University Institute of Legal Studies

Project Report
Of
Labour Laws
On
Benefits Of The Employees State
Insurance Act, 1948

To:
Mrs. Jai Mala

By:
Rohit Garg
BA.LLB.

(5th semester)
81/08

Application of the Act

It is applicable to non-seasonal power using factories employing 10 or more persons and
non-power using factories employing 20 or more persons.The Scheme has been extended
to shops, hotels, restaurants, cinemas including preview theatre, road motor transport
undertakings and newspaper establishment employing 20 or more persons.The existing
wage-limit for coverage under the Act, is Rs.7500/- per month (with effect from
1.4.2004).

Objective
The object of the Act is to secure sickness, maternity, disablement and medical benefits to
employees of factories and establishments and dependents benefits to the dependents of
such employees

Applicability
First of we should the applicability of the Employees State Insurance Act, 1948 As soon
as the below conditions are fulfilled the employer should furnish the details in Form-01 to
ESI office for registration under the ESI Act, 1948 & Obtaining of the employers Code
No.
1) All factories excluding seasonal factories employing 10 or more persons and working
with electric power.
2) All factories excluding seasonal factories employing 20 or more persons and working
without electric power.
3) Any establishment which the Government may specifically notify as being covered.
4) Shop employing 20 or more persons.1

Eligibility

1 http://www.on-lyne.info/legal1.htm
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1) Any person employed for wages (up to Rs. 6500) in or in connection with the work of a
factory or establishment end.
2) Any person who is directly employed by the employer in a factory or through his agent
on work which is ordinarily part of the work of the factory or incidental to purpose of the
factory.2

Contribution under ESI Act,1948

1. Employees : 1.75% on total monthly wages
2. Employer : 4.75% on total monthly wages

Time & Method for payment of Contribution

Both the employers and the Employees contribution are to paid in cash or by cheque , into
the State Bank of India or any other bank authorized by the ESI Corporation, by filling in a
prescribed Challan in quadruplicate within 21 days following the end of the calendar month
in which the contribution falls due.
The Bank will retain two copies of the Challan and return other two to the employer, one for
submitting to the Regional Office of the Corporation and the other for the record of the
employer.

Procedure for Registration

The employer of a factory or an establishment desirous of registering it under the Act has to
send to the Regional Office within 15 days from the Act becomes applicable to it a
Declaration of Registration in the prescribed form. Upon receipt of the Declaration of
Registration the Regional Office shall if satisfied that the factory or the establishment is
covered by the Act, allot to it a Code Number and thereupon the factory or the establishment
shall stand registered under the Act.

Benefits under the Act

There are Six kinds of benefits are provided under the Act:

2 http://www.citehr.com/656-esi-act-1948-implications-benefits-procedure.html
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Sickness benefit
Maternity benefit
Disablement benefit
Dependents benefit
Medical benefit and
Funeral expenses.
1. Sickness benefit - It is in the form of periodical payment to any insured person provided his
sickness is certified by a duly appointed medical practitioner, or any person having such
qualifications and experience as may be specified by regulations of the Corporation. Where
provision is made for sick leave by standing order, the employer cannot require the employee
to seek sickness benefit provided under this sub- section.
In Management of Dioccsan Press v. Labour Court Madras 3 it was held that it was not possible
to accept the contention that since the employee has received sickness benefit under the Act, he
is not entitled to receive wages for the period during which he was on sick leave. But the
employer is entitled to deduct the benefit received by the employee from the leave salary payable
to him.4
The below table will explain the things better.5

Benefits

Contributory
Conditions

Duration

Rate

To Whom
Payable

a) Sickness
Benefit.

I.P. Should work 91 days in any two As per S.B.R. Only to the insured
for wages for 78 consecutive B.P.
person
days in the
corresponding C.P.
(wef 19-9-98).
b) Extended
Continuous
124 days which 25% Above S.B.R. Only to the insured
sickness benefit for employment for may be extended
person
long term diseases the period of two upto 309 days in
like TB, leprosy,
years.
specified chronic
3 (1982) I L.L.J 451 (Mad)
4 S.N. Mishra, Labour and Industrial Laws, Central Law Publications 25 th edi. P. 463
5 H.L. Kumar, Labour Laws Everybody Should Know, Univeral Law Publishing Co.,
2008 p.66 B
4

etc.
c) Enhanced
sickness benefit
(for under-going
sterilization
operation for
family planning)

cases during a
period of three yrs.
Same as for
7 days for
Twice the S.B.R Only to the insured
Benefit (a)above vasectomy & 14
person
days for tubectomy
extended in cases
of post-coperative
complications etc.

