Composition of ESIC

The Union Minister of Labour heads the ESIC as its Chairman. The Central Government appoints a Director General as the Chief Executive Officer of ESIC. The ESIC comprises members representing crucial interest groups, including employers, employees, the Central and State Governments, representatives of the Parliament and the medical profession. 

A Standing Committee is constituted from among the members of the ESIC, which acts as an executive body. The Standing Committee has the power to administer the affairs of the ESIC and perform functions of the ESIC under its overall control and superintendence. 

The Secretary, Ministry of Labour, is the Chairman of the Standing Committee. The Director General of the ESIC is also an ex-officio member of the Standing Committee. The other members of the Standing Committee are nominated and elected among the members of the ESIC. The nominated members include the following:

• 3 members of the Central and State Governments 
• 3 members representing employers and employees 
• 1 member representing Parliament and the medical profession  

Applicability of the ESI Scheme

The ESI scheme is applicable to all factories and other establishments as defined in the ESI Act with 10 or more persons (20 or more in some states) employed in such establishments. However, only those employees are covered under the ESI scheme whose monthly wages do not exceed Rs.21,000 (Rs.25,000 in the case of a person with a disability). The applicability of the scheme is explained through a flow chart below:

The scheme under the ESI Act also applies to the following: 

• Shops 
• Restaurants 
• Hotels 
• Cinema theatres 
• Road motor transport undertakings 
• Newspaper establishments and undertakings 
• Educational institutions
• Medical institutions 
• Contract and casual employees of Municipal Corporations or Municipal Bodies. 

It also applies to the following establishments under the Central Government employing 20 or more persons engaged in: 

• Insurance business 
• Non-Banking Financial Companies (NBFCs) 
• Airport authorities 
• Port trusts 
• Warehousing establishments

Features of the ESI Scheme

• Complete medical care and attention are provided by the scheme to the employees registered under the ESI Act, 1948 at the time of his incapacity, restoration of his health and working capacity.
• During absenteeism from work due to illness, maternity or factories accidents which result in loss of wages complete financial assistance is provided to the employees to compensate for the wage loss.
• The scheme provides medical care to family members also. As of 31 March 2022, the total number of beneficiaries covered under this scheme is 12.04 crore.
• Broadly, the benefits under this scheme are categorized under two categories:
  • Cash benefits (which includes sickness, maternity, disablement – temporary and permanent, funeral expenses, rehabilitation allowance, vocational rehabilitation and medical bonus) and,
  • Non-cash benefits through medical care.
• The scheme is self-financing and being contributory in nature. The funds under the ESI scheme are primarily built out of the contribution from the employees and employers payable monthly at a fixed percentage of wages paid.
• Currently, the employee contribution rate is 0.75% of the wages and that of employers is 3.25% of the wages paid.
• The employer makes the contribution from his own share in favour of those employees whose daily average wage is Rs 137 as these employees are exempted from his own contribution.
• The employer is required to pay his contribution and deduct employees’ contribution from wages and deposit the same with ESIC within 15 days from the last day of the calendar month in which the contribution falls due. The payment can either be done online or through designated and authorized public sector banks.