Compliances

Labour Ministry notifies Additional Benefits under EPFO and ESIC

The Ministry of Labour and Employment recently announced additional benefits for the workers through the social security scheme run by Employees’ State Insurance Corporation and Employees’ Provident Fund Organization. In this article, we shall be discussing the additional EPFO and ESIC benefits announced by the labour ministry.

Why were the additional benefits announced under EPFO and ESIC?

The additional benefits was announced by the Labour ministry for workers through the ESIC and EPFO schemes to address the fear of workers about the well being of their family members due to the increase in deaths owing to the Covid-19 pandemic. The Ministry of Labour and Employment said that enhanced social security is to be provided to workers without any additional cost to employer.

An Overview on Additional benefits under EPFO and ESIC scheme

Under the present rules, in case where a person insured under the ESIC scheme dies or is disabled due to employment injury, the dependent will get a pension equal to 90% of the average daily wages drawn by such workers. The dependents include the spouse and the widowed mother who get this pension lifelong. The dependent children are eligible for this pension till the age of 25 years and a female child until her marriage.

Under the new rules, all the dependent members of the insured person who is registered on ESIC online portal before being diagnosed with the Covid-19 and subsequent death, would receive the same benefits on the same scale as obtained by the dependents of insured persons who succumb to the employment injury provided that these conditions are fulfilled:

• The person insured should have been registered on the ESIC online portal at least 3 months before being diagnosed with the Covid-19 that caused death.
• The person insured should have been employed for wages and for contributions for minimum 78 days and should have been paid or be payable in respect of the deceased insured person during 1 year immediately before diagnosing Covid-19  resulting in death. The scheme is effective from 24^th March 2020. 

If the person insured meets the eligibility conditions and succumbs to the Covid-19, the dependents will be entitled to a monthly payment of 90% of the average daily wages of the insured person.

According to the Employees’ Deposit Linked Insurance scheme, all surviving dependent family members of the subscribers of this scheme can avail the benefits in case of death of a member who was working or active. Under the scheme, the benefits offered on the death of a worker don’t have any requirements for a minimum service for the payment of gratuity. Additionally, the family pension shall be paid according to the provisions of the EPF and the MP Act, where the sickness benefits of 70% of the wages for 91 days in one year are paid in case the worker falls sick and does not attend the office.

Amendments made to the scheme

A notification was issued where the following amendments were announced to the scheme:

• The maximum benefit is increased from 6 lakh rupees to 7 lakh rupees for the family members of the deceased employee;
• A minimum assurance benefit of 2.5 lakh rupees has been announced to eligible dependent family members of deceased employee who was a subscriber for 12 months continuous in one or more establishments before his/her death in place of the extant provisions of continuous employment in the same establishment for  12 months period.

These amendments may help casual and contract labourers who otherwise would lose out on benefits due to the condition of continuous one year employment in a single establishment. The ministry restored the provisions for minimum 2.5 lakh rupees compensation retrospectively from 15Feb 2020. 

Who will benefit from the latest amendments?

The additional social security benefits announced by Labour and Employment Ministry will benefit those who have been covered under Employees’ State Insurance Act, 1948^[1] and under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.

Employees whose monthly wages is not more than 21k rupees are eligible to be covered under the ESI Act, and monthly wage not more than 15k rupees makes them eligible for coverage under EPFO.

Conclusion

The ministry said that the number of claims due to death under the scheme is estimated to be close to 50000 families per year, including increased claims taking into account the estimated death of close to 10000 workers, which can occur due to Covid-19. The ministry further asserted that these welfare measures shall provide support to the families of the workers who died due to the Covid-19 pandemic and will protect them from financial difficulties in times such as these.

Read our article: Introduction of New e-form AGILE for GSTIN, EPFO and ESIC by MCA