The Employees' State Insurance (ESIC) Act, 1948 - An overview

WHY THIS ESIC ACT, 1948 CAME INTO FORCE:

This Act is designed to complete the task of protecting 'Employees' as defined in the ESI Act - 1948, against the hazards of Sickness, Maternity, Disablement or Death due to Employment injury and to provide full Medical care to insured persons and their families.

APPLICABILITY:

• Sec 2(12) Non-seasonal Factories using power in and Employing ten (10) or More persons
• Non-seasonal and non-power using factories and establishments employing twenty(20) or more persons
• Sec 1(5), the scheme has been extended to shops, hotels, restaurants, cinemas including preview theatres, road-motor transports undertakings and newspaper establishments employing 20 or more persons.

Note: Registration Certificate or License issued under Shops and Establishment Acts or Factories Act. (Sec 2A)

REGISTRATION UNDER ESIC:

Shops or Establishments that have 10 or more employees, drawing the wages of up to (not exceeded) Rs.21,000 /- a month are required to be registered in FORM 01 within 15 days after the act becomes applicable to a unit or establishment for ESIC under the ESI Act 1948.

Once, registered the organization is allotted a 17 digit unique identification code.

ESI CONTRIBUTION:

ESI contributions must be made by the employer for all employees having a salary of less than Rs.21,000 per month. The employer must contribute 4.75% and employee must contribute 1.75% of the wages for ESI.

The amount of contribution (Employee's and Employer's share) is to be deposited with the authorized bank (State Bank Of India) through Online Generated Challan, on or before 15th day of the Succeeding month, of month following the calendar month (effective for contribution payable for the month of June, 2017 onwards).

COMPLIANCE:

Every employer covered under this act has to comply with various compliances such as deposit of monthly contribution, in order to file half yearly return and report to ESIC authorities if there is any change in business activity, address, ownership and the management, maintenance of registers and records etc.

DOCUMENTS REQUIRED FOR ESI REGISTRATION:

• To be Submitted by Employer :
• Registration Certificate or License issued under Shops and Establishment Acts or Factories Act.
• Address Proof: Latest Rent receipt of the premises you are occupying indicating the capacity in which the premises are occupied, if applicable.
• Latest building Tax/Property Tax receipt (Photocopy).
• Memorandum and Articles of Association/Partnership Deed/Trust Deed depending on the entity that is applying for registration.
• Photocopy of certificate of Commencement of production and/or Registration No. of CST/ST (or GST once it becomes applicable).
• Copy of PAN Card
• Evidence in support of the date of commencement of production/business/first sale (e.g. Copy of First Invoice).
• Month wise employment position, salary etc.
• Copy of bank statement

TO BE SUBMITTED BY EMPLOYEES:
Family Photo in Duplicate

RECORDS TO BE MAINTAINED FOR THE PURPOSE OF THE ESI SCHEME:

In addition to the Muster roll, wage record and books of Account maintained under other laws, the employer is required to maintain the following records for ESI:-

• Accident Register in Form-11
• An inspection book.
• The immediate employer is also required to maintain the Employee's Register for the employees deployed to the principal employer.

REPORTS TO BE SUBMITTED BY THE EMPLOYER:

Reports: Accident report in Form 12 in case any accident takes place, to the notice of the Accident. Absence verification report such as Employee Records including attendance, wages and books of accounts.

PERIODS OF CONTRIBUTION AND BENEFIT

The financial year from April to March has been divided in to two six monthly contribution periods i.e. 1st April to 30th September and 1st October to 31st March of the next year.

The relevant period of benefit corresponding to each period of contribution commences three months after the end of that contribution period i.e. Jan to June and July to December (The calendar year has been divided in to two six monthly benefits periods).

Explanation :

Contribution Period      Benefit Period
1st April to 30th Sep.     1st Jan to 30th June (of the following year )
1st Oct to 31st March    1st July to 31st Dec.