CHANAKYA NATIONAL LAW UNIVERSITY,

NAYAYA NAGAR, MITHAPUR, PATNA-800001

A FINAL DRAFT SUBMITTED IN PARTIAL FULFILLMENT OF THE COURSE

LABOUR LAW II, 5thSemester during the Year - 2020-21

SUBMITTED BY:
AMIT DIPANAKAR
Roll No. – 20181609
B.B.A LL.B

SUBMITTED TO:

Ms. Pallavi Shankar

Faculty of Labour Law II

JANUARY, 2019
CHANAKYA NATIONAL LAW UNIVERSITY,
NAYAYA NAGAR, MITHAPUR,
PATNA-800001
BENEFITS UNDER THE EMPLOYEES STATE INSURANCE ACT,1948
A CRITICAL STUDY

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 ACKNOWLEDGEMENT
Making a project is one of the most significant academic challenges I have ever faced. Any
attempt at any level can't be satisfactorily completed without the support and guidance of
learned people. I am overwhelmed with my gratitude to acknowledge all those who have
helped me put these ideas, well above the level of simplicity and into something concrete
effectively and moreover on time.

I am very thankful to my subject teacher Ms. Pallavi Shankar for his valuable help. He was
always there to show me the right track whenever I needed his help. He lent his valuable
suggestions, guidance and encouragement, on different matters pertaining to the topic. He has
been very kind and patient while suggesting me the outlines of this project and clearing my
doubts. I thank him for his overall support without which I would not have been able to
complete this project. I would also like to thank my colleagues, who often helped and gave
me support at critical junctures, during the making of this project. Last but not the least, I
would like to thank my family members for their emotional support.

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 FINDINGS OF THE STUDY

1. All the workers are aware of sickness benefits; dependant’s benefits and leave benefits of

ESI scheme.

2. Majority of workers are aware of the payment funeral expense provided by ESI

Corporation.

3. Interpersonal communication is the main source of information about ESI scheme

of workers. Some of the workers are getting information from ESI the employer as

well as the ESI office.

4. Media is the least sought source of information for getting the ESI.

5. Majority of workers are utilizing the sickness benefits, maternity benefits and

dependant’s benefits provided by the ESI dispensary.

6. All the workers are utilizing the leave benefits provided by ESI Corporation. l

Majority of workers are utilizing the ESI dispensary.

7. Large majority of workers are utilizing the ESI dispensary for treatment of minor

diseases and majority of them are for occupational hazard.

8. Very few are visiting to the ESI dispensary for treatment of major diseases and all

the diseases.

9. A large majority of workers feels that bottlenecks in procedure and lack of medical

facility as the main barrier in getting services from ESI dispensary.

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 Contents

1) INTRODUCTION
2) SOCIAL SECURITY
3) SOCIAL SECURITY LAWS IN INDIA
4) EMPLOYEES STATE INSURANCE AND ESI LOGO
5) SCHEMES UNDER ESI
6) CASE
7) CONCLUSION
BIBLIOGRAPHY

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 INTRODUCTION

An equitable health system must ensure that utilization conforms to need (impartiality in
delivery) and that payment conforms to the ability to pay (impartiality in financing). A failure
to separate utilization from payments will have a negative financial impact on the poor who
suffer from ill health. The poor lack financial resources to pay for health services. Ill health,
through the loss of productive labour, can also undermine their ability to cope financially;
thereby strengthening further the nexus between poverty and poor health. Hence, the purpose
of health financing is to use the appropriate funding instruments to set the right financial
incentives for providers, and to ensure that all individuals have access to effective public
health and affordable personal healthcare. In recent years, India, like several other low-
income countries, has established different types of national health insurance scheme. The
ESIS is one such scheme. One of its main objectives is to reduce the monetary cost of
accessing health services; thereby enabling individuals with substantial unmet needs to access
otherwise unaffordable care. Health insurance also protects households against the financial
burden of illness, especially large OOP expenses resulting from catastrophic illnesses, while
at the same time raising additional resources for the public sector. This helps reduce or
eliminate the possibility that an individual will be unable to pay for such care, or will be
impoverished trying to do so. Catastrophic health payments have been found to be significant
in both rich and poor countries.
For example, results from a recent study of healthcare payments in India indicate that around
70% of total health expenditure is made of OOP payments and around 30% of households
spend more than 10% of their income on health. In Indonesia also, the rich are found to be at
risk of experiencing catastrophic health payments defined as exceeding 10% of income and in
the United States certain vulnerable groups are more affected by such payments than other

