EMPLOYEE STATE INSURANCE ACT 1948



EMPLOYEE STATE INSURANCE ACT 1948

BY

SMART LEARNING WAY


  Introduction

            The employee ‘ State insurance act extends to the whole of India, including the state of Jammu and Kashmir. the insurance scheme contained in the act has up till  date, been applied to a few selected localities. The act of 1948 was amended by the amendment acts of 1966,1975,1984,1989,and1997.

           Exemption: a factory or establishment or a class of factories establishments can be exempted from the operation of the act. This can be done by the appropriate government by notification for one year at a time(sec.87).

The following seasonal processes have secured exemption under section 87 of the act: 1) salt manufacturing 

2) rice milling 3)oil mils (provided the process of oiling is subsidiary to any other manufacture process, and  mill has employed less than 50 employees,4) ice manufacture ,5) wool processing with or without cotton pressing and ginning.etc.

DEFINITION OF ESI

      “appropriate government” means, in respect of establishment under the control of the central government or (a railway administration) or a major port or a mine or oilfield, the central government, and in all other cases, the state government;

      “Contribution”  means the sum of money payable to the corporation by the principal employer in respect of an employee and includes any amount payable by or on behalf of the employee in accordance with the provisions of this Act;

      “Sickness” means a condition which requires medical treatment and attendance and necessitates abstention from work on medical ground;

  The Employees’ State Insurance Corporation

Administration :

   The administration of the scheme of insurance contained in the act is vested in the employees’ state Insurance Corporation created by the act. The corporation is a body corporate having perpetual succession and a common seal. It can sue be sued by its name.
Members:

  According to the Act, the corporation consists of the following members;
  1. A chairman to be nominated by the Central Government ;
  2. A vice – Chairman to be nominated by the Central government;
  3. Not more than five person to be nominated by the Central Government ;
4)One person each representing each of states in which this act is in force to be nominated by the central government;

5)One person to be nominated by the central government to represent the Union territories;

6)Five person representing employers to be nominated by the central government in consultation with such organization of employees as may be recognized for the purpose by the central government;

7)Three members of Parliament of whom two shall be members of the Lok sabha and one shall be a member of the rajya sabha elected respectively by the two houses;

8)The director General of the corporation , ex – officio;

          The term of office of members is ordinarily four years but nominated member holds office during the pleasure of the government nominating them.

AUTHENTICATION ;

                        Orders and decision of the corporation are to be authenticated by the signature of the director general ; other instrument by the signature of the director general or any other authorized officer of the corporation.

PRINCIPAL OFFICERS :

                        The principal officer of the corporation are (a) a Director general of employees’ state insurance ; (b) an insurance commissioner ; (c) a medical commissioner ; (d) a chief account officer ; and (e) an actuary. The director general is the chief executive officer of the corporation . The officer and whole time officers cannot undertake any work unconnected with their office without the sanction of the central govt. or of the corporation.

Meetings:
                        Meetings of the members , the standing committee and the medical benefit council, must be held according to the regulations. Sec- 20.
                       

Supersession :
                        The central govt. may supersede the corporation or the standing committee if it persistently makes default in performing its duties or abuses its power. After supersession the central govt. may appoint new members or create an agency to exercise the powers and the functions of these bodies.

Delegation :
                        The corporation may appoint regional boards , local committees and regional and local medical benefit councils in such area and in such manner and delegate to them such powers and functions may be provided by the regulation.
  Power of the corporation

  1.  STAFF:
 (a)The corporation may employee such other staff of officers and servant as may be necessary for the efficient transaction of its business provided that the sanction of the central government shall be obtained for the maximum monthly salary of which exceeds Rs.3000

2)Measures for health

  the corporation may in, addition to the scheme of benefits specified in this act, promote measures for the improvement of the health and welfare of insured person and for the rehabilitation and re-employment of insured person who have been disabled or injured and may incur in respect of such measures expenditure from the funds of the corporation within such limits as may be prescribed by the central govt.- sec.19.

3)Holding of property :

   the corporation may, subject to such condition as may be prescribed by the central govt. acquire and hold property both movable and immovable , sell or otherwise transfer any movable or immovable property which may have become vested in or have been acquired by it and do all things necessary for the purposes for which the corporation is established.

4)investment:

   subject to such condition as may be prescribed by the central govt. the corporation for may time to time  invest any money which are not immediately required for expenses properly defrayable under this act and may , subject as aforesaid , from time to time re-invest or realize such investment.

 5)Loans:

The corporation may, with the previsions sanction of the central govt. and on such term as may be prescribed by it, raise loans and take measures for discharging such loan.

