The Employees' State Insurance (ESI) is a government-run scheme designed to provide health insurance and social security benefits to workers in India. It is managed by an autonomous body under the Ministry of Labour and Employment. The program is funded by contributions from both employers and employees, and it offers various benefits such as medical care, cash benefits during sickness, maternity, or disability, as well as support for dependents in case of the worker's death.

The ESI registration scheme helps employees in several key ways:

1.      Medical Coverage: Employees registered under the ESI Act, 1948 receive full medical coverage during their period of incapacity. This includes treatment for illnesses, injuries, and other health-related issues, ensuring they receive the necessary care to restore their health and working capacity.

2.      Financial Assistance: The scheme provides financial support to employees who are unable to work due to sickness, maternity, or work-related injuries. This compensation helps replace lost wages during the period of absence, ensuring that the employee can still support themselves financially.

3.      Family Coverage: In addition to the employee, the scheme also extends medical benefits to the employee’s family members. This means that their spouses, children, and sometimes other dependents can access medical services under the same ESI coverage.

Overall, the ESI scheme acts as a safety net for employees, ensuring that they have access to healthcare and financial support during times of need, without significant financial strain.

Who requires ESIC Registration?

ESIC registration is mandatory for:

·        Factories and specified establishments that have 10 or more permanent employees, provided the wages of these employees are less than Rs. 21,000 per month.

This includes both large and small industries, as well as specific establishments that meet these criteria.

Is it mandatory for the Employer to register under the scheme?

Yes, it is mandatory for the employer to register under the ESIC scheme. According to Section 2A of the ESI Act and Regulation 10-B, the employer has a statutory responsibility to register their factory or establishment under the ESI Act.

The employer must complete the registration process within 15 days from the date the scheme becomes applicable to them (i.e., when the employee count and wage criteria are met). Failing to do so may lead to penalties and non-compliance issues.

Definition of Establishment

According to the law, certain types of establishments that employ 10 or more people must register for ESI coverage. These include:

1.      Shops: Any kind of retail store or business.

2.      Hotels or Restaurants: Places that sell food and drinks, but don't do any manufacturing.

3.      Cinemas: Movie theaters, including preview theaters.

4.      Road Motor Transport Establishments: Companies that run buses, taxis, or other vehicles for public or private transport.

5.      Newspaper Establishments: Businesses involved in producing and publishing newspapers, but not considered factories under the law.

6.      Private Educational and Medical Institutions: Schools, colleges, hospitals, nursing homes, and diagnostic centers that are privately owned or run by trusts or charitable organizations.

These establishments must register under the ESI scheme if they meet the requirement of employing 10 or more people.

In case of failure to get ESI registration & ESI returns

If an employer fails to register for ESI or does not file the required ESI returns, they will be penalized with a fine of INR 10,000. This penalty is for non-compliance with the ESI registration and return filing requirements.

Benefits of ESIC Registration :

ESI Registration provides both financial and healthcare support to employees in case of illness, maternity, or work-related injuries. Here are the key benefits:

1.      Sickness Benefits: Employees receive 70% of their salary if they are certified as ill and unable to work, for up to 91 days in a year.

2.      Medical Benefits: The scheme covers medical treatment for employees and their family members.

3.      Maternity Benefits: Pregnant women employees are entitled to paid maternity leave during their pregnancy.

4.      Death Benefits: If an employee dies while working, their dependents will receive 90% of the employee's salary each month after their death.

5.      Disability Benefits: If an employee is disabled due to a work-related accident, they will receive 90% of their salary as compensation.

6.      Funeral Expenses: The scheme provides coverage for funeral costs in case of the employee's death.

7.      Old Age Medical Care: Employees are also covered for healthcare expenses in their old age.

These benefits ensure that employees and their families are financially supported and have access to healthcare in times of need.

ESI Contribution of Employer and Employees :

Each month, both the employer and the employee contribute a percentage of the employee's wages to the ESI fund. The total contribution is 4% of the wages, broken down as follows:

• Employer: Contributes 3.25% of the employee's wages.
• Employee: Contributes 0.75% of their wages.

Together, the total contribution of 4% is deposited into the ESIC fund to provide benefits to employees.

ESI Returns to be Filed by the Employer

All businesses with ESIC registration are required to file ESI returns regularly. The key ESI returns and their filing intervals are as follows:

1.      Form 5 (Half Yearly Return)

o   Interval: Twice a year

o   Due Dates:

§  For the period April to September: 11th November

§  For the period October to March: 11th May

2.      Form 1A (Annual Return)

o   Interval: Once a year

o   Due Date: 31st January

Employers must ensure these returns are filed on time to remain compliant with the ESI regulations.

ESI Registration Process:

1.      Upload Necessary Documents: Start by uploading the required documents on the ESI registration portal.

2.      Choose a Package and Make Payment: Select the appropriate package for ESI registration and complete the payment online using available payment modes.

3.      Assigning a Professional: After placing the order, your application will be assigned to a dedicated professional who will assist you throughout the process.

4.      Filling the ESI Registration Form: The professional will fill out the required ESI registration form on your behalf.

5.      Verification and Submission: The filled registration form will be verified for accuracy, then submitted for approval.

6.      ESI Account Creation and Certificate Issuance: Once the ESI account is created, the ESI registration certificate will be sent to you.

This process ensures that your establishment is properly registered under the ESI scheme and complies with legal requirements.

Documents Required for ESI Registration:

1.      Registration Certificates: GST Certificate, Shop Act License (Shopex), Certificate of Incorporation (COI).

2.      Address Proof: Any one of the following – Electricity Bill, Rent Agreement, Telephone Bill, or Water Bill.

3.      PAN Cards: PAN card of the business entity as well as those of all partners or directors.

4.      Cancelled Cheque: A cancelled cheque to verify the bank account details for ESI contributions.

5.      Digital Signature Certificate (DSC): A Digital Signature of any one director (usually stored on a USB drive, or Pendrive) which will be used to affix the DSC on the application form.

6.      Additional Documents:

o   For a Company: Certificate of Incorporation (COI) and Memorandum of Association (MOA).

o   For a Partnership Firm: Partnership Deed.

These documents ensure that the ESI registration process is completed smoothly and in compliance with the legal requirements.