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groups. A recent global review of household catastrophic health payments emphasized the
role of health insurance as a key instrument in reducing the risk of such payments. Given that
one of the key purposes of health insurance is to provide protection against particularly high
healthcare costs, this study aims to test this proposition empirically in a low-income country
setting. The health insurance is an important policy tool for providing financial health
protection is well grounded in both theory and experience. The highly heterogeneous array of
health financing arrangements justifies the systematic analysis of individual cases to provide
evidence on the practical effects of health insurance programmes. Furthermore, access to the
potential benefits of health insurance may be curtailed if indirect financial and non-financial
barriers (such as travel and lodging expenses, lost income, and a lack of knowledge of what
provider’s offer) impede the insured from seeking care. Even when care is actually sought,
the insured may still face a wide range of hurdles before actually receiving health insurance
benefits.
Some of these hurdles include the tedious paperwork, the limited portability of the insurance
schemes, or the unwelcoming attitude of health staff towards insured patients. Although
much has been written on the barriers to access that prevent individuals from seeking
appropriate care, comparatively little is known about the factors influencing the insured
person's decision to access their insurance benefits when care is actually sought.
This study was undertaken with the following objectives:
1. To analyze overall trends in utilization and number of beneficiaries of ESIS over a period
of time in Maharashtra;
2. To assess the effectiveness of the scheme as perceived by beneficiaries, and from
utilization level of ESI facilities, in Maharashtra; and
3. Analyze the development of ESI policy in the state and factors influencing its
implementation.

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 SOCIAL SECURITY

India has a very basic social security system catering to a fairly small percentage of the
country’s workforce. Traditionally, Indians relied on their extended families for support in
the event of illness or other misfortunes. However, due to migration, urbanization, and higher
social mobility, family bonds are less tight and family units much smaller than they used to
be. So far, neither the state nor private insurance companies have quite stepped up to fill this
gap.
There are two major social security plans in India, the Employees’ Provident Fund
Organization (EPFO) and the Employees’ State Insurance Corporation (ESIC). The EPFO
runs a provident fund, also known as a pension scheme, and an insurance scheme. All of
these are supposed to grant EPFO members and their families’ benefits for old age, disability,
and support in case the primary breadwinner dies.
The ESIC, on the other hand, covers low-earning employees providing them with basic
healthcare and social security schemes. Originally aimed at factory workers, the coverage is
being gradually extended to include greater parts of the population, e.g. employees in
hospitals or educational institutions.

What is Social Security?

 Any of the measures established by legislation to maintain individual or family

income or to provide income when some or all sources of income are disrupted or
terminated or when exceptionally heavy expenditures have to be incurred (e.g., in
bringing up children or paying for health care).

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  Social security may provide cash benefits to persons faced with sickness and
disability, unemployment, crop failure, loss of the marital partner, maternity,
responsibility for the care of young children, or retirement from work.

Difference between Organized and Unorganized Sectors

Organized sector
 includes primarily those establishments which are covered by the Factories Act, 1948,
the Shops and Commercial Establishments Acts of State Governments, the Industrial
Employment Standing Orders Act, 1946 etc.
 This sector already has social security benefits under above laws.
 Examples: employees of union and state Government, army, navy, airforce,
Multinational companies, Infosys, TCS and so on.

Unorganized sector
 Unorganized sector doesn’t have labour law coverage. These are seasonal and
temporary nature of occupations.
 Casual nature of work, labour mobility is high hence bargaining power is low.

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 SOCIAL SECURITY LAWS IN INDIA

Employees’ State Insurance Act, 1948 (ESI Act)

 covers factories and establishments with 10 or more employees

 Provides medical care to employees and their families.
 Provides Cash benefits during sickness and maternity
 Monthly pension after death or permanent disability.

Employees’ Provident Funds Act, 1952

 applies to specific scheduled factories and establishments employing 20 or more

employees and ensures terminal benefits to provident fund, superannuation pension,
and family pension in case of death during service.

Workmen’s Compensation Act, 1923 (WC Act)

 Requires payment of compensation to the workman or his family in cases of
employment related injuries resulting in death or disability.

Maternity Benefit Act, 1961 (M.B. Act)

 Provides for 12 weeks’ wages during maternity as well as paid leave in certain other
related contingencies.