  Duties of the ESI corporation

1)Budget estimates :

     the corporation shall in each year frame a budget showing the probable receipts and the expenditure which it proposes to incur during the following year and shall submit a copy of the budget for the approval of the central govt. before such date as may be fixed by it in that behalf.

2)accounts:
        The corporation shall maintain correct accounts of its income and expenditure in such from and in such manner as may be prescribed by the central govt.

3) Audit :
       The account of the corporation shall be audited , at such time and in such manner as may be prescribed by the auditor by the central govt.

4) Annual report :
        The corporation shall submit to the central govt. an annual report of its work and activities .

5) placement to parliament:
      The annual repot the audited accounts of the corporation and the budget as finally adopted by the corporation shall be placed before and published in the official gazettes.

Types of benefits under the act

        The act provides for six types of benefit to insured workmen: A) Sickness benefit  B)maternity benefit  C) disablement benefit D) dependent's benefit  E) medical benefit F) funeral benefit. Benefits are receivable during the benefit period, which is defined as follows.
         Benefit period means such period, being not less than 25 but not more than 27 consecutive weeks or 6 consecutives  months corresponding period a s may be specified in the regulation framed under the act. For the first benefit period a shorter or longer period may be fixed.
    
 1.Sickness benefit

                          Sickness benefit represents periodical payments  made to an insured person for the period of certified sickness after completing nine months insurable employment. To quality for this benefits, contribution should have been paid for at least78 days in the relevant contribution period. The maximum duration for availing sickness benefit is 91 days in two consecutive benefit periods. There is  waiting period of 2 days which I waived if the insured person is certified sic within 15 days of the last spell for which  sickness benefit period was last paid. The daily rate of sickness benefit in respect of a person during any benefit period shall be 20 percent more than “ standard benefit rate”

2. Maternity benefit

          maternity benefit implies cash payment to an insured woman in case of confinement or miscarriage or sickness arising out of  pregnancy, premature birth of child as certified by a duly appointed medical officer or midwife. For entitlement to maternity benefit, the insured woman should have contributed for not less than 70 days in the immediately preceding two consecutives contribution periods corresponding  to the benefit period in which the confinement occurs or is expected to occur. The daily rate of  benefit double the standard  sickness benefit  rate i.e full wages.

Maternity benefit is normally payable for a maximum period of 12 weeks in case of confinement , 6weeks in case of miscarriage or medical termination of pregnancy which can be extended up to one additional month in case of sickness arising out of confinement and duly certified by an authorized medical officer. Maternity benefit continues to be payable even in the event of the death of an insured woman, during her  confinement, or during the period of 6 weeks immediately following her confinement leaving behind  a child for the whole of that period , and in case the child also dies, during the said period, until the death of the child.

   3.Disablement benefit

           In case of  temporary disability arising out of an employment injury, disablement benefit is admissible to an insured person for the  entire period so certified by an insurance medical officer/ practitioner   for which  the insured person does not work for wages. the benefit is not subject to any contributory condition and is payable  at the daily rate of 15 percent more than the standard benefit rate. The benefit is, however, not payable if the incapacity is less than 3 days excluding the rate date of accident.

4.Dependent’s benefit

           Periodical pension is paid to the dependent of a deceased insured person where death occurs as a result of an employment injury or occupational diseases. The  daily rate of dependent’s shall be 15 percent more than the standard benefit rate. The widow  receives monthly  pension for life or until remarriage, at a fixed rate equivalent to 3/5th of the  disablement benefit rate and each dependent child is paid an amount equivalent  2/5th there of until he/she attains 18 years of ages, provides that , in case of  infirmity, the benefit continues to be  paid till infirmity. 

           However, it is subject to the condition that the total dependents’ benefit distributed among the widow and legitimate or adopted children of the deceased insured persons, does not exceed , at any time, the full rate of disablement benefit. In case it exceeds the given ceiling, the share of each of the dependents is, proportionately reduced. The benefit is not payable to married daughter.

             In case the insured  person does not leave behind any widow or child, the benefit is payable to other dependents including parents.
       
5.Medical benefit

         An insured person and his family member become entitled to medical care from the date he enters the insurable employment and the entitlement continues as long as the insured person is in insurable employment or is qualified to claim sickness, maternity, or disablement benefit. The entitlement to medical care is extended up to  two years to persons suffering from any specified chronic or long-term diseases. medical treatment to persons , who go out of coverage during the period of treatment, is not discontinued till the spell of sickness ends. All insured persons and member of there are entitled to free, full and comprehensive medical care  under the scheme.

