The Employees's State Insurance Act, 1948

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The Employees* State Insurance Act

1948


OBJECT OF THE ACT

 

The Employees* State Insurance Act (ESI Act) was enacted with the object of introducing a scheme of health insurance for industrial workers. The scheme envisaged by it is one of compulsory State Insurance providing for certain benefits in the event of sickness, maternity and employment injury to workmen employed in or in connection with the work in factories other than seasonal factories. The ESI Act, which has replaced the Workmen's Compensation

 

DEFINITIONS. [Section 2]

(3) "confinement" means labour resulting in the issue of a living child or labour after 26 weeks of pregnancy resulting in the issue of a child whether alive or dead;

(4) "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;

(6) "Corporation" means the Employees' State Insurance Corporation set up under this Act;

8) "employment injury" means a personal injury to an employee caused by accident or an occupational disease arising out of and in the course of his employment, being an insurable employment, whether the accident occurs or the occupational disease is contracted within or outside the territorial limits of India;

(12)"factory" means any premises including the precincts thereof whereon 10 or more persons are employed or were employed on any day of the preceding 12 months, and in any part of which a manufacturing process is being carried on or is ordinarily so carried on, but does not include a mine subject to the operation of the Mines Act, 1952 or a railway running shed. (2010 amendment)

(14A) "managing agent" means any person appointed or acting as the representative of another person for the purpose of carrying on such other person's trade or business, but does not include an individual manager subordinate to an employer;

(14B) "mis-carriage" means expulsion of the contents of a pregnant uterus at any period prior to or during the 26 weeks of pregnancy but does not include any mis-carriage,

(15A) "permanent partial disablement" means such disablement of a permanent nature, as reduces the earning capacity of an employee in every employment which he was capable of undertaking at the time of the accident resulting in the disablement:

(22) "wages" means all remuneration paid or payable, in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and includes any payment to an employee in respect of any period of authorized leave, lock-out, strike which is not illegal or lay -off and other additional remuneration, if any, paid at intervals not exceeding two months, but does not include-

(a) any contribution paid by the employer to any pension fund or provident fund, or under this Act;

(b) (any travelling allowance or the value of any travelling concession;

(c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or

(d) any gratuity payable on discharge.

 

CORPORATION, STANDING COMMITTEE AND MEDICAL BENEFIT COUNCIL

ESTABLISHMENT OF EMPLOYEES’ STATE INSURANCE CORPORATION.[Section 3]

Central government establishes the Corporation to be known as the Employees' State Insurance Corporation. This corporation will be having following characteristics

·       separate corporate body.

·       Having perpetual succession. (no death)

·       Have a common seal.

·       Employees' State Insurance Corporation can sue. (file a suit in court on other)

·       Other can sue Employees' State Insurance Corporation.

THE CORPORATION SHALL CONSIST OF THE FOLLOWING MEMBERS. [Section 4]

(a) Chairman, Vice-Chairman to be appointed by the Central Government;

(b) not more than 5 persons to be appointed by the Central Government;

(c) one person each representing each of the States in which this Act is in force to be appointed by the State Government concerned;

(d) one person to be appointed by the Central Government to represent the 3Union Territories;

(e) 10 persons representing employers to be appointed by the Central Government in consultation with such organisations of employers.

(f) 10 persons representing employees to be appointed by the Central Government in consultation with such organisations of employees.

(g) 2 persons representing the medical profession to be appointed by the Central Government in consultation with such organisation of medical practitioners.

(h) 3 members of Parliament of whom two shall be members of the House of the People (Lok Sabha) and one shall be a member of the Council of States (Rajya Sabha) elected respectively by the members of the House of the People and the members of the Council of States; and

(i) The Director-General of the Corporation ex-officio.

 

 

TERM OF OFFICE OF MEMBERS OF THE CORPORATION. [Section 5]

Members referred to in clauses (f), (g), (h) shall be four years, commencing from the date on which their appointment or election. The members of the Corporation referred to in clauses (a),(b),(c) and (e)of Sectiontion 4 shall hold office during the pleasure of the government appointing them.

CONSTITUTION OF STANDING COMMITTEE. [Section 8]

Standing Committee of the Corporation shall be constituted from among its members, consisting of

(a) A Chairman, appointed by the Central Government;

(b) three members of the Corporation appointed by the Central Government;

(bb) three members of the Corporation representing such three State Governments thereon as the Central Government may, by notification Gazette, specify from time to time;

(c) eight members elected by the Corporation as follows-

·       3 members from among the members of the Corporation representing employers;

·       3 members from among the members of the Corporation representing employees;

·       1 member from among the members of the Corporation representing the medical profession; and

·       1 member from among the members of the Corporation elected by Parliament;

(d) the Director General of the Corporation, ex officio

TERM OF OFFICE OF MEMBERS OF STANDING COMMITTEE. [Section 9]

·       A member of the Standing Committee shall cease to hold office when he ceases to be a member of the Corporation.

·       the term of office of a member of the Standing Committee, other than a member referred to in clause (a) or clause (b) or clause (bb) of Section 8, shall be two years from the date on which his election.

·       A member of the Standing Committee referred to in clause (a) or clause (b) or clause (bb) of Section 8 shall hold office during the pleasure of the Central Government.

MEDICAL BENEFIT COUNCIL. [Section 10](2010 AMENDMENT)

(a) the Director General, the Employees' State Insurance Corporation, ex officio as Chairman;

(b) The Director General, Health Services, ex officio as Co-chairman;".

(c) one member each representing each of the States

(d) 3 members representing employers to be appointed by the Central Government in consultation with such organisations of employers.