Payment of Gratuity Act, 1972 (P.G. Act)

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  Provides 15 days’ wages for each year of service to employees who have worked for
five years or more in establishments having a minimum of 10 worker

EMPLOYEES' STATE INSURANCE (ESI)

Employees' State Insurance (abbreviated as ESI) is a self-financing social security and health
insurance scheme for Indian workers. It is a comprehensive Social Security Scheme designed
to accomplish the task of socially protecting the 'employees' in the organized sector against
the events of sickness, maternity, disablement and death due to employment injury and to
provide medical care to the insured employees and their families. The ESI Scheme is
administered by a corporate body called the 'Employees' State Insurance Corporation' (ESIC),
according to rules and regulations stipulated there in the ESI Act 1948.
ESIC is an autonomous corporation by a statutory creation under Ministry of Labour and
Employment, Government of India. Employees’ State Insurance Scheme of India is an
integrated social security scheme tailored to provide social protection to workers in the
organized sector and their dependants in contingencies, such as, sickness, maternity or death
and disablement due to an employment injury or occupational disease. The scheme tailored to
suit health insurance requirements of workers provides full medical facilities to insured
persons and their dependants, as well as, cash benefits to compensate for loss of wages or
earning capacity in different contingencies.
In March 1923, B. P. Adarkar was appointed by Government of India to create a report on
health insurance scheme for industrial workers. The report became the basis for the
Employment State Insurance (ESI) Act of 1948. The ESI Act was enacted in 1948 and came
into effect from 24 February 1952. The act was initially intended for factory workers but later
became applicable to all establishments having 10 or more workers. As of 2011-12, the total
beneficiaries are 65.5 million. The scheme was inaugurated in Kanpur on 24th February 1952
(ESIC Day) by then Prime Minister Pandit Jawahar Lal Nehru. The venue was the Brijender
Swarup Park, Kanpur and Panditji addressed a 70,000 strong gathering in Hindi in the
presence of Pt.Gobind Ballabh Pant, Chief Minister Uttar Pradesh; Babu Jagjivan Ram,

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Union Labour Minister; Raj Kumari Amrit Kaur, Union Health Minister; Sh.Chandrabhan
Gupt, Union Food Minister and Dr.C.L.Katial, the first Director General of ESIC.
The scheme was simultaneously launched at Delhi as well and the initial coverage for both
the centre’s was 1,20,000 employees. Our first prime Minister was the first honorary insured
person of the Scheme and the declaration form bearing his signature is a prized possession of
the Corporation. It is important to mention here that it blossomed as the first social security
scheme in 1944, when the Government was still British. The first document on social
insurance was "Report on Health Insurance" submitted to the Tripartite Labour Conference,
headed by Prof. B.P.Adarkar, an eminent scholar and visionary. The Report was acclaimed as
a worthy document and forerunner of the social security scheme in India and Prof. Adarkar
was acknowledged as "Chhota Beveridge" by none other than Sardar Vallabhbhai Patel. Sir,
William Beveridge, as all know, was one of the high priests of social insurance.
The report was accepted and Prof. Adarkar continued to be actively associated with it till
1946. On his disassociation, he strongly advocated management of the Scheme by an expert
from ILO. In 1948 Dr. C.L.Katial, an eminent Indian doctor from London took over as the 1st
Director General of ESIC and he steered the affairs of the fledgling Scheme till 1953. Since
the red-letter day of 24th February in the annals of social security in India, there has been no
looking back.

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 EMPLOYEES' STATE INSURANCE
CORPORATION (ESIC)
Employees' State Insurance Corporation (ESIC), established by ESI Act, is an autonomous
corporation under Ministry of Labour and Employment, Government of India. As it is a legal
entity, the corporation can raise loans and take measures for discharging such loans with prior
sanction of the central government and it can acquire both movable and immovable property
and all incomes from the property shall vest with the corporations. The corporation can set up
hospitals either independently or in collaboration with state government or other private
entities, but most of the dispensaries and hospitals are run by concerned state governments.

ESIC LOGO
A lighted lamp which is the logo of ESIC truly symbolizes the spirit of the Scheme, lighting
up lives of innumerable families of workers by replacing despair with hope and providing
help in times of distress, both in physical and financial terms.
During the 61 years of its existence, ESIC has grown from strength to strength and the
Corporation owes it, most of all, to the commitment, dedication and perseverance of persons
like Prof. Adarkar and Dr. Katial.

