What is ESI?
The Employees State Insurance Scheme, or ESI, is a type of insurance that employees can utilise to help them through sickness and other ailments during employment. It is a contributing fund under the ESI Act of India, 1948, and is regulated by the Employee State Insurance Corporation. Both the employer and employee’s contributions go into this fund, which eventually provide insurance and monetary benefits.
What are the allowances and exemptions included under ESI calculation?
Registered employees may receive various incentives and allowances at their workplace. However, not all of the compensation, allowances, and other bonuses given to employees are included in the ESI calculation. The list of wages or allowances included and excluded under the ESI Act is as follows:
Inclusions under ESIC scheme:
- Conveyance allowance
- Night Shift allowance
- Suspension allowance
- Overtime Pay
- Dearness allowance
- Salary Paid during Layoff
- Bonus given for attendance
- HRA (House Rent Allowance)
- Lunch Allowance / food allowances
- Medical/healthcare Allowance
- Newspaper Allowance
- Education Allowance
- Gratuity allowance
- Interim Relief
- Expenditure on Annual/ Periodical Services Contract: Contribution is payable only on the amount paid for annual or periodical service contracts.
Exclusions under ESIC scheme:
Listed below are some of the exclusions that employees will not be eligible under the ESIC scheme.
1. Employee Dismissal:
If an employee is fired due to misconduct, they will not be eligible for sick leave benefits for a period of time that will be determined by the employer.
2. Apprentices:
People undergoing training under the Apprentice Act or under a company’s standing regulations are not covered by the ESIC Act.
3. Earning threshold:
Workers who earn more than the Act-specified maximum are not eligible for the scheme. As of 2023, the monthly salary limit is set at Rs 25,000 for workers with disabilities and Rs 21,000 for others.
What are the benefits of ESIC registration?
Both the employer and the employee get many benefits from registering with ESIC. Some of the major benefits of ESIC registration are:
Maternity benefits:
If a pregnant working woman has been covered for at least nine months before the anticipated date of delivery, she may be eligible for maternity benefits. This covers full pay for the whole term of the maternity leave, which is typically 26 weeks long but may be longer if a doctor recommends it. This benefit covers medically checked conditions, miscarriages, and temporary disability resulting from pregnancy and childbirth.
Medical benefits:
Access to medical facilities is the main benefit of registering with ESIC. Complete medical care, including outpatient services, expert consultations, sophisticated diagnostic tests, operations, and even super-speciality therapies like cancer therapy or heart procedures, is available to those registered with ESIC.
Dependent’s benefits:
The dependents get monthly compensation in the unfortunate event that the insured individual passes away from an illness related to employment or any occupational hazard. The covered person’s compensation is closely correlated with the amount of this payment.
Disability benefits:
The covered worker is eligible for disability compensation in case of an illness or injury associated with their job that renders them physically disabled, either temporarily or permanently. These benefits can include financial and recovery-related medical care.
Unemployment benefits:
Employees may be eligible to receive unemployment benefits under the Rajiv Gandhi Shramik Kalyan Yojana if they are permanently disabled due to a non-work-related accident or lose their jobs forcibly. ESIC launched the Rajiv Gandhi Shramik Kalyan Yojana unemployment scheme on April 1st, 2005. Under this scheme, an insured person may receive the following benefits if they lose their job after two or more years of coverage:
- Layoffs; permanent disability from a not-work-related injury causing at least 40% of the disability; or unemployment payments equal to 50% of wages for a maximum of two years.
- ESI Hospitals/Dispensaries for personal and family medical needs are provided to employees under unemployment benefits.
- Vocational training is offered to employees to upgrade their skills (ESIC covers the cost of fees and travel expenses of employees in this case).
Other benefits:
In addition to financial and medical benefits, funeral expenses and assistive devices for disabled individuals are covered under ESI registration. Insured people who have retired or completed superannuation can also get old-age medical support and treatments.
Final thoughts
Workers who register up for ESI gain both a more stable and secure job and financial stability. Employees may feel assured knowing they are protected against the financial difficulties that are sometimes brought on by illness and job loss by registering with ESI. It is recommended for readers to visit our website to know about the services our professional experts offer.
Frequently Asked Questions (FAQs)
1. What are the schemes and benefits offered by ESIC to unemployed people?
Some schemes which cover unemployed employees under ESIC are Rajiv Gandhi Shramik Kalyan Yojana and Atal Beemit Vyakti Kalyan Yojana (ABVKY).
2. Can an employee registered with ESIC choose to unregister from ESIC?
No, once employees are eligible and registered under ESIC, they cannot choose to un-register themselves from ESI registration.
3. Who is exempted from contributing to the ESIC scheme?
Employees or workers whose average daily wages are less than 137 are exempted from contributing to the ESI contribution.
4. Are there any exemptions for not registering under ESIC for daily wage workers?
Employees are excused from contributing if their average daily wage is less than INR 137. Employers must, however, reimburse these workers for their contributions.
5. What are the various benefits that employees can claim under ESI contribution?
Workers or employees can obtain benefits for medical care, work-related disability or sickness, pregnancy, immediate family members, disability, funeral costs, and many more.
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