ESIC Full Form: History, Benefits & Documents – All You Need To Know

Introduction

ESIC is a commonly used term when it comes to employee benefits for those working with private as well as government organisations. ESIC full form is Employees' State Insurance Corporation, established under the ESI Act 1948. This statutory body ensures the implementation of the ESI Scheme, a self-financed safety net designed to protect employees from financial hardships arising from sickness, disablement, or employment-related injuries.

With its headquarters in New Delhi and an extensive nationwide network, ESIC plays a major role in securing the well-being of covered employees. The Corporation operates through 65 regional and sub-regional offices located across various states, supported by a specialised Medical Benefit Council that advises on the administration of medical benefits.

This blog will cover what ESIC is, its history, ESIC eligibility, benefits, contribution rates, registration process, and more.

What is ESIC and What Legislation Governs it?

The ESI Act, or Employees' State Insurance Act of 1948, is the legislative foundation for the Employees' State Insurance Corporation (ESIC). This act empowers ESIC to administer the comprehensive ESI Scheme, offering social security to employees. Its key focus is protecting employees from financial challenges arising from sickness, disablement, or employment-related injuries.

The ESI Act establishes the legal framework that ensures the welfare of covered employees, marking a crucial milestone in India's social security landscape. It covers various benefits including medical care, maternity benefits, rehabilitation, and funeral expenses, all administered through ESIC, a statutory corporate body under the Ministry of Labour and Employment.

History and Evolution of the ESI Scheme

In 1943, Professor B.P. Adarkar laid the foundation of the ESI scheme, envisioning the health security of labourers in India. His landmark document, "Report on Health Insurance," was submitted to the Tripartite Labour Conference and was widely acclaimed as the forerunner of social security in India. Prof. Adarkar was acknowledged as "Chhota Beveridge" by Sardar Vallabhbhai Patel, a reference to Sir William Beveridge, one of the founding figures of modern social insurance.

The ESI Act of 1948 emerged from this vision, protecting workers from the challenges of illness, disabilities, maternity concerns, and work-related injuries.

The ESI scheme was inaugurated on 24th February 1952 (now observed as ESIC Day) in Kanpur by Prime Minister Pandit Jawaharlal Nehru at Brijendra Swarup Park, where he addressed a gathering of 70,000 people. The scheme was simultaneously launched in Delhi, with initial coverage for both centres totalling 1,20,000 employees. Notably, Pandit Nehru himself became the first honorary insured person under the scheme.

Initially launched in 1952 in Kanpur, the scheme was initially for labourers, but it evolved to include all employees below a Rs 21,000 wage threshold. By March 31, 2019, the ESI scheme had been extended to over 34 states and Union Territories. The ESIC scheme goes beyond a policy; it symbolises the intrinsic link between employee well-being and a resilient Indian workforce, emphasising health and financial stability during tough times.

Composition of ESIC

Understanding what ESIC is also means understanding how it is governed:

• The Union Minister of Labour heads the ESIC as its Chairman.
• The Central Government appoints a Director General as the Chief Executive Officer.
• ESIC comprises members representing employers, employees, the Central and State Governments, Parliament, and the medical profession.
• A Standing Committee, constituted from among ESIC members, acts as the executive body. The Secretary, Ministry of Labour, chairs the Standing Committee.
• The Standing Committee includes 3 members from Central and State Governments, 3 members representing employers and employees, and 1 member each from Parliament and the medical profession.

ESIC: Coverage and Benefits

The ESIC scheme covers factories and establishments with 10 or more employees (20 or more in some states). As per the ESI, it applies to employees with monthly wages not exceeding Rs 21,000 (Rs 25,000 for persons with disabilities).

What is Covered Under the ESIC Scheme?

The ESI scheme applies to every non-seasonal factory with 10 or more workers, and has been extended to cover the following establishments:

• Shops, hotels, and restaurants
• Road motor transport establishments
• Cinemas and preview theatres
• Newspaper establishments
• Educational and medical institutions
• Insurance businesses, NBFCs, port trusts, airport authorities, and warehousing establishments (employing 20 or more, where Central Govt. is the appropriate authority)

What is NOT Covered Under the ESIC Scheme?

Individuals earning more than Rs. 21,000 per month are currently excluded from the ESI scheme. For persons with disabilities, the exclusion threshold is Rs. 25,000 per month.

ESIC Coverage Statistics (As on March 31, 2022)

As of March 31, 2023, the total number of beneficiaries covered under the ESI scheme has grown to 13.30 crore.

Benefits of the ESIC Scheme

Section 46 of the Employees' State Insurance Act, 1948 envisages the following social security benefits:

Medical Care and Attention

ESIC offers comprehensive medical care and attention to registered employees during incapacity. It focuses on health restoration and the revival of working capacity. There is no upper limit on expenditure for treatment of the insured person or their family members.

Financial Assistance

The ESIC scheme provides crucial financial aid during absenteeism due to illness, maternity, or factory accidents. The scheme aims to compensate for wage loss during the specified periods.

Family Coverage

The ESIC scheme extends medical care benefits to the family members of the registered employees.

Sickness Benefit

Insured workers are entitled to cash compensation at 70% of their wages during certified sickness periods, for up to 91 days annually. To be eligible, the insured person must have contributed for a minimum of 78 days within a six-month contribution period.

Maternity Benefit

Maternity benefits for childbirth or pregnancy last for 26 weeks and can be extended by an additional month based on medical advice, with full wages granted, provided the employee has contributed for at least 70 days within the previous two contribution periods.

