The Employees

State Insurance
Act 1948
By: Aniruddha, Shabani, Anisha
 A) Introduction
The Employees State Insurance Act 1948 by the Parliament was the first
major social security legislation for workers in India. The ESI Act 1948 covers
certain health-related incidents the workers are exposed to, such as
maternity, sickness, permanent or temporary disablement, or death due to
employment injury, which can result in the loss of earning capacity. The
Employees State Insurance Act 1948 functions under the Ministry of Labour &
Employment.
 B) What is the act?
Employees State Insurance is a self-financed comprehensive social security scheme
that comes under Employees State Insurance Act 1948. The Ministry of Labour &
Employment is responsible for the functioning of this Act.
1) Social security provisions made in the ESI Act 1948 protect the employees
against financial distress arising out of events of disablement, sickness, or death
due to employment injury.
2) Employees State Insurance provides cash compensation for the above
cases.Employees' State Insurance Corporation (ESIC) administers Employees
State Insurance Act 1948.
3) Employees' State Insurance Corporation (ESIC) is a statutory corporate body that
is established under the employee’s state insurance act in India.
 C) Employees’ State Insurance Scheme

1) Employees’ State Insurance Scheme of India,is a multidimensional social security

system tailored to provide socio-economic protection to worker population and
their dependants covered under the scheme.
2) The scheme was inaugurated in Kanpur on 24th February 1952. The
comprehensive and multi-pronged social security programme is administered by
an apex corporate body called the Employees' State Insurance Corporation.
 D) Coverage of Employees State Insurance
Act 1948:
1) The Employees State Insurance applies to the factories and other establishments institutions
where 10 or more persons are employed. However, in some states, the limit is 20.
2) Under section 1(5) of the Employees State Insurance Act 1948, the ESI scheme has been
extended to hotels, shops, cinemas, and restaurants, including road-motor transport, preview
theaters and newspaper establishments where employees are 10 or more.
3) Again under section 1(5) of the Employees State Insurance Act 1948, the ESI scheme has
been extended to educational institutions and private medical employing more than 10 or
more persons.
4) The ESI scheme is not notified in 526 districts in 35 UT and states, which includes 346
complete districts, 95 district headquarters, and 85 districts.
 E) Finance

ESI Scheme, like most of the Social Security Schemes the world over, is a self financing
health insurance scheme. Contributions are raised from covered employees and their
employers as a fixed percentage of wages. The State Governments, as per provisions of
the Act, contribute 1/8th of the expenditure of medical benefit within a per capita ceiling
of Rs. 1500/- per Insured Person per annum. Any additional expenditure incurred by the
State Governments, over and above the ceiling and not falling within the shareable pool,
is borne by the State Governments concerned.
 F) Contribution

1) E.S.I. Scheme being contributory in nature, all the employees in the factories or
establishments to which the Act applies shall be insured in a manner provided by
the Act. The contribution payable to the Corporation in respect of an employee shall
comprise of employer's contribution and employee's contribution at a specified rate.
The rates are revised from time to time.
2) Currently, the employee's contribution rate is 1.75% of the wages and that of
employer's is 4.75% of the wages paid/payable in respect of the employees in every
wage period. For newly implemented areas, the contribution rate is 1% of wages of
Employee and 3% payable by Employers for first 24 months Employees in receipt of
a daily average wage upto Rs.137/-
 F) Contribution

3) Collection of Contribution

The employer is liable to pay his contribution in respect of every employee and
deduct employees contribution from wages bill and shall pay these contributions at
the above specified rates to the Corporation within 15 days of the last day of the
Calendar month in which the contributions fall due. The Corporation has authorized
designated branches of the State Bank of India and some other banks to receive the
payments on its behalf.
 G) Benefits of Employees State Insurance
Act 1948:
The benefits of the Employees State Insurance Act 1948 are as follows:
1) Medical Benefit- medical care will be given to the person and his family members.
There will be no ceiling on the expenditure.
2) Maternity Benefit- for pregnancy is payable for 26 weeks as well under the ESI Act
1948, which can be extended up to one month on medical advice.
3) Sickness Benefit- it will be given in the form of cash compensation at the rate of 70
percent of wages.
4) Dependants Benefit- this is paid in the form of monthly payments to the dependants
in cases where the death occurred due to occupational hazards or employment injury.
 G) Benefits of Employees State Insurance Act
1948:
5) Disablement Benefit-
Temporary disablement benefit (TDB) at the rate of 90% of wage is payable so long as
the disability continues.
Permanent disablement benefit (PDB) is paid at the rate of 90% of wage in the form of
monthly payments. It depends on the extent of the loss.
6) Other Benefits of Employees State Insurance Act 1948
Funeral Expenses
Physical Rehabilitation
Old Age Medical Care
Confinement Expenses
Vocational Rehabilitation
 H) Penalties

