ESIC Glossary

As per the ESI Act, an employer is defined as a person or entity that employs ten or more individuals in a factory or establishment in specified industries or activities, such as manufacturing, construction, cinemas, and newspaper establishments, among others. The employer must register the establishment and its employees with the ESIC (Employees’ State Insurance Corporation) and make monthly contributions towards the ESI scheme on their own and their employees’ behalf. They must maintain and submit necessary records, perform audits and ensure that they meet all regulatory requirements. Failure to comply with the provisions of the ESI Act results in penalties and legal action against the employer.

Under the Act, two types of employers are specified – the principal employer and the immediate employer. The principal employer is the owner of an establishment or the person who is responsible for the supervision and control of the establishment. For instance, the owner of a factory would be a principal employer in case of a factory. For a construction site, the contractor engaging the employees will be the principal employer.

Principal employers are ultimately responsible for the workers employed in the establishment. It is their responsibility to ensure that sub-contractors and immediate employers comply with the provisions of the Act.

Immediate employers are those who employ workers in an establishment or are responsible for the supervision and control of the workers employed in the establishment. The immediate employer may be a contractor, a sub-contractor, or any other person who has engaged workers in the establishment.

For example, in a construction site, the immediate employer could be a sub-contractor who has engaged workers for a specific task like electrical work, plumbing or civil work. Similarly, in a factory, the immediate employer could be a contractor who has been engaged to provide services such as maintenance or security.

Households, home-based enterprises and others in the unorganized sector aren’t considered employers by the Act. However, the TankhaPay app enables even households to register their household workers to the scheme and extend its many benefits to them.

A factory or establishment is the premises including precincts where insurable employment is offered to the employee. All work locations in specified areas like hotels, restaurants, cinemas, newspapers, educational and medical institutions and so on with 10 or more employees are considered factories or establishments. In some states of India, the threshold limit for a workplace to be considered a factory is 20 employees or more.

Insured persons under the ESI Act are employees, present and former, towards whom contributions are/ were made by the employer. The primary beneficiaries of the ESI scheme are the insured persons.

The family of the insured person are also entitled to most of the benefits provided by the ESI Scheme. Family as the definition of the Act refers to all or any of the relatives of the insured person who are registered and their Aadhar Cards linked such as:

• Spouse

• Child or Minor child (own/ adopted) who is partially/ wholly dependent on the insured person till the age of 21. This includes children who are studying and unmarried daughters.

• An infirm child who is wholly dependent on the earnings of the insured person, as long as their infirmity (physical or mental) continues.

• Dependent parents

If someone isn’t listed by the insured person, the benefits will not extend to them.

Dependents as per the ESI Scheme are family members or relatives of a deceased insured person who were dependent on the earning of the insured person such as:

• Widow/ widower

• Minor legitimate or adopted child

• Widowed mother or parent (if dependent on the earnings of the insured person at the time of their death)

• Infirm child dependent on the earnings of the insured person

• A minor sibling

• A minor child of a predeceased daughter where no parent of that child is alive.

• A paternal grandparent if the parent of the insured person is not alive.

The ESIC or Employees’ State Insurance Corporation is the statutory corporate body that administers and governs the implementation of the ESI scheme, ensuring that its benefits reach the workers. ESIC includes representatives of employees, employers, the central and state governments, medical professionals and members of the Parliament. As of January 2022 data, the ESIC had 12.39 lakh new registrations in October 2021 and 10.28 lakh new member registrations in November 2021.

The Employees’ State Insurance Fund held by the ESIC is where all contributions made under the ESI Scheme are paid into. All other money received by the ESIC such as gifts, donations and grants are sent towards this Fund. It is held, administered and managed by the ESIC. There are clearly specified rules and conditions under which the funds are used and disbursed.

Being a self-financed scheme, the employees and employers must make monthly payments into the scheme at a predefined rate. These payments are known as contributions. The rate of contribution is fixed by and revised from time to time by the Government of India. At present, employees are required to make 0.75% of their wages paid/ payable as contributions while employers pay 3.25% of the wages paid/ payable to the employee. The employer is responsible for the timely payment of contributions into the scheme. They must make deductions from the employee’s monthly wage and deposit their contributions into the scheme too.

Wages, as per the ESI Act, is the remuneration that is paid/ payable to an employee as per the terms of the employment in their contract. The wage does not include any contribution made into EPF or pension schemes, travel allowance/ concessions, special expenses, gratuity, etc.

Wage period is the period for which wages are ordinarily paid/ payable to the employee as specified in the terms of the employment contract, expressed or implied.