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EMPLOYEES' STATE INSURANCE ACT, 1948
The promulgation of Employees' State Insurance Act, 1948 envisaged an integrated need
based social insurance scheme that would protect the interest of workers in Mcontingencies
such as sickness, maternity, temporary or permanent physical disablement, death due to
employment injury resulting in loss of wages or earning capacity. the Act also guarantees
reasonably good medical care to workers and their immediate dependants.
Following the promulgation of the ESI Act the Central Govt. set up the ESI Corporation to
administer the Scheme. The Scheme, thereafter was first implemented at Kanpur and Delhi
on 24th February 1952. The Act further absolved the employers of their obligations under the
Maternity Benefit Act, 1961 and Workmen's Compensation Act 1923. The benefit provided
to the employees under the Act are also in conformity with ILO conventions.

APPLICABILITY OF THE ESI ACT

The ESI Act, (1948) applies to the following categories of factories and establishments
in the implemented areas: -
 Non-seasonal factories using power and employing ten (10) or more persons
 Non-seasonal and non-power using factories and establishments employing twenty
(20) or more persons.
The “appropriate Government” State or Central is empowered to extend the provisions of the
ESI Act to various classes of establishments, industrial, commercial, agricultural or otherwise

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in nature. Under Section 1(5) of the Act the Scheme has been extended to certain specific
classes of establishments, such as, shops, hotels, restaurants, cinemas, preview theatres,
motors transport undertakings and newspaper and advertising establishments etc., employing
20 or more persons.

ORGANISATION

As provided under the ESI Act, the scheme is administered by a duly constituted corporate
body called the Employees’ State Insurance Corporation (ESIC). It comprises members
representing Central and State Governments. Employers, Employees, Parliament and the
medical profession. Union Minister of Labour functions as Chairman of the Corporation
whereas Director General as chief executive discharges the duty of running the day-to-day
administration.
A Standing Committee representing all stake holders is elected from the body corporate for
managing the affairs of the scheme and monitoring the progress of implementation of various
decisions and policies etc. from time to time. The Medical Benefit Council, a statutory body
advises the Corporation on matters related to administration of medical benefit under the ESI
scheme.
INFRASTRUCTURE
The central headquarters of the Corporation is located at New Delhi. For purpose of
coverage, revenue collection, extension of the scheme to new classes of establishments,
implementation of the scheme in new areas, co-ordination with the State Governments and
general administration the Corporation has established Regional and sub-Regional Offices
across the country mostly located in State capitals. Given the huge number of beneficiaries –
about 340 lakhs now – the Corporation has set up a wide spread network of service outlets for
prompt delivery of benefits in cash and kind that includes full medical care.
Medical facilities are provided through a network of 1452 ESI Dispensaries, about 3000
Panel Clinics, 307 diagnostic centres besides 140 ESI hospitals and 43 hospital annexes with
over 26000 beds. For providing super specialist medical care the Corporation has tie up
arrangements with advanced medical institutions in the country, both in public and private
sector.

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The medical benefit is administered with the active co-operation of State Governments. The
payment of cash benefits is made at the grass roots level through as many as 800 Branch
Offices and Cash Offices that function under the direct control of the Corporation.

NEW AMENDMENT

The Employees’ State Insurance Corporation (ESIC) raised the monthly wage limit to Rs
21,000, from the existing Rs 15,000, for coverage with effect from October, 2016 Labour
Minister Bandaru Dattatreya added that the move of raising the threshold will help bring in
an additional 50 lakh members to ESIC. Labour Minister is the Chairman of the ESIC Board.
At present, ESIC has 2.6 crore insured persons, which covers over 10 crore people, assuming
four members of a family. The minister also said there is a plan to increase the wage
threshold for retirement fund body EPFO subscribers and it may be considered in the next
meeting of the Central Board of Trustees (CBT). At present, the wage threshold is Rs 15,000
per month for coverage under its social security scheme.
COVERAGE – AREAS, ORGANIZATIONS AND EMPLOYEES

COVERAGE

The ESIC Scheme is being implemented in various phases area-wise across India. The
Scheme has already been implemented in different areas in various States/Union Territories
across India except in states like Arunachal Pradesh, Manipur, Mizoram, Nagaland, Tripura
and Sikkim.

