Employee State Insurance: ESI Registration

Ashish M. Shaji

18 Jun, 2020

What is Employee State Insurance (ESI)?

Employee State Insurance Corporation is a self-financing social security and health insurance scheme that provides benefits on medical, maternity, sickness, disablement, and various others. Online ESI registration allows for enjoying the benefits mentioned above.

ESI scheme was formed by the Government of India to provide employees with various benefits. ESI is managed by Employee State Insurance Corporation (ESIC) which comes under the jurisdiction of the Ministry of Labour and Employment.

The ESI scheme^[1] is a self-financing scheme, and the ESI funds are built from the contribution from the employers and employees. The concerned state government also contributes its shares to meet the cost of medical benefit.

Who can register for Employee State Insurance (ESI)?

Any units or establishments having ten or more employees who have a salary of up to Rs.21000 must register with the ESIC. In some states, the minimum requirement for the number of employees is 20. The employees covered under this scheme contribute 1.75% of their wages to ESIC, and the employers contribute 4.75% of the wages.

What is the purpose of ESI Registration?

It is a broad social security scheme formed to accomplish the task of providing social protection to the employees against the unforeseen events like sickness, maternity, disablement, and death caused by an injury sustained during employment. It is also made with the purpose of providing medical care to the insured employees and their dependents.

Documents required for Registration of ESI

An employer requires the following documents for registration:

• Shop & Establishment Registration certificate or license issued by the Shops and Establishments Act or Factories Act;
• Address Proof;
• Copy of PAN card;
• Memorandum of Association and Articles of Association/Partnership deed/Trust deed depending on the applying entity;
• Copy of registration certificate of commencement of production; and
• Copy of Bank Statement.

What is the procedure of ESI Registration?

 The following steps must be followed for registration of Employee State Insurance:

• The ESI registration form is to be downloaded from the official website of ESIC and filled.
• Once the form is filled, relevant documents must be attached with it and submitted.
• After you submit the form, the details provided by you will be verified.
• Once the form is verified, the government shall issue a 17 digit unique number, employee insurance number and temporary identity card.

Filing of returns after Registration of ESI

Returns must be filed after the registration twice a year and the following documents must be attached for filing the returns:

• Attendance register of the employees;
• Form-6^[2] register;
• Register of wages;
• Monthly returns and challans; and
• Registration of any accidents which may have taken place within the industrial or business premises.

Our Recommendation: ESIC Return and other Annual Compliance

What are the benefits of ESI Registration?

There are various advantages of registering under the ESI scheme. Some of them are as follows:

• Medical Aid

The registered ESI members and their families can enjoy the benefits of medical care and insurance.

• Maternity Aid

Under this maternity, aid is paid to pregnant women. Maternity benefits can be availed by pregnant women up to twenty-six weeks, and it can be extended further for 30 days on medical advice.

• Sickness benefits

Sickness benefits at the rate of 70% in the form of salary in case of certified illness and absence from work during illness may be taken for a period of 91 days in a year.

• Disablement benefits

Employees who are disabled can get 90% of their monthly salaries as a disablement benefit.

• Salary benefits on death

Where the death of an employee happens during the course of employment, then 90% of the salary is given to his or her dependents every month.

• Funeral Expenses

The family of the deceased employee is entitled to Rs. 10,000 /- as funeral expenses.

• Old age medical care

Old age medical care is also provided under it. Medical benefits are provided for retiring ESI employees.

• Enhanced sickness benefit

It was introduced in 1976 as part of a measure to promote ESI employees to undergo vasectomy or tubectomy for the welfare of the family. The ESI members who were willing to undergo sterilization are eligible for enhanced sickness benefits of 100% of their daily wages.

Applicability of ESI registration

Under the ESI Act, 1948, all establishments can register for Employee State Insurance as long as they satisfy the minimum number of employees required.

The following entities are covered:

• Shops;
• Restaurants and hotels engaged in the sale;
• Cinemas;
• Medical Institutions;
• Road Motor Transport Establishments;
• Private Educational Institutions; and
• Newspapers establishments.

Essential aspects related to ESI Registration

The ESI scheme is a self-financing scheme from the contributors. The funds for the scheme are taken out from the contribution of employers and employees monthly at a fixed percentage of wages. Any establishment employing ten or more persons attracts ESI, and in some states, the minimum limit for ESI coverage is 20 or more employees. Some of the state governments have not extended this scheme to include Medical and Educational institutions.

Any sum deducted from the wages under the ESI Act will be deemed to have entrusted to the employer by the employee for paying the contribution for which it was deducted. Non-payment or delayed payment of the Employee’s contribution after being deducted from employees’ wages amounts to a breach of trust and it will attract criminal liabilities and shall be punishable under Section 406 of the Indian Penal Code (IPC).

Conclusion

Also, read: Change in ESI Contribution Rates