Disablement Benefit

In the case of temporary disablement, a worker receives 90% of their monthly wage until they regain full health. In the event of permanent disability, 90% of the monthly wage is payable for life.

Dependants' Benefit

The dependants of an insured person receive monthly financial support in the event of the insured person's death or injury arising out of employment, distributed equally among surviving dependents.

Funeral Expenses

An amount of Rs. 15,000 is payable to dependants or to the person performing the last rites, from the very first day of insurable employment.

Rehabilitation Benefits

Vocational Rehabilitation (VR) training is provided at VR centres for permanently disabled insured persons. Physical rehabilitation support is also available for those disabled due to employment injuries.

ESIC benefits broadly fall under two categories:

• Cash benefits: Sickness, maternity, disablement (temporary and permanent), funeral expenses, rehabilitation allowance, vocational rehabilitation, and medical bonus.
• Non-cash benefits: Comprehensive medical care for insured persons and their families.

ESIC Contribution Rates

The ESIC contribution rates were revised with effect from July 1, 2019. Here is a comparison of old and current rates:

Key points on contributions:

• Employers must deposit contributions within 15 days from the last day of the calendar month in which contributions fall due.
• Payment can be made online or through designated authorised public sector banks.
• Employees whose daily average wage is Rs. 176 or less are exempt from making their own contribution; however, employers must still contribute their share for such employees.
• State Governments contribute a 1/8th share of the cost of medical benefits.

Infrastructure of the ESIC Scheme

The ESIC has built an extensive healthcare and administrative infrastructure across India:

What Are the Required Documents for ESI Registration?

Here are the documents required for ESI scheme registration:

1. Registration Certificate:

Registration Certificate, obtained under the Factories Act or Shops and Establishment Act.

2. Certificate of Incorporation:

• For companies: Certificate of Company Registration.
• For partnership firms: Partnership deed.
• GST certificate for the establishment.

3. Corporate Documents:

• Memorandum of Association and Articles of Association for companies.
• Address proof: Utility bills, rental agreement, or property tax receipts (not exceeding three months).

4. Employee Information:

• List of all employees along with their Aadhaar card numbers, salary details, and date of joining.
• PAN Card of the business establishment and all employees.
• Compensation details of all employees.

5. Financial Information:

• A cancelled cheque from the company's bank account.
• List of company directors and shareholders.

6. Attendance Records:

- A register containing the attendance of employees.

Note: Document requirements may vary slightly based on the nature of the business entity. Always verify the latest requirements on the official ESIC portal (esic.gov.in) or consult a professional.

ESIC Registration Process

When does ESI registration become mandatory? ESI registration is compulsory for any establishment employing 10 or more workers (20 or more in Maharashtra and Chandigarh). Here is the step-by-step process:

• Visit the official ESIC portal and create an employer login account.
• Fill in the required details: company information, business type, employee strength, and contact details.
• Upload necessary documents including registration certificates, PAN, and employee details.
• Submit employee information such as salary, date of joining, and identification details.
• Review the application carefully and submit it online.
• Upon successful verification, the employer receives a 17-digit ESIC registration number.

Payment and Confirmation

• Generate the ESI contribution challan through the ESIC portal.
• Make payment online via net banking or authorised bank channels.
• Download the payment receipt and acknowledgement for your records.
• Once payment is processed, registration confirmation will reflect on the employer dashboard.

How to Apply for an ESI Card (Pehchan Card)

The Pehchan Card is the ESI card that employees need to avail medical benefits under the scheme. Here's how to get it:

• Ensure your employer has registered your details on the ESIC portal and generated your Insurance Number (ESIC Number).
• Log in to the ESIC employee portal using your Insurance Number and verify your personal details.
• Upload required documents such as identity proof, address proof, and family member details (if applicable).
• Provide biometric information and photographs at an authorised ESIC office or camp, if required.
• Once verification is complete, the Pehchan Card will be generated and made available for download or collection.
• Keep the card safely, as it is required to avail medical benefits at ESIC hospitals and dispensaries.

How to Claim Benefits Under the ESIC Scheme

To claim benefits under the ESI scheme, insured individuals must:

• Visit an ESIC dispensary or hospital with your ESIC card and relevant documents.
• Submit claims for sickness, maternity, or disability benefits through their employer or directly via the ESIC online portal.
• After verification, approved claims will be reimbursed directly to the insured person's bank account.

How Do You Find Your ESIC Number?

Now, what is an ESIC number and how to get it? An ESIC number is a unique identifier that is like a verification identity number for all ESIC users. It is generated when your employer registers your details on the ESIC portal. Searching for your ESIC Insurance Number is straightforward.. Here are the steps you need to follow:

• Visit the ESIC website (esic.gov.in).
• Go to the "Insured Person" tab.
• Click on the "Track your ESIC Insurance Number" link.
• Enter your Aadhaar number or PAN number.
• Click the "Search" button. You will get your ESIC number in seconds.

Eligibility for the ESI Scheme

Is ESIC Compulsory For All Employees?

ESIC is mandatory for specific employees within certain parameters. In short, organisations with a workforce of 10 or more individuals fall under the scheme's coverage. It's important to note that for an employee to be eligible, their monthly wages should not exceed Rs. 21,000 (or Rs. 25,000 for those with disabilities).

If you find yourself within these criteria, ESIC becomes a compulsory inclusion. This mandatory nature ensures a considerable workforce can access fundamental medical and social security benefits, emphasising the significance of a healthier and more secure work environment.