UNION TERRITORIES
Delhi and Chandigarh
Coverage(As on 31st March, 2015)
No. of Insured Person family units 2.03 Crores
No. of Employees 1.79 Crores
Total No. of Beneficiaries 7.89 Crores
No. of Insured women 3.36 Lacs
No. of Employers, etc. 7.23 Lacs

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COVERAGE OF FACTORIES
The Act is applicable to all non-seasonal factories that utilize power providing employment
to 10 or more individuals as well as factories not utilizing power employing 20 or more
individuals for wages on any day in areas wherein ESIC Act has been implemented.
There is an amendment to the Act under Section 1(5) to extend the benefits to other classes of
establishment – agricultural, commercial, industrial or otherwise. The provisions of this Act
have been extended by majority of the State Governments in India to the following class of
establishments such as shops, hotels, restaurants, cinemas road-motor transport agencies,
newspaper agencies, workshops, establishments employing 20 or more individuals. In case, at
any stage or in due course of time, if the number of employees working with an establishment
or factory covered under the ambit of this Act falls short of the stipulated number of 10 or 20
employees as specified, ceases to be a beneficiary of ESIC Act without any aid of power.
However, this Act is not applicable to workers engaged in mining operations, railway running
sheds and certain seasonal/temporary factories operating for less than 7 months in a calendar
year. The employees of establishments or factories run with the aid of Central or State
Governments who are in receipt of social security benefits that are substantially similar or
superior as compared to those provided under this Act can be exempted from coverage.

COVERAGE OF EMPLOYEES
The Central Government of India has issued guidelines pertaining to monthly wage limit that
has been prescribed for the purpose of coverage of employees/workers of the factories or
establishments covered under this Act. Under Section 2(9) of this Act, an employee has been
defined as any individual employed for wages in connection with the work related to a
factory or establishment which is a beneficiary under ESIC Act. The wage ceiling is revised
from time to time. The existing wage ceiling effective from 1.10.2006 is Rs. 10,000/- per
month.

ADMINISTRATION
The comprehensive and multi-pronged social security programme is administered by an apex
corporate body called the Employees' State Insurance Corporation. It comprises members
representing vital interest groups, including, employees, employers, the Central and State
Government, representatives of Parliament and medical profession. The Corporation is

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headed by the Union Minister of Labour, as its Chairman, whereas the Director General,
appointed by the Central Government functions as its Chief Executive Officer. The broad
based corporate body is, primarily, responsible for coordinated policy planning and decision
making for growth, development 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, is yet
another Statutory Body that advises the Corporation on matters related to effective delivery
of medical services to the Beneficiary Population. The Corporation, with its Central
Headquarters at New Delhi, operates through a network of 52 Regional, Sub- Regional and
Divisional Offices located in various States. The administration of Medical Benefit is taken
care of by the respective State Government except in case of Delhi and Noida/Greater Noida
area in Uttar Pradesh where the Corporation administers medical facilities directly. The
Corporation has taken over the administration of 23 ESI Hospitals in various States for
developing them as ESIC Model Hospitals.

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. As of now, covered employees contribute 1.75%
of the wages, whereas, the employers contribute 4.75% of the wages, payable to their
employees. Employees earning uptoRs.100/- a day are exempted from payment of their share
of contribution. 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.

CONTRIBUTION
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

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from time to time. Currently, the employee's contribution rate (w.e.f. 1.1.97) 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. Employees in receipt of a daily average wage upto Rs.100/- are
exempted from payment 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 employee’s 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. Contribution Period and Benefit Period There are
two contribution periods each of six months’ duration and two corresponding benefit periods
also of six months’ duration as under.

BENEFITS FOR EMPLOYEES

Benefits
Under Section 46 of ESIC Act, totally six social security benefits have been conferred on
employees working with various organizations across India. These six social security benefits
for the welfare of the employees are enlisted as follows:
(a) Medical Benefit
(b) Sickness Benefit (SB)
(c) Maternity Benefit (MB)
(d) Disablement Benefit
(e) Dependants' Benefit (DB)
(f) Retirement Benefit
And some Other Benefits
(a) Medical Benefit:
In ESIC, comprehensive medical care ranging from OPD, medical attendance, treatment,
drugs, specialist consultation, hospitalization of insured persons (IPs) and their family
members to super-speciality treatment, are provided under the Scheme. Medical Benefit is

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available to the Insured Person (IP) and his family member from the day one he enters the
insurable employment. What makes this Scheme unique is that, medical care is provided to
ESI Beneficiaries as per need. There is no ceiling on expenditure on individual medical care.
Besides this, Medical Care as available in ESI Dispensaries/Hospitals is also provided to
retired and permanently disabled insured persons and their spouses on payment of a token
annual premium of `120/-. 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/- Section 56 (1) of ESI Act, 1948 provides, “an Insured Person or
(where such medical benefit is extended to his family) a member of his family whose
condition requires medical treatment and attendance shall be entitled to receive medical
benefit”.

