Employee State Insurance (ESI): Relevance in the Age of COVID-19

 

Animay Singh
Simpliance COE

Biography

Varun B
Simpliance COE

Biography

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ESI

Introduction

For a country like India that has an enormous working population, provision of social security and health related benefits through a public insurance scheme is both necessary and cost-effective. The Employee State Insurance Act, 1948 (ESI) was enacted to establish a framework for a self-financing social security scheme that provided workers with numerous benefits. The Act established a statutory body in the form of the Employee State Insurance Corporation (ESIC) that is responsible for the administration of the scheme. The ESIC is a body corporate that enjoys the status of an artificial juridical person under the Ministry of Labour and Employment. It is empowered to hold immovable/movable property, invest money, raise and discharge loans. Its primary function is to ensure that the monies remitted into the ESI fund by employers and employees alike is spent appropriately towards the purposes listed under Section-28 of the Act.

The Act is applicable to all factories whether private or state-owned but does not apply to seasonal factories. All employees in factories or establishments covered by the enactment shall be insured. Currently, contributions payable under the act on behalf of employees is at the rate of 0.75% of gross wages and 3.25% of gross wages on behalf of the employer. These contributions are towards the ESI fund and are used to provide insured employees with medical, sickness, maternity, disablement, dependants benefits as well as funds for funeral expenses and rehabilitation allowances. The Act also imposes an obligation on employers to pay contributions in a timely manner, furnish returns and maintain registers that contain details relating to the same.

Sickness benefit is provided for under Section-49 of the Act and vests the power in the Central Government to describe the conditions subject to which such benefit may be given as well as the rate and period thereof.  It is provided in the form of periodical cash payments to an insured person during the period of certified illness occurring in a benefit period. This can be described as a period during which an insured person requires medical treatment and attendance with abstention from work on medical grounds. Sickness benefit is given at the rate of 70% of average daily wages and is payable for 91 days during 2 consecutive benefit periods.

To become eligible for sickness benefit, an insured person should have paid contribution for not less than 78 days during the corresponding contribution period. Any individual who has entered into insurable employment for the first time has to wait for nearly 9 months before becoming eligible for sickness benefit because the corresponding benefit period only begins after the interval. The benefit is not payable for the first two days of a spell of sickness, which is known as the ‘waiting period’.

Sickness Benefit and Leave Under ESI Scheme

While there were central notifications providing for extension with respect to period for filing returns, mandating continued remittance of contributions and reduction in rate thereof, several state governments released directives providing for paid leave for employees infected by coronavirus. For example, the Karnataka government released a notification that instructed the labour department to ensure that any infected employees covered under ESI received twenty-eight days of paid sick leave with full wages. This is subject to the employee obtaining a declaration from an ESI hospital and submitting the same to the employer.  Similar notifications were enacted by other State governments as well.

The ESI also released a directive allowing migrant workers who are insured under the scheme to avail medical benefits while they are away from their workplace town/city. They are allowed to seek medical care services from ESI hospital nearest to their hometown.

The ESIC have extended the sickness benefit to employees who are quarantined due to COVID-19 and are absent from work. ESIC has stated that coronavirus infection is to be treated as a sickness for which an employee or an insured person can claim benefits allowed to him/her, provided that he/she meets the eligibility criteria attached to it. An Insured Person (IP) under the ESIC scheme needs to follow the procedures that are mentioned in the Employees’ State Insurance (General) Regulations, 1950 and can approach the ESIC directly to avail sickness benefit for COVID-treatment.

How to Avail Treatment Under ESI Scheme During COVID-19 Period?

Due to the nature of the COVID-19 outbreak, several hospitals across the countries have been converted to function as dedicated COVID-19 hospitals catering exclusively to patients afflicted by the virus. ESI beneficiaries referred to such hospitals may thus face difficulties if they want to avail non-COVID medical services. To this end the ESIC has given approval for a beneficiary to be referred to tie-up hospitals for consultation/admission/investigation during the period where hospitals are catering to exclusively COVID-19 patients. During the same period, ESIC beneficiary may also seek emergency/non-emergency medical treatment from a tie-up hospital without a referral letter in accordance with his/her respective entitlement. Similarly, ESIC beneficiaries may be provided the required treatments by tie-up hospital if available, even if there is no specific ESIC tie-up for the particular treatment. These provisions are temporary in nature and will operate until the ESIC COVID hospital is reversed back to an ESIC hospital catering to non-COVID medical services. 

Conclusion

The ESI scheme’s relevance as a widespread social security net for India’s workers was clearly visible in the midst of the COVID-19 crisis. Its proactive directions helped address the difficulties faced by India’s most vulnerable populace and ensured that they received due assistance in coping with the cash crunch imposed by the nationwide lockdowns.

Have you faced any difficulties in claiming ESI benefit? Do you feel like the ESIC has addressed the pandemic and related difficulties adequately?

