Background:
The Employees’ State Insurance Act, 1948, was enacted to provide social security and health benefits to employees in India. It establishes a comprehensive insurance scheme covering medical care, sickness benefits, maternity benefits, disability benefits, and dependents’ benefits in case of employment-related injuries or death. The Act is administered by the Employees’ State Insurance Corporation (ESIC) under the Ministry of Labour and Employment.
Applicability:
All factories and other establishments employing 10 or more employees with monthly wages not exceeding Rs. 21,000. The following establishments employing 10 or more persons are also mandatorily covered under the ESI scheme:
Compliance requirement under the Act in accordance with the Employees’ State Insurance (General) Regulations, 1950
The employer in respect of a factory or an establishment to which the Act applies for the first time and to which an Employer’s Code Number is not yet allotted and the employer in respect of a factory or an establishment to which the Act previously applied but has ceased to apply for the time being, shall furnish to the appropriate Regional Office not later than 15 days after the Act becomes applicable, as the case may be, to the factory or establishment, a declaration of registration in writing in Form-01 and Form-01-A .
Employers are required to remit the ESI contributions for all insured employees within the prescribed timelines. Interest at the rate of 12% per annum is levied for each day of delay or default in payment of contribution.
Employers must submit intimation regarding any change in particulars provided at the time of registration of the factory or establishment within 2 weeks of such change. This includes changes in name, address, or employee details. The wage limit for a person with disability is Rs. 25,000.
Every employer shall immediately report in Form 12 to the appropriate Branch Office and the Insurance Medical Officer if an employee suffers a serious injury likely to cause death, permanent disablement, or loss of a member.
Every employer shall report in Form 12 to the Branch Office and Insurance Medical Officer within 48 hours of receiving notice of a non-serious accident affecting an employee. This applies from the time the accident comes to the notice of the employer, foreman, or any designated official.
In case of death due to an employment injury:
(a) if at the workplace, the employer must report immediately;
(b) if elsewhere, a dependent intending to claim benefits must report immediately;
(c) any person present at the time may also report immediately to the nearest Branch Office and medical institution where ESIC benefits are available.
Every employer shall maintain a register in Form 6 for every employee in the factory or establishment. The register must be preserved for 5 years from the date of the last entry.
Every employer shall maintain an Accident Book in Form 11 to record particulars of any accident causing personal injury to an employee. The book must be preserved for 5 years from the date of the last entry.
Every principal employer shall maintain a bound inspection book, produce it on demand by a Social Security Officer, and preserve it for 5 years after the last entry. Notes of all irregularities and illegalities discovered during inspections, along with actions and orders for remedy, shall be entered in this book.
Penalties & Punishments
ESIC Regulation 31 A and 31 C (Interest and damages on late payment): An employer who fails to pay the ESIC contribution within the due date, shall be liable to pay 12 % per annum interest. The ESI Corporation may also levy and recover damages at the following rates. However, the damages may not exceed the amount of contribution payable for default or delay in payment of the contribution.
Section 85(a): Penalty on the failure of contribution payment: Non-payment of contribution may attract imprisonment for a period extending up to 2 years and a fine up to Rs. 5,000.
Section 85(b) to (g): Penalty for non-compliance with other requirements: If an employer deducts the total contribution (employer & employee contribution) from the salary of the employee, reduce the wages of the employee for ESIC Reporting purpose, makes a false return, prevent any ESIC Inspector in discharge his duties etc, he may attract the fine up to Rs. 5,000 and imprisonment up to one year.
Conclusion:
The Employees’ State Insurance Act, 1948, ensures that workers receive timely social security and health benefits, while employers comply with statutory obligations like registration, contribution remittance, maintenance of registers, and reporting of accidents or injuries. Effective adherence safeguards employees’ rights and minimizes legal and financial risks for employers.
For more details kindly refer to –
Employee Provident Fund (EPF) & Employee State Insurance (ESI)
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