ESI

ESI

Employees’ State Insurance is an essential payroll compliance in India. In this blog today, I will cover necessary details about ESI. If you are running a startup or a small business, read on. The essential target by the Government of India to dispatch the Employees’ State Insurance (ESI) scheme is to cover workers from health and wellness issues.

Such issues include:

• lasting or impermanent disablement,
• disorder,
• demise because of employment injury or occupational disease

The ESI scheme empowers workers to avoid monetary loss due to such tragic situations. Additionally, the scheme likewise offers maternity benefits to the beneficiaries.

ESI scheme is a cover for workers which protects them with medical care for the insured. Additionally their dependents are covered as well. Finally ESI offers a variety of cash benefits during loss of wages or disablement. Also, the scheme offers pension known as dependent benefit to the family members of the insured person in case of death or injury due to occupational hazards while at work. Note that ESI is one of the key payroll compliances along with Provident Fund(PF), Professional Tax(PT) and TDS.

EMPLOYEES STATE INSURANCE ACT, 1948

The Employees’ State Insurance Act, 1948 or popularly known as the ESI Act was notified by the Parliament and it was the first major legislation on the Social Security for workers post-independence of the country.

The ESI Act 1948 provides medical cover and other essential benefits to workers and employees who are working in factories, business establishments and organizations such as:

• hotels
• road transport
• cinemas
• newspaper
• educational or medical institutions
• shops
• wherein 10 or more persons are employed.

The ESI scheme offers benefits to both the workers and their dependents in case of any unfortunate eventualities at work. Under the ESI Act, employees or workers employed at the

• above-mentioned categories
• earning wages up to INR 21,000 per month

are entitled for this social security scheme. The ESI Act aims at respecting human dignity during crises by protecting them from destitution, deprivation and social degradation.

WHAT IS THE APPLICABILITY AND EXTENT OF COVERAGE OF ESI?

Stretches out to the entire of India and covers all business environments enlisted under either in the Factories Act or under the Shops and Establishments Act, where at least 10 employees are working.

• An employee is obligatorily needed to be covered by her/his employer as long as s/he is within the threshold reaches of wages.
• For example, all such workers whose monthly salary are up to and equivalent to Rs.21,000/month, it is the obligation of the business to get qualified representatives covered under the ESIC scheme.
• Monthly salary limit for inclusion under the ESIC scheme for representatives with incapacity is Rs.25000/month rather than Rs.21,000 in other cases.

WHICH ARE THE ENTITIES COVERED UNDER ESI?

• Shops
• Restaurants or Hotels only engaged in sales.
• Cinemas
• Road Motor Transport Establishments;
• Newspaper establishments (which is not covered under the factory act)
• Private Educational Institutions

WHICH DOCUMENTS ARE REQUIRED FOR ESI REGISTRATION?

The documents required for the registration are –

1.  A registration certificate obtained either under the:
   • Factories Act
   • Shops and Establishment Act
2. Certificate of Registration in case of Company, and Partnership deed in case of a Partnership.
3. Memorandum of Association and Articles of Association of the Company.
4. A list of all the employees working in the Establishment.
5. PAN Card of the Business Entity as well as all the Employees working under the entity.
6. The compensation details of all the employees.
7. A cancelled cheque of the Bank Account of the Company.
8. List of Directors of the Company.
9. List of the Shareholders of the Company.
10. Register containing the attendance of the employees.

WHAT IS THE ELIGIBILITY FOR ESI?

To be eligible for the ESI scheme, the employee or the worker’s monthly salary should not exceed Rs.21,000 and Rs.25,000 for people with disability.

• For companies not registered under the ESI Act

Companies that have an employee base of more than 20 must be registered under the act.

• For companies already registered under the ESI Act

The organizations need to rework the CTC of all the employees who have a monthly gross salary of INR 21,000 or less.

PROCEDURE FOR ESI REGISTRATION:

The procedure for ESI registration by the employers is completely online and does not require submission of physical application either before or after the registration. Here are the steps to register your company with the ESIC:

1. Visit the ESIC Portal and click on ‘Login’.
2. On the new page, click on ‘Sign Up’.
3. Enter your company name, employer name, state, region, email ID (which will be your username), and your phone number.
4. Click on the checkbox to confirm your company or factory is under an exclusive labor contract, manpower suppliers, security agencies or contractors supplying labor categories.
5. Click on ‘Submit’. An email will be sent with login credentials or details.
6. Now that you have signed up, you need to visit the ESIC Portal to login.
7. Enter the username and password received by email and click on ‘Login’.

For new employee registration

1. Click on ‘New Employer Registration’.
2. Select the type of unit and click on submit.
3. On the new page, enter the name of the unit, complete postal address of the factory or the establishment and the police station under whose jurisdiction your unit is.
4. Enter if the building or the premises of the factory or the establishment is owned or hired and click on ‘Next’ to proceed.
5. Enter the nature of the business and category, PAN details, etc. and click on ‘Next’.
6. On the next page, enter the date of commencement of the factory or establishment and license details (if any).
7. Now, select the constitution of ownership and details of owners and then click on ‘Save’ after entering all the designation of owners and then click on ‘Next’.
8. Here, enter the number of employees working in your establishment or factory and the number of employees earning less than Rs.21,000 and click on ‘Save’.
9. In the new page, enter the date when the first 10/20 employees were employed and then click on ‘Employee Declaration Form’.
10. Select ‘Yes’ if the insured person is already registered and enter IP number and date of joining. Select ‘No’ if IP is not registered and click on ‘Continue’.

 

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