Employees State Insurance Act 1948 : Overview.

EMPLOYEES STATE INSURANCE ACT 1948

Author: Deepak Goyal, CNLU, Patna. 

INTRODUCTION

The Employees’ State Insurance Scheme provides need-based social security benefits to insured workers in the organized sector. ESIC has taken up the daunting task of tailoring different benefit schemes for the needs of different worker groups. The scheme, which was first introduced at two centers in 1952 with initial coverage of 1.20 lakh workers, today covers 1.55 crore workers in about 790 centers in the country. It benefits about 6.02 crore beneficiaries including the family workers of the insured persons, across the country. The scheme is being gradually to cover new centers and steps are being taken for the creation of requisite infrastructure for providing medical care to a larger number of insured persons and their families. While the cash benefits under the scheme are administered through a network of about 799 Branch offices and pay offices, medical care is provided through 150 ESI Hospitals, 42 ESI Annexes, 1403/93 ESI Dispensaries / ISM Units and 1447 Clinics of Insurance Medical Practitioners. The total number of medical officers under the Scheme is about 6536.

There have been a number of developments in the ESIS during the past three years. Each year, it is extended to new areas to cover additional employees. The new employees covered in 2009-10, 2010-11 and 2011-12 are 1.23 lakh, 1.14 lakhs, and 1.58 lakh respectively. Low paid workers in receipt of daily wages up to Rs. 100/- have been exempted from payment of their share of contribution. Earlier this limit was Rs. 70/-. This measure has benefited about eight lakh insured workers across the country. In order to provide relief to insured persons suffering from chronic and long term diseases, the list of diseases for which Sickness Benefit is available for an extended period up to two years at an enhanced rate of 70% of daily wages, was enlarged by adding four new diseases, keeping in view the international classification of disease profiles and the quantum of malignancies of some diseases which had come to light over the last few years.

Salient Features of Employees’ State Insurance Act-1948

Introduction ESI Act of 1948

The Employees’ State Insurance Act was enacted in 1948 with the object, as stated in its preamble, “ to provide for certain benefits to employees in case of sickness, maternity and “employment injury” and to make provisions for certain other matters in relation thereto.”  The act introduced an integrated social insurance scheme covering health, maternity and accident insurance. The scheme was introduced as a compulsory state insurance scheme for the benefit of the workers working in Indian industries.

Origin

The Employee State Insurance act was promulgated by the Parliament of India in the year 1948. To begin with, the ESI scheme was initially launched on 2^nd February 1952 at just two industrial centers in the country namely Kanpur and Delhi with total coverage of about 1.20 lakh workers. Thereafter the scheme was implemented in a phased manner across the country with the active involvement of the state governments.

Salient Features of ESI Act 1948

• Facilitating coverage of smaller factories;
• Enhancing the age limit of dependent children for eligibility to dependants benefit;
• Extending medical benefit to dependent minor brother/sister in case of not having own family and whose parents are also not alive;
• Streamlining the procedure for assessment of dues from defaulting employers;
• Providing an Appellate Authority within the Corporation against an assessment to avoid unnecessary litigation;
• Continuing medical benefit to insured persons retiring under VRS scheme or taking premature retirement;
• Treating commuting accidents as employment injury;
• Streamlining the procedure for grant of exemptions;
• Third party participation in commissioning and running of the Hospitals;
• Opening of medical/dental/paramedical/nursing colleges to improve the quality of medical care;
• Making an enabling provision for extending medical care to other beneficiaries against payment of user charges to facilitate providing of medical care from under-utilized ESI Hospitals to the BPL families covered under the RashtriyaSwasthayaBimaYojana introduced by the Ministry of Labour & Employment.
• Empowering State governments to set up autonomous Corporations for administering medical benefit in the States for bringing autonomy and efficiency in the working.

DEFINITION OF ESI

• “Appropriate government” means, in respect of establishment under the control of the central government or (a railway administration) or a major port or mine or oilfield, the central government, and in all other cases, the state government;
• “Contribution” means the sum of money payable to the corporation by the principal employer in respect of an employee and includes any amount payable by or on behalf of the employee in accordance with the provisions of this Act;
• “Sickness” means a condition which requires medical treatment and attendance and necessitates abstention from work on the medical ground;

ADMINISTRATION

The administration of the scheme of insurance contained in the act is vested in the employees’ state Insurance Corporation created by the act. The corporation is a body corporate having perpetual succession and a common seal. It can sue be sued by its name.

Members:

According to the Act, the corporation consists of the following members;

1. A chairman to be nominated by the Central Government ;
2. A vice – Chairman to be nominated by the Central government;
3. Not more than five people to be nominated by the Central Government ;
4. One person each representing each of the states in which this act is in force to be nominated by the central government;
5. One person to be nominated by the central government to represent the Union territories;
6. Five-person representing employers to be nominated by the central government in consultation with such organization of employees as may be recognized for the purpose by the central government;
7. Three members of Parliament of whom two shall be members of the Loksabha and one shall be a member of the Rajya Sabha elected respectively by the two houses;
8. The Director-General of the corporation, ex – officio;

The term of office of members is ordinarily four years but nominated member holds office during the pleasure of the government nominating them.

