Employees’ State Insurance (ESI) Act, 1948
The Employees' State Insurance Act, 1948 was enacted by the Government of India to provide
social security and health insurance benefits to workers in certain establishments. It is managed by
the Employees' State Insurance Corporation (ESIC) under the Ministry of Labour and Employment.
1. Objectives of the ESI Act
The main objectives of the ESI Act, 1948 are: ✅ Provide medical care to employees and their
families.
✅ Offer financial protection in cases of sickness, maternity, disability, or death due to employment-
related injury.
✅ Ensure social security for workers earning low wages.
2. Applicability of the ESI Act
✅ Applicable to:
All establishments with 10 or more employees (in some states, 20 or more).
Factories, shops, hotels, cinemas, educational institutions, hospitals, and private
companies.
Any entity where employees are engaged for wages up to ₹21,000 per month (₹25,000 for
disabled employees).
✅ Not Applicable to:
Employees earning more than the wage limit.
Government employees covered under other schemes.
3. Contributions Under the ESI Act
Both employees and employers contribute to the ESI fund:
Contribution Rate
Employee Contribution 0.75% of gross wages
Employer Contribution 3.25% of gross wages
Total Contribution 4% of gross wages
🔹 Example: If an employee earns ₹20,000/month:
Employee pays ₹150 (0.75%)
Employer pays ₹650 (3.25%)
Total ₹800 goes to ESIC.
🔹 Wage limit for ESIC eligibility: ₹21,000/month (₹25,000 for disabled employees).
4. Benefits Under the ESI Act
The ESI Act provides various benefits to insured employees:
Benefit Details
Medical Benefit Free treatment at ESIC hospitals/dispensaries for employees & families.
Sickness Benefit 70% of wages for up to 91 days per year for illness.
Maternity Benefit 100% of wages for 26 weeks (for pregnancy).
Disability Benefit 90% of wages for temporary/permanent disability.
Dependent’s Benefit 90% of wages as a pension to family if employee dies due to work injury.
Funeral Expenses ₹15,000 paid to nominee for funeral costs.
Unemployment 50% of wages for 2 years under Rajiv Gandhi Shramik Kalyan Yojana if
Allowance job is lost.
1. ESIC Benefits for Employees
A. Medical Benefits
✅ Free medical treatment for employees and their family members at ESIC hospitals & dispensaries.
✅ Covers OPD, hospitalization, medicines, specialist consultation, diagnostics, surgeries, and
maternity care.
✅ No upper limit on medical expenses.
B. Sickness Benefit
✅ Employees get 70% of their average daily wages for up to 91 days per year.
✅ Requires 78 days of contribution in the preceding 6 months.
C. Maternity Benefit
✅ 100% of wages for 26 weeks (for the first 2 deliveries).
✅ Up to 6 weeks in case of miscarriage.
✅ 12 weeks for adoption.
D. Disability Benefits
✅ Temporary Disability: 90% of wages as a monthly payment until recovery.
✅ Permanent Disability: Based on loss of earning capacity, as per medical evaluation.
E. Dependent’s Benefit (Death due to Employment Injury)
✅ 90% of wages paid to the dependents (spouse, children, parents) every month as a pension.
F. Funeral Expenses
✅ ₹15,000 paid to the nominee/legal heir for funeral costs.
G. Unemployment Allowance (Rajiv Gandhi Shramik Kalyan Yojana)
✅ 50% of wages for 2 years in case of involuntary job loss due to factory closure, retrenchment, or
permanent disability.
2. ESIC Forms and Their Purpose
Here are important ESIC forms required for various claims and processes:
Form Name Purpose
Form 1 (Declaration Form) For registration of new employees under ESIC.
Form 9 (Claim for Sickness, Maternity, or
To claim Sickness, Maternity, or Disability benefits.
Temporary Disablement Benefit)
Employer must report workplace accidents within 24
Form 12 (Accident Report Form)
hours.
Form 13 (Certificate for Maternity Benefit) For availing maternity benefits.
Form 14 (Claim for Permanent Disablement
For employees suffering permanent disability.
Benefit)
To claim benefits for the nominee/dependents after
Form 16 (Claim for Dependent’s Benefit)
the death of an insured person.
Form 22 (Funeral Expenses Claim) To claim ₹15,000 for funeral expenses.
To ensure continued ESIC coverage for employees
Form 37 (Continuation of Insured Status)
switching jobs.
3. ESIC Contribution Details
Employee Contribution: 0.75% of gross wages.
Employer Contribution: 3.25% of gross wages.
Wage Limit for ESIC Eligibility: ₹21,000 per month (₹25,000 for disabled employees).
4. How to Avail ESIC Benefits?
1️⃣ Visit the nearest ESIC Dispensary/Hospital.
2️⃣ Submit the required ESIC form along with supporting documents.
3️⃣ Get the claim approved by ESIC authorities.
4️⃣ The benefit amount is credited directly to the employee's bank account.
