factory. It is mandatory according to the rules and regulation of the ESI Act 1948.

FAQ

  • 1. How does the Employee State Insurance Registration scheme help the employees?

The scheme provides full medical care to the employee registered under the ESI Act, 1948 during the period of his incapacity, restoration of his health and working capacity. It provides financial assistance to compensate the loss of his / her wages during the period of his abstention from work due to sickness, maternity and employment injury. The scheme provides medical care to his / her family members also.

  • 2. What is registration of Factory/ Establishment?

Registration is the process, by which every factory / establishment, to which the Act applies, gets itself registered online for compliance. Otherwise when a factory / establishment is identified by ESIC, it is asked to get itself registered under the Act.

  • 3. Can a factory or establishment once covered go out of coverage if the number of persons employed therein goes down to the minimum limit prescribed?

Once a factory or an establishment is covered under the Act, it continues to be covered notwithstanding the fact that the number of persons / coverable employees employed therein at any time falls below the required limit or there is a change in the manufacturing activity.

  • 4. Is there any provision for ‘exemption of a factory or establishment’ from ESI coverage?

Yes, the exemption is permissible from operation of provisions of the Act subject to the condition that the employees in a covered factory or establishment are otherwise in receipt of benefits substantially similar or superior to those provided under the ESI Act. The appropriate Government may grant exemption to such factory or establishment for a period of one year at a time prospectively in consultation with ESI Corporation. An exempted application unit has to apply for renewal 3 months before the date of expiry of the prior exemption.

  • 5. If the wages of an employee exceed Rs. 21,000 in a month, can he be treated as not covered and deduction of contribution from his wages is stopped?

If the wages of an employee (excluding remuneration for overtime work) exceeds the wage limit prescribed by the Central Government after start of contribution period, he continues to be an employee till the end of that contribution period and the contribution is to be deducted and paid on the total wages earned by him.

  • 6. What is the effect of increase in wages from a retrospective date?

In case the wages of an employee are increased from a retrospective date resulting in crossing the wage limit prescribed, its effect on coverage of that employee is only after expiry of the contribution period during the currency of which such increase is announced or declared. The contribution on enhanced wages is also payable from the month in which such increase is announced. There is no need to pay the contribution on the arrears for the period prior to the month of declaration / announcement / agreement.

  • 7. Why contribution should be paid on the total wages beyond the wage ceiling limit when an employee crosses the wage limit prescribed by the Central Government?

  • An employee who crosses the prescribed ceiling limit in any month at any time after commencement of the contribution period, he / she would continue to be an employee till the end of that contribution period.

  • The Rule position in this regard is mentioned as under – “As per Rule-50 of the Employee’s State Insurance (Central) Rule 1950, any employee whose wages (excluding remuneration for overtime work) exceed (21,000) rupees a month at any time after and not before the beginning of the contribution period, shall continue to be an employee until the end of that period.”

  • 8. Why over-time is to be excluded for wage ceiling limit for coverage of an employee?

Overtime is not a regular and continuous payment, but it is of an occasional nature. If overtime is also taken for wage limit for coverage of an employee, he may be going out of coverage for some time and again coming within the ambit of the scheme, when overtime is not there. However, it is included for payment of contribution to cover the risk during the period he was on overtime work, and to enable him to draw cash benefits at an enhanced rate also.

  • 9. What is the time limit for contribution?

Contribution shall be paid in respect of an employee in a bank duly authorized by the Corporation within 15 days of the last day of the calendar month in which the contribution falls due for any wage period

  • 10. What is the rate of contribution?

Employee’s contribution rate (w.e.f. 01.07.2019) is 0.75% of the wages and that of employer’s is 3.25% of the wages paid / payable in respect of the employees in every wage period.

  • 11. What is contribution period & cash 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 PeriodCash Benefit Period
1st Apr to 30th Sep1st Jan to 30th Jun
1st Oct to 31st Mar1st Jul to 31st Dec

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