2. Maternity Benefit- This benefit in the form of periodical payment available to an insured
woman. It is payable in case of1) Confinement; or
2) Miscarriage; or
3) Sickness arising out of pregnancy; or
4) Premature birth of child

Benefits

Contributory
Conditions

Duration

Rate

Maternity Benefits Payment of

12 weeks of which Twice S.B.R.
contribution for 70 not more than 6 Subject t o min
days in one or two weeks can precede of Rs.20/- p.d.
consecutive
the expected date
periods.
of confinement.
6 weeks for
Medical bonus
miscarriage or for of Rs.250/medical
where ESI
termination of
facility is not
pregnancy
available.
Additional
payment for one
month for
Complications (pre
or post) arising out
of Pregnancy

To Whom
Payable
Only to the
insured
person.

The grounds of eligibility of an insured woman to such payments must be certified by an

Insurance Medical Officer as provided by the regulations. 6 The below table will help in
explaining the concept.7
3. Disablement benefit- Any insured person shall be entitled to periodical payments if:
1) He suffers from disablement :
2) The disablement results from an employment injury: and
3) He sustained the employment injury as an employee under condition mentioned in the
Act.
The disablement benefit is payable only when the injury is duly certified by an Insurance
Medical officer.
In Krishnan Kutty Nair v. P.B.V. Regional Director; E.S.I Corporation and Another,8 the
appellant who was a covered employee under the E.S.I scheme, met with an accident in the
course of his employment on June 15, 1990. The claimant suffered injury he had ceased to be
an employee.
Dismissing the appeal it was held that Section 56 of Employees State Insurance Act, 1948
specifically provides for two cumulative conditions for its applicability : (1) first the claimant
must be an insured person; and (2) second that such an injury must be sustained when he was
an employee. Hence, when the injury had been sustained by the employee when he ceased to
be an employee, he would not be entitled to the benefit of disablement though his
contribution period and his status as insured person continues.9
Disablement
Benefits
(employment

No Conditons

In case of
temporary
disablement: as

a) For temp. Only to disablement the

6 Supra no. 4
7 Supra no. 5 p. 66 D
8 2008 II L.L.J 997 (S.C.)
9 Supra no. 4
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injury)

long as incapacity
lasts & in case of injured 40% above person S.B.R
permenant disablement: for life
time.

4. Dependents benefit- The benefit is available to such dependents, of an insured person who
dies as a result of an employment injury sustained as an employee, as are entitled to
compensation under this Act.10
Dependents
Benefit
(employment
injury)

No condition

To the WIDOW/S
during life time
until remarriage.
To the legitimate
or adopted SON/S
until he attains the
age of 18yrs.

3/5 of the FULL RATE, if there are 2

or more widows, the amt. payable to
the widows shall be divided equally
between the widows.
2/5 of the FULL RATE, if there are 2
or more sons, the amt. payable to the
sons shall be divided equally between
the sons. Subject to a min of Rs. 14/-

5. Medical Benefit- Medical benefit is available to an injured person or to a member of his

family, were such benefit is extended to the members of his family. This benefit is in the
following forms:
I.
Out patient treatment and attachment in the hospital or dispensary; or
II.
By visits of the home of the insured; or
III.
As an in-patient in a hospital pr other institution.11

No condition but
Medical
Benefit to an. I.P. has to pay
Rs. 10/- pm in
insured
lump sum for one
persons
year in advance
who
every year.
ceases
insurable
employmen
t on

Till the date on

Medical Benefit
which an I.P.
would have
attained the age of
superannuation

IP and spouse.

10 ibid
11 Ibid p.464
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account of
permanent
disablement
.

Medical
Benefit to
retired
Insured
Period

1) Insurable
employment
for a period of 5
years
and
2) Payment of
Office of the
Contribution @
Rs. 15/PM in lump sum
for one year in
advance, each
year.

Till the time

yearly contribution
is
paid to the
Concerned
Office of the
Corporation.

-----

Insured
person and
his spouse

6. Funeral Expenses- Funeral expenses are payable to the eldest surviving member of the family
or to such person who actually incurs funeral expenses. The amount of such payment shall
not exceed such amounts as may be prescribed by the Central Government. Any claim for the
funeral expenses must be made within three months of the death of the insured person or
within such extended period as the Corporation or any other competent official may allow.12
Funeral
Expenses

No condition
One time lump
(i.e.merely by
sum payment
virtue of being an
insured person)

Not more than

Rs. 1,500/-

To the eldest
surviving
member of the
family of the
deceased I.P.
Or to the
person who
actually incurs
the
expenditure
on the funeral
of an I.P.

12 Ibid
8

Bibliography
Books
1. S.N. Mishra, Labour and Industrial Laws, Central Law Publications 25th edi
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2. H.L. Kumar, Labour Laws Everybody Should Know, Univeral Law

Publishing Co., 2008
Websites
1. . http://www.on-lyne.info/legal1.htm
2. http://www.citehr.com/656-esi-act-1948-implications-benefitsprocedure.html

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