Eligibility for Medical Benefit:

An insured person (IP) and his/her family member become eligible for primary & secondary
medical benefit under the ESI Scheme from day one of entering insurable employment.
Section 56 (3) of ESI Act, 1948 provides, “A person shall be entitled to medical benefit
during any period for which contributions are payable in respect of him or in which he is
qualified to claim sickness benefit or maternity benefit (or is in receipt of such disablement
benefit as does not disentitle him to medical benefit under the regulations)”.
Duration and Scale of Medical Benefit:
The insured person/family member of an insured person can avail the medical treatment
under this Scheme till the insured person is in insurable employment. Full medical care (all
facilities including hospitalization) for insured person and their family members is provided.
Delivery of Medical Benefit:
As per the provisions of ESI Act, 1948, the State Governments are responsible for providing
the medical benefits through the network of ESI Dispensaries (for primary medical services)
and ESI Hospitals (for secondary medical services). However, the ESI Corporation provides
medical care directly, in Delhi and Noida area. Besides these two areas, the Corporation is
also running 34 ESIC Hospitals directly which includes ESIC Model Hospitals, at least one in
each State. The beneficiaries are provided OPD services, in-patient services, diagnostic

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facilities, free drugs and dressings etc. in all ESI medical delivery institutions. ESIC has
developed its own pharmacopeia for drugs. All drugs and dressing (including vaccine &
sera), which is considered necessary and generally in accordance with pharmacopeia, are
supplied to all patients free of charge.
In the case of critical patients, incidental expenditure on transport, stoppage charges at the
centre, traveling expenses for attendants (if required) are also being paid by ESIC. Medical
Infrastructure of ESI Scheme: The ESI Scheme has the largest medical infrastructure under
one umbrella, in India. Medical Care is provided through its huge network of 150 ESI
Hospitals, 1372/91 ESI Dispensaries/ISM Units, 1380 Panel Clinics and 7340 IMOs. The ESI
Scheme is also the largest employer of Medical and Para-Medical personnel of the country. It
includes:
1. System of Treatment
2. Scale of Medical Benefit
3. Benefits to Retired IPs
4. Administration of Medical Benefit in a State
5. Domiciliary treatment
6. Specialist consultation
7. In-Patient treatment
8. Imaging Services
9. Artificial Limbs & Aids
10. Special Provisions
11. Reimbursement

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 THE EMPLOYEES’ STATE INSURANCE
SCHEME AS A MECHANISM TO POOL
RISK
The ESIS was introduced in India in 1955 with the intention of providing financial protection
to those in the lowest income groups in the industrial/manufacturing sector.
Although it has grown in both size and scope, many have been critical of the scheme.
One criticism is that most beneficiaries, or members, of the scheme do not utilize the services
for a variety of reasons, the primary one being a perception of the poor quality
of care. Description of the Employees’ State Insurance Scheme The promulgation of the
ESI Act by the Parliament in 1948 was the first major legislation on social security for
workers in India.
The Act envisages protection to workers in the organized sector in the case of sickness,
maternity and death or disability due to injury at work. Based on the principle of pooling
of risks and resources, this health insurance scheme provides medical facilities to
beneficiaries and cash compensation for loss of wages or earning capacity while in

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service.
The ESI Act applies to non-seasonal factories or manufacturing units employing ten or
more people in a power using factory and twenty or more people in a non-power using
factory. Employees drawing wages of up to Rs. 10,000 per month (as on Jan 2009) are
currently entitled to a health insurance scheme. However, the wage ceiling for the
purpose of coverage is revised from time to time. To increase the coverage the ESI Act
has also been extended gradually to other establishments such as shops, hotels and
restaurants, road and motor transport undertakings, newspaper establishments and
cinema halls. The ESI Act however, is not applicable to factories or establishments run by the
State
Governments/Central Government whose employees receive other social security
benefits. Under the ESI scheme, employees contribute 1.75% of their wages and the
employers contribute 4.75% of the wages of eligible beneficiaries/employees towards
premium payments. Employees earning less than Rs. 50 per day are exempted from
contribution towards premium payments. The contributions made by the employees and
the employers are deposited in a common pool known as the ESI Fund, which is used
for meeting administrative expenses as well as cash and medical benefits to Insured
Persons (IP) and their dependents. The state governments, as per the ESI Act,
contribute 12.5% of the total expenditure (within the per capita ceiling of Rs.1000 per
annum) incurred by the ESIC on medical care in respective states.

