ESI Scheme And Its Application

Employee_State_Insurance_Corporation_LogoESI Scheme for India is an integrated social security scheme tailored to provide Social Production to workers and their dependents, in the organized sector, in contingencies, such as Sickness, Maternity and Death or Disablement due to an employment injury or Occupational hazard.

APPLICABILITY

  • Sec 2(12) Non –seasonal Factories using power in and Employing ten (10) or More persons
  • Non –seasonal and non‐power using factories and establishments employing twenty(20) or more persons
  • Sec 1(5), the scheme has been extended to shops,hotels, restaurants,cinemas including preview theaters, road-motor transports undertakings and newspaper establishments employing 20 or more persons

WAGE LIMIT

The existing wage limit for coverage under the Act is Rs. 15,000/- per month ( w.e.f. 01/05/2010).

DETAILED ANALYSIS ON MEANING OF WAGES

Wages means all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and includes any payment to an employee in respect of any period of authorized leave, lock out, strike which is not illegal or layoff and other additional remuneration, if any, paid at intervals not exceeding two months, but does not include

  • Any contribution paid by the employer to any pension fund or Provident fund, or under this act.
  • Any traveling allowance or the value of any traveling concession.
  • Any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment.
  • Any gratuity payable on discharge.

The above definition has three parts

1. All remuneration paid or payable in cash to an employee following from the term of employment (including agreement) express or implied. The periodicity of payment is not relevant in this case.

2. Any additional remuneration even if not flowing from any agreement or settlement but paid at intervals not exceeding two months.

3. The exceptions as provided in Clause (a) to (d) above. Any remuneration paid or payable under para 1 and 2 is wages and chargeable to contribution whereas any amount paid towards items mentioned in clause (a) to (d) are not wages and therefore no contribution is chargeable on the amount

TO BE DEEMED AS WAGES

  • Basic pay
  • Dearness Allowance
  • House rent allowance
  • City compensatory allowance
  • Overtime wages (but not to be taken into account for determining the coverage of an employee)
  • Production incentive
  • Bonus other than statutory bonus
  • Night shift allowance
  • Children education allowance
  • Heat, Gas & Dust allowance

NOT TO BE DEEMED AS WAGES

  • Contribution paid by the employer to any contribution any
  • Sum paid to defray special expenses
  • Gratuity payable on discharge
  • Pay in lieu of notice retrenchment
  • Benefits paid under the ESI Scheme
  • Encasement of leave Encasement
  • Payment of Inam which does mean part of employment
  • Washing allowance for livery
  • Conveyance amount towards reimbursement for duty related journey

CONTRIBUTION

The Scheme is primarily funded by contribution raised from Insured Employees and their employers Payable such as

1. Employees’ Contribution –1.75% of the Wages

2. Employers’ Contribution –4.75% of the Wages

TOTAL ‐6.5 % of the Wages

Note: Employees in receipt of an average daily wage of Rs.100/‐or Less, are exempted from Payment their share of contribution. Employers will however contribute their own share in respect of these employees.

COLLECTION OF CONTRIBUTION

An 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 21 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.

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