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Employee State Insurance

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Overview

Decoding the Fundamentals of the Employee State Insurance (ESI) Scheme

The focus on human resource management has been through consequent improvements over the course of recent years. Many legal precedents have been tailored to ensure safeguards for employee rights and provide economic and social security for them. The ESI or Employee State Insurance scheme is a multi-faceted social security scheme tailored for employees working in the organized sector in India. The ESI scheme protects employees against the financial and social burden of sickness, maternity, death, and disability due to injuries or accidents during employment. The ESI scheme is meant to provide financial assistance and ensures the facility of medical care to employees with insurance according to the ESI Act. In addition, the ESI scheme also provides assurance of medical care for the families of employees. Let us reflect further on the details of ESI and the process for ESI registration. 

Understanding ESI

The first thing to know about ESI or Employee State Insurance is that it is under the management of an autonomous body, Employee State Insurance Corporation. The Employee State Insurance Corporation is recognized by law and created under the Ministry of Labour and Employment of India's Government. As mentioned already, the ESI scheme is specially tailored for Indian employees and provides different monetary, medical, and other benefits on behalf of the employer. Any enterprise which has more than 10 employees with a maximum salary of Rs. 15,000 is mandatorily bound to register with the ESIC. In the case of some states, the conditions for companies to register with the ESIC imply the requirement of more than 20 employees rather than 10, like in the previous case. One of the most significant details about the ESI scheme is that it is a self-financing scheme. The funds for the ESI scheme come from employers as well as employees of companies registered with ESIC. The employer has to contribute 3.75% of the total monthly salary payable to an employee, and the employee has to pay 0.75% of their monthly salary for every month of the year. Employees with a salary less than Rs. 100 per day are exempted from making their contribution to the ESI. 

Organizations Covered under ESI

So, what types of entities are covered under ESIC? This is a prominent question that arises in the mind of anyone looking for detailed and clear information on ESI. According to the government notification in Sec 1(5) of the ESI Act, the following entities are required to register with ESIC. 

1) Private educational institutions

2) Shops

3) Newspaper establishments 

4) Cinemas

5) Restaurants and hotels which are engaged only in sales

6) Road motor transport establishments

Advantages

The next important concern about the ESI scheme that troubles newcomers is the list of benefits of ESI. There are many benefits with the ESI scheme, such as the following. 

1) ESI facilitates medical benefits for employees and their family members without any ceiling on expenditure regarding the treatment of an injured person or their family member. Medical care is also available for retired and permanently disabled individuals insured under ESI as well as their spouses with a token annual premium of Rs. 120.

2) You can also get sickness benefits at the rate of 70%, in terms of salary, for any certified illness that lasts for up to 91 days in any year.

3) ESI also ensures maternity benefits for pregnant women with paid leaves.

4) In the case of an employee's death at work, ESI ensures that the employee’s dependents receive 90% of their salary every month after the employee’s death.

5) The benefits of ESI in the case of disability of employees due to occupational hazards or employment injury also include permanent disability benefits. Employees with a certified loss of earning capacity due to their disability are liable to receive 90% of their salary every month. 

6) The ESI scheme also ensures the facility of funeral expenses and old-age medical care expenses. 

ESI Returns

Another one of the most important concerns regarding ESI scheme is the filing of ESI returns. Companies registered under the ESI scheme have to file their ESI returns twice in a year. The company would require following documents for filing ESI returns.

1) Register of employee attendance

2) Register of wages

3) Form 6- Register

4) Monthly returns and challans

5) Register of accidents that have occurred on the business premises

What Do You Think?

If you are the owner of any business premise that employs 10 or more individuals and you fall under companies in the ESI scheme, then it is recommended to start planning for the registration process. You can depend on reliable financial and taxation consultants to help you navigate all stages of the ESI registration process. Furthermore, you can also access comprehensive support for filing ESI returns with the help of competent taxation consultants. Explore more about ESI and leverage its benefits for your business right now!      

Document Required

Now, the most prominent topic of the doubt for readers must be the process of ESI registration. Prior to ESI registration, it is essential to know about the important documents required for the registration. Here are the important documents you must have before applying for ESI registration. 

  • A registration certificate obtained under the Factories Act or the Shops and Establishment Act
  • Memorandum of Association and Articles of Association of the company
  • Certification of Registration of the company or Partnership Deed in the case of a partnership
  • List of all employees currently working in the establishment
  • PAN Card of the business entity and employees working under the business
  • Details of compensation for all employees
  • Cancelled cheque of the company’s bank account
  • List of company directors
  • List of company shareholders
  • Attendance register of employees

With all the above-mentioned documents you have to download the Employers Registration Form and fill it with the unit details, factory or establishment details, employer details, and employee details. You can then submit the application form along with the documents as mentioned earlier for verification on the official ESIC website. After the verification process, the applicant will be issued a 17 digit unique number by the government. In addition, employees registered under the scheme will have to provide a filled form and photographs of their family members according to the registration process. The employees would get an ESI card when the registration process completes. The company must immediately notify the ESIC about any modifications in the company or the employees. 

Time Lines

  • (10 to 15 Days)
  • Purchase the Service
  • Upload / send the Documents
  • Discussion with expert
  • Filing of application with registrar authorities
  • Receipt of Registration Certificate
  • Confirmation to client

Service Covered

Pricing for what you want required service

Basic

7000*
  • Expert Consultation
  • ESI Registration upto 20 employees

Business

13500*
  • Expert Consultation
  • ESI Registration upto 50 employees

Enterprise

23000*
  • Expert Consultation
  • ESI Registration more than 50 employees
  • Notes:
  • * This price is inclusive of all Govt filing fee and excluding GST amount.

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