ESI Scheme in India

The Employees’ State Insurance Corporation is a pioneer Social Security organization
providing comprehensive social security benefits like reasonable Medical Care and a
range of Cash Benefits in times of need such as employment injury, sickness, death etc.
The ESI Act applies to premises/precincts where 10 or more persons are employed.
The employees drawing wages up to Rs. 15,000/- a month are entitled to health
insurance cover and other benefits, under the ESI Act.
The Act now applies to over 7.23 lakh factories and establishments across the country,
benefiting about 2.03 crores family units of workers. As of now, the total beneficiary
population of ESI Scheme stands over 7.89 crores. Ever since its inception in 1952, the

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ESI Corporation has, so far, set up 151 Hospitals, 1459/188 Dispensaries / ISM Units,
812 Branch/Pay Offices and 61 Regional & Sub-Regional/Divisional Offices.
ESIC’s latest initiatives – ESIC 2.0 A.
A. Extending coverage of ESI Scheme for extending its social security net to the
whole country
1. Extending the social security benefits of ESI Scheme in the remaining North-East
States Arunachal Pradesh, Mizoram, Manipur and Andaman & Nicobar Island. It has
been implemented in Mizoram w.e.f. 1.12.2015 and in Port Blair w.e.f. 01.01.2016.
2. At present, ESI Scheme is being implemented in industrial/commercial clusters within
districts. Now, the target is to cover whole of the 393 districts of the States by
31.03.2016, where these clusters are located.
3. Opening Health Scheme for selected group of unorganized workers like rickshaw
pullers/auto rickshaw drivers in selected urban/metropolitan areas, on pilot basis.
4. ESI Coverage has been extended to Construction workers in the implemented area.
Construction site Workers has been covered to avail benefits under the ESI Scheme
w.e.f. 1st August, 2015.
B. New Initiatives under Health Reforms Agenda of ESIC 2.0, for improving the
medical care

Aimed at providing better health services, Hon’ble Prime Minister of India had launched
a series of Health Reforms Agenda of ESIC on 20.07.2015 which includes-

• Online availability of Electronic Health Record of ESI Beneficiaries (Insured Persons

and their family members).
• Abhiyan Indradhanush : Ensuring the change of bedsheet according to VIBGYOR
pattern during the week i.e. to be changed everyday
• Medical Helpline No. 1800 11 3839 for emergency and seeking guidance from
casualty/emergency of ESIC Hospitals.
• Special OPD for Sr. Citizens and differently-abled persons in ESIC hospitals.
Other initiatives for Improving Patients/Attendant Care
(i) ESIC has now resolved to adopt two Model Hospitals, in each State.

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(ii) Providing appropriate cancer detection/treatment facilities, cardiology treatment
facilities, dialysis facilities on PPP Model at different levels of hospitals.
(iii) For facilitating the practice of telemedicine, the RFP for pilot run has already been
floated and the project is expected to go live in the next three months.
(iv) Special focus has been paid for upgradation of Dispensaries, 24 Dispensaries in
ESIC buildings have been identified for up- gradation to 30 bedded set up to provide
24x7 services.
(v) Pathological & X-ray facilities will be provided on PPP model in all the dispensaries
in phases. Pathological services in all dispensaries of Delhi has been started from 30th
November, 2015. Laboratory and ECG Services has been started in ESI Dispensary of
Delhi/Noida area.
(vi) Tracking of every pregnant mother & new born: With a view to ensure 100%
immunization as well as safe delivery, every mother and new born child of Insured
Person, a pilot project for tracking every pregnant mother and new born is to be started
in Delhi, for which coordination will be done with the State Programme Officer under
Ministry of Health and Family Welfare.
(vii) Mother and Child Care Hospital in every State: ESIC has constituted a committee to
prepare the norms for setting up a Mother and Child Care Hospital in every State.
(viii) AYUSH: Besides Allopathic treatment, ESIC hospitals also provide treatment under
AYUSH (Ayurveda, Yoga, Unani, Siddha and Homeopathy). Facilities of AYUSH are
to be extended to all dispensaries in phases by December, 2015 and Yoga in all ESIC
Hospitals by 30th November, 2015.
C. Digital India – e-initiatives of ESIC
o e-Biz Platform: ESIC is the first organization of Central Government, to
integrate its services (Registration of Employers via e-Biz portal of
Department of Industrial Policy and Promotion of DIPP) to promote ease of
business and curb transaction costs. • Under its flagship digital project
‘Panchdeep’ ESIC has facilitated Online payment of ESI Contribution by the
Employer, via the payment gateway of State Bank of India and 58 other banks
with launch on 01st April, 2015.