Power of the corporation

STAFF:

The corporation may employees such other staff of officers and servant as may be necessary for the efficient transaction of its business provided that the sanction of the central government shall be obtained for the maximum monthly salary of which exceeds Rs.3000

Measures for health

The corporation may in, addition to the scheme of benefits specified in this act, promote measures for the improvement of the health and welfare of insured person and for the rehabilitation and re-employment of insured person who have been disabled or injured and may incur in respect of such measures expenditure from the funds of the corporation within such limits as may be prescribed by the central govt.- sec.19.

The holding of property :

the corporation may, subject to such condition as may be prescribed by the central govt. acquire and hold property both movable and immovable, sell or otherwise transfer any movable or immovable property which may have become vested in or have been acquired by it and do all things necessary for the purposes for which the corporation is established.

Investment:

Subject to such condition as may be prescribed by the central govt. the corporation for my time to time invests any money which is not immediately required for expenses properly defrayable under this act and may, subject as aforesaid, from time to time re-invest or realize such investment.

Loans:

The corporation may, with the provisions sanction of the central govt. and on such term, as may be prescribed by it, raise loans and take measures for discharging such loan.

DUTIES OF THE ESI CORPORATION

Budget estimates:

the corporation shall in each year frame a budget showing the probable receipts and the expenditure which it proposes to incur during the following year and shall submit a copy of the budget for the approval of the central govt. before such date as may be fixed by it in that behalf.

Accounts:

The corporation shall maintain correct accounts of its income and expenditure in such form and in such manner as may be prescribed by the central govt.

Audit:

The account of the corporation shall be audited, at such time and in such manner as may be prescribed by the auditor by the central govt.

Annual report:

The corporation shall submit to the central govt. an annual report of its work and activities.

Placement to parliament:

The annual report the audited accounts of the corporation and the budget as finally adopted by the corporation shall be placed before and published in the official gazettes.

TYPES OF BENEFITS UNDER THE ACT

The act provides for six types of benefit to insured workmen: A) Sickness benefit B) maternity benefit C) disablement benefit D) dependent’s benefit E) medical benefit F) funeral benefit. Benefits are receivable during the benefit period, which is defined as follows.

Benefit period means such period, being not less than 25 but not more than 27 consecutive weeks or 6 consecutive months corresponding period as may be specified in the regulation framed under the act. For the first benefit period, a shorter or longer period may be fixed.

 Sickness benefit

Sickness benefit represents periodical payments made to an insured person for the period of certified sickness after completing nine months of insurable employment. To qualify for these benefits, the contribution should have been paid for at least78 days in the relevant contribution period. The maximum duration for availing sickness benefit is 91 days in two consecutive benefit periods. There is a waiting period of 2 days which I waived if the insured person is certified sic within 15 days of the last spell for which sickness benefit period was last paid. The daily rate of sickness benefit in respect of a person during any benefit period shall be 20 percent more than “standard benefit rate”

Maternity benefit

Maternity benefit implies cash payment to an insured woman in case of confinement or miscarriage or sickness arising out of pregnancy, premature birth of the child as certified by a duly appointed medical officer or midwife. For entitlement to maternity benefit, the insured woman should have contributed for not less than 70 days in the immediately preceding two consecutive contribution periods corresponding to the benefit period in which the confinement occurs or is expected to occur. The daily rate of benefit double the standard sickness benefit rate,i.e. full wages.

Maternity benefit is normally payable for a maximum period of 12 weeks in case of confinement, 6weeks in case of miscarriage or medical termination of pregnancy which can be extended up to one additional month in case of sickness arising out of confinement and duly certified by an authorized medical officer. Maternity benefit continues to be payable even in the event of the death of an insured woman, during her  confinement, or during the period of 6 weeks immediately following her confinement leaving behind  a child for the whole of that period , and in case the child also dies, during the said period, until the death of the child.

Disablement benefit

In case of temporary disability arising out of an employment injury, disablement benefit is admissible to an insured person for the entire period so certified by an insurance medical officer/practitioner for which the insured person does not work for wages. The benefit is not subject to any contributory condition and is payable at the daily rate of 15 percent more than the standard benefit rate. The benefit is, however, not payable if the incapacity is less than 3 days excluding the rate date of the accident.

Dependent’s benefit

Periodical pension is paid to the dependent of a deceased insured person where death occurs as a result of an employment injury or occupational diseases. The daily rate of dependents shall be 15 percent more than the standard benefit rate. The widow  receives monthly  pension for life or until remarriage, at a fixed rate equivalent to 3/5th of the  disablement benefit rate and each dependent child is paid an amount equivalent  2/5th thereof until he/she attains 18 years of ages, provides that, in case of  infirmity, the benefit continues to be  paid till infirmity.

However, it is subject to the condition that the total dependents’ benefit distributed among the widow and legitimate or adopted children of the deceased insured persons, does not exceed, at any time, the full rate of disablement benefit. In case it exceeds the given ceiling, the share of each of the dependents is, proportionately reduced. The benefit is not payable to the married daughter.

In case the insured person does not leave behind any widow or child, the benefit is payable to other dependents including parents.

Funeral benefit:

Funeral expenses are in the nature of a lump sum payment up to three thousand rupees made to defray the expenses of the funeral of the deceased insured person. The amount is paid either to the eldest surviving member of the family or, in his absence, to the person who actually incurs the expenditure on the funeral.