(e) 3 members representing employees to be appointed by the Central Government in consultation with such organisations of employees.

(f) 3 members, of whom not less than one shall be a woman, representing the medical profession, to be appointed by the Central Government.

DUTIES OF MEDICAL BENEFIT COUNCIL. [Section 22]

·       Advise the Corporation and the Standing Committee on matters relating to the administration of medical benefit, the certification for purposes of the grant of benefits and other connected matters;

·       have such powers and duties of investigation as may be prescribed in relation to complaints against medical practitioners in connection with medical treatment and attendance; and

·       perform such other duties in connection with medical treatment and attendance.

CESSATION OF MEMBERSHIP. [Section 12]

·       3 members of Parliament of whom 2 shall be members of the House of the People (Lok Sabha) and one shall be a member of the Council of States (Rajya Sabha) shall cease to be a member of the Corporation when he ceases to be a Member of Parliament.

·       Other members Membership of Employees' State Insurance Corporation, Standing Committee or the Medical Benefit Council will be ended when that person ends representing such employers, employees, or the medical profession.

Disqualification. [Section 13]

A person shall be disqualified for being chosen as or for being a member of the Corporation, the Standing Committee or the Medical Benefit Council-

·       if he is declared to be of unsound mind by a competent court; or

·       if he is an undischarged insolvent; or

·       If he a shareholder or a partner of company.

·       If he has been convicted of an offence involving moral turpitude.

FEES AND ALLOWANCES. [Section 15]

Members of the Corporation, the Standing Committee and the Medical Benefit Council shall receive such fees and allowances as may from time to time be prescribed by the Central Government.

 

CONTRIBUTIONS

ALL EMPLOYEES TO BE INSURED. [Section 38]

Factory or establishment having more than 10 employees should be insured under the Employee State Insurance Act

CONTRIBUTION. [Section 39]

·       Employer and employer liable for payment of the contribution to the Employee State Insurance Corporation.

·       The rate of contribution paid by employer and employee will be decided by the central government.

·       Currently, the employee’s contribution rate (w.e.f. 1.1.97) is 1.75% of the wages and that of employer’s is 4.75% of the wages paid/payable in respect of the employees in every wage period.

·       If wage is received every month by employee, the Contribution to the ESI Corporation should be made by employer and employee every month without fail.

·       @ 12% of interest per year should be paid If employer delays in payment of the contribution to ESI corporation

 

PRINCIPAL EMPLOYER TO PAY CONTRIBUTIONS IN THE FIRST INSTANCE. [Section 40]

·       Employer should pay the contribution to ESI Corporation of behalf of his employee.

·       Employer may deduct employee contribution from employee wage for payment of contribution to ESI Corporation.

·       Employer may recover the employee contribution paid from the wage of the employee which should not exceed the amount equivalent to employer contribution.

·       Employer will become responsible for the payment to the ESI contribution after deduction of the employee contribution from the employee wage

·       Employer should bear the expenses occurred in payment of contributions to the Corporation.

GENERAL PROVISIONS AS TO PAYMENT OF CONTRIBUTIONS. [Section 42]

·       No employee's contribution shall be payable by or on behalf of an employee whose average daily wages during a wage period are below such wages as may be prescribed by the Central Government.

·       The average daily wages of an employee shall be calculated in such manner as may be prescribed by the Central Government.

For Andhra Pradesh Employees in receipt of a daily average wage up to Rs.70/- are exempted from payment of contribution.

METHOD OF PAYMENT OF CONTRIBUTION. [Section 43]

The ESI Corporation can make following rules and regulation in payment and collection of contributions payable under this Act.

·       The manner of payment of contribution

·       The time of payment of contribution.

·       Fixation of stamps for payment of contribution.

·       Benefits distributed in the case of the insured persons by the corporation.

·       Maintenance of books and cards of contribution of insured person by ESI Corporation.

·       The issue, sale, custody, production, inspection and delivery of books or cards and the replacement of books or cards which have been lost, destroyed or defaced.

EMPLOYERS TO FURNISH RETURNS AND MAINTAIN REGISTERS IN CERTAIN CASES. [Section 44]

Every principal and immediate employer should submit to the Corporation or to such officer of the Corporation as it may direct such returns in such form and containing such particulars relating to persons employed by him.

Every principal and immediate employer shall maintain such registers or records in respect of his factory or establishment

SOCIAL SECURITY OFFICERS, THEIR FUNCTIONS AND DUTIES. [SECTION 45] (2010 amendment)

The Corporation may appoint such person as Social Security Officers, as it thinks fit, for the purposes of this Act. The following are his functions and duties.

·       Enquiring into the correctness of any of the particulars stated in any return referred to in Section 44.

·       Social Security Officers can demand any principal or immediate employer to furnish to him such information as he may consider necessary for the purposes of this Act.

·       Social Security Officers can at any reasonable time enter any office, establishment, factory or other premises for inspection of examine such accounts, books and other documents relating to the employment of persons and payment of wages or to furnish to him such information as he may consider necessary.

·       He can examine the employer, his agent or servant or any person found in such factory, establishment, and office.

·       He can make copies of, or take extracts from, any register, account book or other document maintained in such factory, establishment, office or other premises.

·       He can do re-inspection whether the records and returns submitted under Section 44 are correct or not.

[Section 45A] (2010 amendment)

If no records or particular of employed persons are not maintain as required under this act by the his employer, social Security officer by order, determine the amount of contributions payable in respect of the employees of that factory or establishment. No order shall be passed by the Corporation in respect of the period beyond 5 years from the date on which the contribution shall become payable.


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