Drop your comments below.

Disclaimer: This blog is meant for informational purposes and discussion only. It contains only general information about legal matters. The information provided is not legal advice and should not be acted upon without seeking proper legal advice from a practicing attorney.
Simpliance makes no representations or warranties in relation to the information on this article.

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18 thoughts on “Employee State Insurance (ESI): Relevance in the Age of COVID-19”

  1. Sir I was working in a private engineering college in bhopal M.P.from last five years.as a lab technician post in electronics department.due to covid-19 my callege reduced many teaching/non teaching staff.due to this I was also terminated by the callage from 1st July 2020. Is there any type of help to me by esic.

    1. The ESIC has two schemes under which unemployment benefits can be availed, these are as follows:

      Rajiv Gandhi Shramik Kalyan Yojana : This scheme of Unemployment allowance was introduced on 01-04-2005. An Insured Person who becomes unemployed after being insured for three or more years is entitled to benefit under the same. The unemployment may be due to closure of factory/establishment, retrenchment or permanent invalidity, as a consequence of which they are entitled to :-
      (i) Unemployment Allowance equal to 50% of wage for a maximum period of upto Two Years.
      (ii) Medical care for self and family from ESI Hospitals/Dispensaries during the period IP receives unemployment allowance.
      (iii) Vocational Training provided for upgrading skills – Expenditure on fee/travelling allowance borne by ESIC.

      Atal Beemit Vyakti Kalyan Yojana : This scheme is a welfare measure for employees covered under Section 2(9) of ESI Act, 1948, in the form of cash compensation upto 90 days, once in a lifetime, to be claimed after three months in one or more spells for being rendered unemployed, provided the employee should have completed two years of insurable employment and has contributed not less than seventy eight (78) days in each of the four consecutive contribution periods immediately preceding to the claim of the relief. The relief shall not exceed twenty five percent (25%) of the average earning per day.

      If you have been insured for 3 years or more you are eligible for the first scheme whereas if you are covered by 2 or more years of insurable employment you are eligible for the latter. Hope this resolves your query, feel free to reach out to us for further clarifications

      Regards
      Animay

    1. To answer your question satisfactorily we would have to know whether you have notified your employer of your pregnancy prior to the termination of your employment or after the same. Once we have clarity on the full facts of the case we can give you a better picture of the situation.

    1. Hi,
      Migrant workers are generally employed as contract labour and are thus mandatorily required to be covered under PF and ESI provided they meet the relevant eligibility criteria.

      Regards
      Animay

  2. Hi…
    Can you please tell that in this time of pandemic that insured peraon or their family is coverd for the treatment of covid 19 by esic hospitals or with any esic tied up hospital in case of covid emergency…..? Esic contributions are regular from last 4 year

  3. Hi Sir,

    One of our emplyee is covered in ESIC & he is Covid Positive. is he can eligible to avail
    Leave benefits from ESIC?

    1. Hi,
      The ESIC have extended the sickness benefit to employees who are quarantined due to COVID-19 and are absent from work. ESIC has stated that coronavirus infection is to be treated as a sickness for which an employee or an insured person can claim benefits allowed to him/her, provided that he/she meets the eligibility criteria attached to it. An Insured Person (IP) under the ESIC scheme needs to follow the procedures that are mentioned in the Employees’ State Insurance (General) Regulations, 1950 and can approach the ESIC directly to avail sickness benefit for COVID-treatment.

      Regards
      Animay

  4. How to claim the wages from ESIC for the quarantine period post testing positive in a RT PCR test conducted by Private Lab? Many employees will find themselves in this situation soon.

    Regards
    Muni Yadav

    1. Hi,
      The ESIC have extended the sickness benefit to employees who are quarantined due to COVID-19 and are absent from work. ESIC has stated that coronavirus infection is to be treated as a sickness for which an employee or an insured person can claim benefits allowed to him/her, provided that he/she meets the eligibility criteria attached to it. An Insured Person (IP) under the ESIC scheme needs to follow the procedures that are mentioned in the Employees’ State Insurance (General) Regulations, 1950 and can approach the ESIC directly to avail sickness benefit for COVID-treatment.

      Regards
      Animay

  5. I was suffering from covid from 31.10.20..became negative on 29.11.20. Can I avail covid leave for that period?If yes then what will be the procedure?

    1. Hi,
      You can check whether your respective State government has issued a notification for leave with wages for employees affected with COVID-19. Karnataka for instance, has issued a notification to that effect.

      Regards
      Animay

  6. My employer mistakenly filled the ESI Contribution of Covid 19 Period (April to September 2020) of short period.
    Now I am availing a Medical Facilities which require atleast 78 days contribution in last preceding period. My medical benefit will stop from 01.01.2021.
    How can my employer increase my contribution for the period April to September 2020.
    Does Government Gives any relaxation in this regards.
    Please advise.

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