Employees State Insurance Act, 1948 Definition, Scope of the Act

Employees’ State Insurance Act of 1948 (ESI Act.) is a landmark social welfare legislation in India, aimed at providing comprehensive medical care and financial benefits to workers in cases of sickness, maternity, disability, and death due to employment injury. It was enacted to protect employees, as defined by the Act, against the impact of health-related eventualities that could lead to loss of earnings and to ensure their well-being at the workplace. Applicable to factories and other establishments specified by the government, the Act covers employees earning up to a certain wage limit, which is subject to revision.

Act establishes the Employees’ State Insurance Corporation (ESIC), which administers the scheme. The ESIC is a self-financing, social security and health insurance scheme. Funding comes from contributions from both employees and employers, based on a percentage of the employees’ wages. The benefits provided under the Act include medical treatment for the employee and their family, cash benefits during sickness and maternity, and compensation for employment injury or death. The ESI Act is a pioneering initiative towards social security in India, aiming to foster a healthy workforce as a crucial element for economic and social development. It underscores the government’s commitment to welfare and the protection of workers’ rights, aligning with principles of social justice and equity.

Scope of the Employees State Insurance Act, 1948:

Employees’ State Insurance Act, 1948 (ESI Act) is designed to offer a comprehensive social security scheme to workers in the organized sector, providing them protection against the events of sickness, disability, maternity, and employment-related injury or death. The scope of the ESI Act extends across several dimensions, including the categories of employees and employers it covers, the types of benefits provided, and the sectors of employment it encompasses.

• Coverage of Employers and Employees:

Initially, the ESI Act targeted factory workers but has since expanded to include other establishments like shops, hotels, restaurants, cinemas, preview theatres, road motor transport undertakings, and newspaper establishments employing a specified minimum number of employees (typically 10 or more, but this number can vary by state). Employees earning up to a certain wage limit (subject to periodic revision) are covered under the Act.

• Comprehensive Benefits:

ESI scheme provides an array of benefits to the covered employees and their families, which includes medical care, sickness benefit, maternity benefit, disability benefit, dependents’ benefit, and funeral expenses. Additionally, the Act ensures provision for medical care to retired and permanently disabled insured persons and their spouses.

• Self-financing and Contributory Scheme:

ESI scheme is primarily funded by contributions from covered employees and their employers, calculated as a percentage of the employees’ wages. The government may also contribute to the scheme.

• Medical Care:

One of the cornerstone benefits of the ESI Act is to provide comprehensive medical care to insured persons and their family members. This includes not just treatment of sickness but also preventive healthcare services.

• Cash Benefits:

The scheme provides cash benefits to insured workers during periods of work absence due to sickness, maternity, or employment injury. These benefits are meant to partially replace lost wages and alleviate financial hardships during such periods.

• Administration and Governance:

Employees’ State Insurance Corporation (ESIC) administers the ESI scheme. The ESIC is a statutory body established under the Act and works under the Ministry of Labour and Employment, Government of India. It has a corporate structure with representation from the government, employers, employees, and medical professionals to ensure inclusive governance.

• Expansion and Modernization:

Over the years, the scope of the ESI Act has been expanded to include more establishments and to increase the wage ceiling for coverage. The ESIC also continuously works on modernizing its services through the adoption of digital technologies for the convenience of beneficiaries.