Employees’ State Insurance… For lower income groups

ESIS is a self-financing social security and health insurance scheme for Indian workers

Geeta—a lower income employee—is working in an organisation for more than two years. Apart from taking care of herself, she also has to meet the financial requirements of her family. Being tied-up with her work schedule and household chores, Geeta never knew what benefits her employer/company was offering to the employees. She only knew that she is earning Rs. 12,000 per month of which a certain amount is deducted for ESIS (Employees’ State Insurance Scheme). She never bothered to know what ESIS is and what benefits it offers.

Unfortunately, Geeta meets with an accident and is temporary disabled for 60 days. During this period, Geeta is constantly worried about how she would manage her household expenses as well as medical treatment. At this point, Geeta sells her gold jewellery to meet her daily expenses and hospitalisation charges. After two months, Geeta joins her company back. At the work place, she discusses about her loss of income due to her temporary disablement and wishes she had an insurance cover.

Geeta already had an insurance cover called ESIS but she never enquired about it. Under ESIS, Geeta was eligible to get unemployment cash benefit in certain contingencies. But due to her ignorance she had to sell her gold jewellery and meet her household and hospitalisation expenses. Most of us behave like Geeta. We are hardly aware of the benefits our company/employer provides us under different schemes—one such scheme is ESIS. Let’s try to know more about ESIS to avoid ourselves from being in a situation which Geeta had to go through.


ESIS is a self-financing social security and health insurance scheme for Indian workers. Employees who earn less than Rs. 15,000 are covered under this scheme. The employees registered under ESIS are entitled to medical treatment for themselves and their dependants, unemployment cash benefit in certain contingencies and maternity benefit in case of women employees. In case of employment-related disablement or death, there is provision for a disablement benefit and a family pension, respectively. All states are covered under ESIS except Manipur, Sikkim, Arunachal Pradesh and Mizoram.


The employee’s contribution is 1.75% of the total gross salary and that of the employer’s is 4.75% of the total gross salary. Employees earning up to Rs.100 a day are exempted from payment of their share of contribution.

How is ESIS funded?

ESIS is a self-financing scheme. The ESI funds are primarily built out of contribution from employers and employees payable monthly at a fixed percentage of salary. The respective state government also contributes its share to meet the cost of medical benefit.

Will the delayed payment attracts any interest?

An employer, who fails to pay the contribution within the time limit prescribed under Regulation 31, shall be liable to pay simple interest at the rate of 12% per annum in respect of each day of default or delay in payment of 11 contributions.

Employees' State Insurance Corporation

This fund is managed by the Employees' State Insurance Corporation (ESIC), which oversees the provision of medical and cash benefits to the employees, through its large network of dispensaries and hospitals throughout India.

Headquartered in New Delhi, ESIC comprises employees, employers, the Central and State Government, representatives of Parliament and medical profession. The Corporation is headed by the Union Minister of Labour as its chairman. The corporate body is responsible for coordinating policy planning and decision making for growth and efficacy of the scheme. A Standing Committee, constituted from among the members of the Corporation, acts as an executive body. The Medical Benefit Council, constituted by the Central Government, advises the Corporation on matters related to effective delivery of medical services to the beneficiaries.

The Corporation operates through a network of 52 offices located in various states. The Corporation has taken over the administration of 23 ESI hospitals in various states.


ESI started in India in 1948, initially for factory workers. It now provides social security to employees from all industries, covering 12.5 million employees working with about 400,000 employers.

How to apply

The ESIC Declaration Form No.1 must be filled within 10 days of the joining date by the employee. Within 15 days of submission of declaration form, temporary ESIC card will be issued, which will be valid for only three months. The permanent ESIC card will be issued after the completion of three months of service.


Temporary ESIC Card: According to the ESIC rule, all accident related benefits can be availed by the temporary ESIC card. All other benefits like sickness benefit and maternity benefit cannot be availed by with the temporary card. The ESIS temporary card is provided by the HR department of the company.