Sections 84, 85, and 85A cover all the punishments for default listed within the ESI Act.
● False Statement: Any person caught increasing the payment or benefit to avoid
payment by himself is known to make a false statement. Punishable with up to six
months and/or with fine not greater than Rs. 2000. Insured persons convicted of
this will not be entitled to cash benefits.
● Failure to pay contribution: Persons failing to pay the contribution, unlawfully
deducts wages or benefits, unfairly punishes an employee, obstructs inspector’s
duties, etc. can be punishable for up to three years, no less than one year with a
fine up to Rs. 10000.
● Subsequent Punishment: If a person is found committing the same offence twice,
he shall be punished with imprisonment for a term extending up to two years with
a fine of Rs. 5000 for each subsequent offence.
 I) Judicial Precedences

Mr. A. Tehan V/S M/S. Associated Electrical Agencies & Anr.

In this case, the plaintiff was under the employment of defendant 1 for carrying out
television repairs. On July 17, 1987, he was injured during the course of employment
while repairing a television set, when a component burst and he suffered injuries on his
face.

After claiming relief from the ESIC Corporation under Section 46 of the Act, he then filed
an appeal asking for compensation under the Workmens’ Compensation Act, which
required an amount paid by the defendant.
This was challenged by the defendant in the Bombay High Court via an appeal, which
contested their payment of the compensation, and called into usage Sections 38 and 46
of the ESI Act, which lay the foundation for the insurance offered by the Act. (Section 38
guaranteeing that every worker is insured and Section 46 defining the relief available to
workers).

This was further verified by the High Court, whose Division Bench further stated that the
worker’s appeal for the amount to be paid by the plaintiff could not be upheld. Instead,
he would receive appropriate relief, to be determined by the ESIC.
Western India Plywood Ltd V/S Shri. P. Ashokan
In this case, the defendant, P. Ashokan, was appealing to claim damages from the
appellant, his employer, ‘Western India Plywood Ltd.’ as compensation for an injury
which he had suffered during the course of employment. However, the defendant had
already claimed compensation from ESIC for his injuries as he was insured under the
ESI Act.

The appeal was filed in lieu of the existence of Articles 53 and 61, the former restricting
compensation to be availed from the Workers’ Compensation Act, and the latter
restricted compensation being availed from any law or action other than the ESI Act.
This bar would only hold if the employee who had suffered the injury had received
adequate compensation for the same.
The Full Bench assigned to this judgment then attempted to define what could constitute
as ‘adequate compensation’ if an injury had been suffered, for which the reliefs received
by the ESIC under Sections 38 and 46 of the ESI Act were eligible as ‘adequate
compensation’.

The final judgment laid down by the bench was to both, restrict the employee from
getting double relief as compensation from his employer, and to define the objective of
Section 53, which was then laid down as not only a bar to guarantee only the required
amount of relief for an injury by ESIC, but also to save the employer from facing more
than one claim in relation to the same accident, i.e. an indirect form of double jeopardy,
in which he may have to compensate twice for the same injury.
Kerala CBSE School Management vs State Of Kerala
This is one of the premier landmark judgments in relation to the ESI Act as the basis of
this case is the determination of whether a particular institution can be covered under
the ESI Act or not.

The matter originally under contention was the release of a new notification by the
Kerala State Government in the Official Gazette, which extended the scope of the ESI
Act, i.e. which organisations could fall under it, was extended to schools and other
educational institutions. The matter was then decided through the interpretation of the
statute in Section 1 of the ESI Act.
It was held that educational institutions, while not being commercial in nature, nor
having the functions of a traditional factory, was not completely excluded from the
statute itself, and could still be applied as an instrument under the ESI Act.

The deciding contention was when the final responsibility towards educational
institutions was discussed. Since the Central Government had a priority to control and
manage most educational institutions, the notification which extended the provision of
the ESI Act to schools was held valid.
 H) Conclusion

For a working-class employee in India, the ESI Act is an essential utility that works in
their favour, while also being beneficial for sectors outside that of the working class.

The ESI Act is unique in the fact that it works in advantageous ways for both employees
and employers. While employees are insured under the act and get financial aid in case
of an injury, the employers are also protected from being jeopardized twice in lieu of
paying compensation to the employees.

The Employees’ State Insurance Act, apart from medical benefits provided to employees,
also controls many more indirect aspects of efficiently managing the Corporation
established by the Act, be it its sales proceedings, account management or separation of
powers amongst its various officers.