The ESI Registration number is the unique identification number issued to employers who have registered under the ESI Act. The ESI Registration number is a 17-digit alphanumeric code used to identify the employer and their employees who are covered under the Act.

The Pehchan/ ESI card is the health card given to employees registered under the scheme with the ESIC. It is only with this card that an employee can access the comprehensive benefits offered under the ESI scheme even when they lose their job or are in between jobs. The insured person and their registered family members/ dependents must carry the Pehchan card to allotted ESI dispensaries/ hospitals to obtain cash-free medical care.

ESI dispensaries/ hospitals are those medical institutions that the ESIC is tied up with to offer cash-free medical care to insured persons and their families. The ESIC Portal has the complete list of registered ESI dispensaries and hospitals. Each insured person is allotted a specific ESI dispensary/ hospital that they must visit for medical treatment. In case of emergencies, they may go to any ESI dispensary/ hospital along with the Pehchan card.

As per the Employees' State Insurance (ESI) Act, coverage refers to the provision of social security benefits to employees. Currently, employees earning monthly wages upto Rs. 21000 (Rs. 25000 in case of employees with disabilities) in registered factories/ establishments are covered by the scheme.

The coverage under the ESI Act is mandatory for establishments that meet certain criteria, such as having 10 or more employees (in some states, the threshold is 20 or more employees), and having wages of up to a specified limit. The coverage is applicable to both permanent and temporary employees, including those employed on a contract basis.

Though not explicitly defined by the Act, the term infrastructure under the ESI Act refers to the facilities such as hospitals and dispensaries, medical equipment and supplies, ambulance services, training and research facilities and administrative facilities, among others. They are essential for the effective administration of the scheme and for ensuring that the insured persons receive the benefits they are entitled to.

Medical benefits: An insured person and their family are eligible to access a full range of preventive and curative medical care from day 1 of insurable employment. In case an employee dies or loses their employment involuntarily, the dependents continue to have access to the medical benefits. All beneficiaries of the ESI scheme can access cash-free healthcare benefits with no upper limit on expenditure provided they visit their allotted ESI hospital/ dispensary. The medical benefits include out-patient and in-patient care, medications, imaging, testing, rehabilitation and much more.

Maternity benefits: Women are entitled to 26 weeks of fully paid maternity leave for their first 2 children under the ESI scheme. Maternity benefits with varying provisions are also provided to women for adoption, miscarriage, complications, confinements, etc.

Disability benefits: The ESI Scheme provides a whole range of benefits including pensions to employees if they have a workplace injury or occupational disease that leads to temporary or permanent disablement.

Sickness benefits: Insured persons are eligible to 78 consecutive days of paid medical leave under the ESI scheme wherein they are paid 70% of daily wage for a maximum period of 91 days. Sickness benefits are also available for enhanced and extended periods for different listed diseases and surgeries.

Unemployment allowance: The ESI Scheme provides an unemployment allowance of 50% of the average monthly wages of insured persons if they face an involuntary loss of employment. This allowance is offered for upto 24 months.

Dependents benefits: The dependents of the insured person receive financial assistance and pensions if the insured person is ill or injured at work. In case of death of the insured person, dependents get 90% of average daily wages, shared in a fixed proportion among them. They are also eligible for monthly pensions.

Funeral Costs: In case of death of an insured person, the ESI scheme covers the funeral costs upto a maximum of Rs. 10,000.

Confinement expenses: The ESI Scheme provides financial support to female insured persons during childbirth in the form of confinement expenses to ensure that they receive adequate medical care during this important phase in their lives. The limit for reimbursement of confinement expenses is currently Rs. 5,000 for normal delivery and Rs. 7,500 for delivery by caesarean section.

Vocational Rehabilitation: In case an insured person becomes disabled due to an employment injury, the ESI Scheme provides vocational rehabilitation services to help them get back to work.

Physical Rehabilitation: The ESI scheme provides physical rehabilitation services to insured persons who have suffered a disability due to an employment injury to help recover from their injury, regain their physical abilities, and return to work. The benefits include medical treatment, artificial limbs and appliances, training, counselling and job placement.

Old Age Medical Care: The ESI Scheme extends primary and secondary medical care to insured persons even after their retirement.

While medical benefits are directly accessible using the Pehchan card, for other cash benefits and reimbursements, the insured person must make a claim. This is done by filling appropriate forms on the ESIC website.

Claim status is the status of the claim placed by an insured person or their dependents. This can be checked on the ESIC portal.

Transfers under the ESI Act refer to the transfer of an insured person's membership from one ESI dispensary/hospital to another. This is usually done when an insured person relocates to another area or when they change their place of work.