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 o ESIC has launched independent Public Grievance Module 2.0 from
15.08.2015 for lodging ESIC related Grievance online through ESIC website
‘www.esic.in’ or‘www.esic.nic.in’.
o Launch of dedicated website www.esichospitals.gov.in for ESIC Hospitals and
Dispensaries in December, 2015.
 Case laws --

1) Vishwanath Chandrikaprasad ... vs M. Karunanithi And Ors.

Provisions of the Employees' State Insurance Act, 1948, were made applicable to the
establishments of the petitioner. He challenged those orders by filing a Dispute under Section
75 of the Employees' State Insurance Act, 1948. Admittedly, those cases were dismissed in
default. According to the petitioner, until those cases were restored, there was no stay order in
operation, and taking advantage of the fact that no stay was in operation, the Recovery
Officer of the Employees' State Insurance Corporation respondent No. 1 initiated recovery
proceedings, coercing the petitioner to pay excessive and unreasonable demands. According
to the petitioner, the respondent No. 2 issued two orders both dated 4th October, 2004 one
pertained to Hotel Shivraj and another to Shivraj Bhojnalaya under Section 45-H of the
Employees' State Insurance Act, 1948. Copies of these orders are at pages 20 and 24 of the
Contempt Petition paper-book respectively. The sum as dues requisitioned through notices is
Rs. 74,188/- and Rs. 88,580/- respectively. By these orders, respondent No. 1 directed the
respondent No. 3 herein to pay to the Recovery Officer the sums demanded therein, with a
direction that if the amount was so paid to the Recovery Officer, it will amount to due
discharge of payment thereof to the party concerned. It was also directed that any amount
held in the name of the Firm or its proprietor was subject to said attachment/ order of
Garnishee.

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 CONCLUSION
ESIC has played a significant role in providing social security millions of workers in the
organized sector. It is only social security organization in the country which provides
insurance coverage for exigencies related to health, maternity, disablement, death and
employment. The corporation thus extends complete social security cover to the
workers and their family members. However, the working of ESI is not up to the
expected level of the insured person from three sectors.
Not only is the utilization pattern of the ESI facilities relatively very low but the cost of
treatment in the private sector is quite high. On an average the in-patients in the private
facilities spent around Rs.6327 (including indirect expenses) and Rs.1104 for out-
patient care. This clearly shows that the scheme is failing to provide the financial
protection that it should. Based on the responses from policy makers on how to improve
the overall effectiveness of the scheme, we offer below some suggestions for

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improvements.
The government could improve access by constructing more ESI facilities or adding
more private facilities to the panel of recognized hospitals where the insured patients
can get treatment. The latter is particularly important as the current perception of quality
of care among beneficiaries is poor. Private providers are spread throughout rural and
urban areas and are available wherever there is a demand for services. They are also
more easily accessible to people than public facilities and have flexible opening hours
and short waiting times. Other documented reasons for their popularity are their greater
sensitivity to user needs and the assurance of confidentiality. Between 75% and 80% of
households in India prefer to use the private sector for treatment of major and minor
illnesses respectively (National Council of Applied Economic Research, 1995).
The basic infrastructure of the existing facilities could be improved to provide higher
quality of service to the beneficiaries; this includes making basic diagnostic equipment
available, providing nursing personnel, laboratory services and making conditions more
sanitary. A multiple card system could be introduced so that the beneficiaries can use a
convenient facility whenever required; this will particularly help those employees whose
family members or dependents do not live with them. It would mean that employees and
their families could hold a card each so that even if they lived apart each could use the
most convenient health facility. Finally, our discussion with policy makers suggest that
there has been little continuity in the highest policy making system, thereby
considerably.

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 BIBLIOGRAPHY
 www.esic.nic.in

 www.esicmaharashtra.gov.in

 www.esicmaharashtra.gov.in

BOOKS :-
 LABOUR LAWS BY MISHRA , S.N
 LABOUR LAWS AND INDUSTRIAL LAWS BY GOSWAMI , V .G (Dr)
 LABOUR LAWS BY CHATURVEDI , S.M

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