ESI REGISTRATION
ESI stands for Employee State Insurance managed by the Employee State Insurance Corporation (ESIC) which is an autonomous body created by the law under the Ministry of Labour and Employment, Government of India.The ESI scheme was started for Indian workers. The workers are provided with a huge variety of medical, monetary and other benefits under the ESI Act from the contributions made by both the employer and employee towards the ESI scheme.
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NATURE OF EMPLOYEE STATE INSURANCE (ESI)
ESI stands for Employee State Insurance managed by the Employee State Insurance Corporation (ESIC) which is an autonomous body created by the law under the Ministry of Labour and Employment, Government of India.
The ESI scheme was started for Indian workers. The workers are provided with a huge variety of medical, monetary and other benefits under the ESI Act from the contributions made by both the employer and employee towards the ESI scheme.
Employee State Insurance or ESI is a scheme commenced by the Government of India to offer medical, monetary, and other advantages to workers. ESI is managed by an autonomous authority – Employee State Insurance Corporation – which lies under the jurisdiction of the Ministry of Labour and Employment.
ESI REGISTRATION ELIGIBILITY
Any non-seasonal factory or establishment having more than 10 employees (in some states it is 20 employees) who have a maximum salary of Rs. 21,000/- has to mandatorily register itself with the ESIC within 15 days from the date of its applicability.
Under this scheme, the employer needs to contribute an amount of 3.25% of the total monthly salary payable to the employee whereas the employee needs to contribute only 0.75% of his monthly salary every month of the year.
The only exemption to the employee in paying his contribution is whose salary is less than Rs. 176/- per day.
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BENEFITS OF ESI
ESI New Registration ensures that employees enjoy the following advantages:
- Medical Aid- From the very first day of employment, registered ESI members and their families are entitled to enjoy the benefits of complete medical care and insurance.
- Maternity Aid- Pregnant women are entitled to maternity benefits that are payable upto twenty-six weeks. This period can be extended by 30 days on medical advice. To qualify for maternity benefits, employers are required to contribute their wages for 70 days in the preceding two contributions periods.
- Old Age Medical Care- An annual payment of ₹120 ensures medical care benefits for retiring ESI employees or for those who are opting for VRS/ERS.
- Extended Sickness Benefits– ESI members suffering from chronic diseases can avail the extended sickness benefit for upto 2 years, once the standard sick leave of 91 days has expired.
- Disablement Benefits- Disabled employees can get 90% of their monthly salaries as disablement benefits.
- Sickness Benefits– Absence from work during illness can be taken for a maximum of 91 days per year along with 70% of the monthly wages.
- Dependent Benefits- In the unfortunate event of the demise of an employee during the employment, the dependents of the deceased will receive 90% of his/her monthly salary.
- Funeral Expenses- The family of the deceased employee is entitled to an additional amount of Rs.10,000 towards funeral expenses.
ESI APPLICATION REQUIREMENT
Section 2(12) of the Employees’ State Insurance Act states that all factories employing ten or more workers must get obligatory registration under the ESI act. To put it another way, the ESI program applies to establishments with ten or more staff workers.
In India, however, the number of employees required for an organization to be eligible for registration under the ESI plan ranges from 10 to 20, depending on the location. Additionally, such firms and enterprises are required to register themselves with the ESI within the first 15 days after the date on which the ESI Scheme would begin to apply to them.
In light of this, the following types of businesses, in addition to factories, qualify for coverage under the ESI plan since they employ ten people or more:
- Shops
- Hotels and restaurants are not involved in any manufacturing activity; instead, they are primarily in the business of selling their products.
- Theatres, cinemas, and preview theatres all rolled into one
- Infrastructure for vehicular and automobile travel on roads
- Establishments that publish newspapers (which are not considered factories according to section 2(12) of the ESI act)
- Educational establishments that are not publicly funded (those run by individuals, trustees, societies or other organizations) & Hospitals and Other Medical Facilities (including Corporate, Joint Sector, trust, charitable, and private ownership hospitals, nursing homes, diagnostic centers, pathological labs)
When an employer registered with the ESIC fails to pay the required contribution to an employee’s ESIC, the employer will be liable to pay simple interest at the rate of 12 percent per year for each day the donation is late or not paid. In addition, the employer will be liable to pay the penalty for each day the contribution is late or not paid.
DOCUMENTS REQUIRED FOR ESI REGISTRATION
To register for ESI the employer has to submit the following documents along with the application:
- The registration certificate or license issued by – Shops and Establishments Acts/Factories Act
- Address proof
- Rent receipt of the occupied premises, mentioning its capacity
- Copy of PAN card
- Copy of bank statement
- Photocopy of the last building tax/property tax receipt
- Memorandum and Articles of Association or Partnership Deed or Trust Deed – depending on the applying entity
- Photocopy of registration
- Certificate of commencement of production
- Registration No. of CST/ST/GST
FAQs ON ESI REGISTRATION
Q1. What is ESI registration?
Registration is the process by which every employer/factory and its every employee employed for wages, is identified for the purpose of the Scheme, and their individual records are set up for them.
Q2. Is ESI registration compulsory?
Yes. All the employers who are covered under the ESI Act have to mandatory register themselves under the ESI scheme. The factories or establishments having more than 10 employees (in some states it is 20 employees) with a maximum salary of Rs. 21,000/- per month are covered under the ESI Act.
Q3. Who is eligible for ESI?
As for workers or employees, they are covered or entitled under ESI when they earn less than Rs. 21,000 per month and Rs. 25,000 in the case of a person with disability. The worker contributes 1.75% of their salary while the employer contributes 4.75% towards the ESI scheme.
Q4. What is the minimum salary to get ESI?
All employees of a covered unit, whose monthly incomes (excluding overtime, bonus, leave encashment) does not exceed Rs. 21,000 per month, are eligible to avail benefits under the Scheme. Employees earning daily average wage up to Rs. 176 are exempted from ESIC contribution.
Q5. Is ESI mandatory for employees?
ESI is mandatory for employers who have employees working in a non-seasonal factory with more than 10 employees, but only for employees who are earning less than ₹21,000 per paycheck.
Q6. What IS ESI benefits?
ESIC Provides monthly cash allowance for a duration of maximum 24 months in case of involuntary loss of employment or permanent invalidity due to non-employment injury.
Q7. What is ESI for employees?
Introduction: The ESI Act. 1948 envisages an integrated social insurance scheme to provide social security to the industrial workers in certain contingencies such as sickness, maternity, temporary or permanent physical disablement and death due to employment injury resulting in loss of wages or earning capacity.