Permanent ESIC Card: After getting the temporary ESIC card, an employee can apply for a permanent ESIC Card. To obtain this card, he has to visit any of the ESI Branch Offices, where he needs to submit is temporary ESIC Card and get his photo clicked.

Abhishek Bade, senior officer-HR department, India Infoline, suggested, “It is better to go with your family to the nearest ESI Branch Office so that they are also covered under ESIS. In case of an unmarried individual, family would include self and parents, while for a married person, family would consist of self, parents, spouse and children (if any). If an employee gets his photo clicked with his family, then his family is also covered under ESIS.”

Usually, an employee has to collect his permanent ESIC Card from the ESI Branch Office, where he had clicked his photo, in around two months.

The section 46 of the ESIC Act envisages following six social security benefits:

Sickness benefit

This benefit is available to the insured employee during sickness in the benefit period. The employee’s contribution should be not less than 78 days of the corresponding contribution period. Sickness benefit is not available for the first two days of sickness. The maximum period for which sickness benefit can be available is 91 days in one year.  

Maternity benefit

Maternity benefit for confinement/pregnancy is payable for around 85 days, which is extendable by further one month on medical advice at the rate of full wage subject to contribution for 70 days in the preceding year.

Disablement benefit (temporary or permanent)         

Temporary disablement benefit (TDB) is provided to an employee from day one of entering insurable employment & irrespective of having paid any contribution in case of employment injury. TDB at the rate of 90% of wage is payable so long as disability continues. If an employee is temporary disabled, he can seek the benefits of unemployment cash benefit, where he gets around 26 days of his salary each month. Mr Bade said, “To avail unemployment cash benefit, an employee should make regular payments to his ESI account for at least one year.”

For instance: Reena has been working in ABC company—which is covered under ESIC—for the past one year. Sadly, she meets with an accident and is temporary disabled. She is on bed rest for two months. During this period, Reena is eligible to avail unemployment cash benefit, which is 26 days of her salary from ESIC.

Mr Bade further explained, “The documents required to claim benefits include medical/doctor’s certificate indicating employee’s disability condition, a confirmation letter from the company/employer—mentioning the date from when the employee is on leave till the date he is expected to join the company again. The confirmation letter has to be stamped and signed from by the HR of the company. The amount due is normally credited to the employee’s ESI account (mentioned in the application form). He can withdraw this amount from the nearest ESI branch.”

Permanent disablement benefit (PDB) is paid at the rate of 90% of wage in the form of monthly payment depending upon the extent of loss of earning capacity as certified by a Medical Board.

Dependants benefit

Dependents benefit is paid at the rate of 90% of wage in the form of monthly payment to the dependants of a deceased insured person in cases where death occurs due to employment injury or occupational hazards.

Medical benefit

Full medical care is provided to an insured person and his family members from the day he enters insurable employment. There is no ceiling on expenditure on the treatment of an insured person or his family member. Medical care is also provided to retired and permanently disabled insured persons and their spouses on payment of a token annual premium of Rs. 120.

Funeral expenses

A lump sum payment of not more than Rs. 3,000 towards expenditure on the funeral, of a deceased insured person, is paid either to the nominee/dependant.

How to claim?

Every claim for a benefit payable—under the ESIC Act—is to be made in writing on the appropriate claim form. Assistance for filling in the claim form in case of insured persons, who cannot do so themselves, will be provided at the ESI Branch Office.

Mr Bade said, “If an insured employee has to claim benefits in case of sickness, maternity and permanent disablement, then he has to fill in the relevant claim form. These forms are available at each ESI Branch Office and are supplied free of cost. Claim forms can also be downloaded from the ESIC website.”

In case of dependent’s benefit and funeral expenses claim—where the insured employee has died—the amount is paid to his dependent mentioned in ESIC account. Here the dependent needs to show death certificate of the insured employee to claim benefits, added Mr Bade.

List of forms

Funeral expenses claim form

Claim for sickness/TDB/sickness due to pregnancy

Claim for permanent disablement benefit

Claim form for dependant’s benefit

Claim for maternity & notice of work

Life certificate for permanent disablement benefit

Declaration and certificate for dependents benefit

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