The package covers all aspects of health care from comprehensive medical care  facilities, such as
  1. Out- patient treatment.
  2. X- ray and laboratory investigation.
  3. Ambulance service or conveyance.
  4. Family welfare services and other national health programmes services.
  5. Medical certification and
  6. Special provision including super-specialty treatment
 6.funeral benefit:

       funeral expenses are in the nature of a lump sum payment up to three thousand rupees made to defray the expenditure of the funeral of deceased insured person. The amount is paid either to the eldest surviving member of the family or, in his absence , to the person who actually incurs the expenditure on the funeral


  Salient Features of Employees’ State Insurance Act-1948

Introduction ESI Act 1948

                The Employees’ State Insurance Act was enacted in 1948 with the object, as stated in its preamble, “ to provide for certain benefits to employees in case of sickness, maternity and “employment injury” and to make provisions for certain other matters in relation thereto.”  The act introduced an integrated social insurance scheme covering health, maternity and accident insurance. The scheme was introduced as compulsory state insurance scheme for the benefit of the workers working in Indian industries.

Origin
               The Employee State Insurance act was promulgated by the Parliament of India in the year 1948. To begin with the ESI scheme was initially launched on 2nd February 1952 at just two industrial centers in the country namely Kanpur and Delhi with a total coverage of about 1.20 lakh workers. There after the scheme was implemented in a phased manner across the country with the active involvement of the state governments.

Salient Features of ESI Act 1948
  1. Facilitating coverage of smaller factories;
  2. Enhancing age limit of dependant children for eligibility to dependants benefit;
  3. Extending medical benefit to dependant minor brother/sister in case of  not having own family and whose parents are also not alive;
  4. Streamlining the procedure for assessment of dues from defaulting employers;
  5. Providing an Appellate Authority within the Corporation against assessment to avoid unnecessary litigation;
  6.  Continuing medical benefit to insured persons retiring under VRS scheme or  taking premature retirement;
  1. Treating commuting accidents as employment injury;
  2. Streamlining the procedure for grant of exemptions;
  3. Third party participation in commissioning and running of the Hospitals;
  4. Opening of medical/dental/paramedical/nursing colleges to improve quality of medical care;
    11. Making an enabling provision for extending medical care to other beneficiaries against payment of user charges to facilitate providing of medical care from under-utilised ESI Hospitals to the BPL families covered under the Rashtriya Swasthaya Bima Yojana introduced by the Ministry of Labour & Employment.

     12. Empowering State governments to set up autonomous Corporations for administering medical benefit in the States for bringing autonomy and efficiency in the working.

Definition:

1) appropriate Government:

As per section 2(1) " appropriate Government" means, in respect of establishments under the control of the Central Government or [ a railway administration] or a major port or a mine or oilfield, the Central Government, and in all other cases, the State Government.

2) confinement:

As per section 2(3) " confinement" means labour resulting in the issue of a living child, or labour after twenty-six weeks of pregnancy resulting in the issue of a child whether alive or dead.

3) Contribution:

As per section 2(4) " contribution" means the sum of money payable to the Corporation by the principal employer in respect of an employee and includes any amount payable by or on behalf of the employee in accordance with the provisions of this Act.

4) Dependent:

As per section 2(6A) " dependant" means any of the following relatives of a deceased insured person, namely:-

(i) a widow, a minor legitimate or adopted son, an unmarried legitimate and adopted  daughter;

(a)  a widowed mother;

(ii) if wholly dependent on the earnings of the insured person at the time of his death, a legitimate or adopted son or daughter who has attained the age of eighteen years and is infirm;
(iii)if wholly or in part dependent on the earnings of the insured person at the time of his death,-

(a)a parent other than a widowed mother,
(b)a minor illegitimate son, an unmarried illegitimate daughter or a daughter legitimate or adopted or illegitimate if married and a minor or if widowed and a minor,
(c) a minor brother or an unmarried sister or a widowed sister if a minor,
(d) a widowed daughter- in- law,
(e) a minor child of a pre- deceased son,
(f) a minor child of a pre- deceased daughter where no parent of the child is alive, or
(g) a paternal grand- parent if no parent of the insured person is alive

5) Employment injury:
As per secton 2(8)" employment injury" means a personal injury to an employee caused by accident or an occupational disease arising out of and in the course of his employment, being an insurable employment, whether the accident occurs or the occupational disease is contracted within or outside the territorial limits of India;

6) Employee:
As per section 2(9) " employee" means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and
(i)who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or
(ii)who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or
(iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service. 

7)Exempted employee:
As per section 2(10) " exempted employee" means an employee who is not liable under this Act to pay the employee' s contribution;

8) Family:
As per section 2(11)" family" means all or any of the following relatives of an insured person, namely:--
(i)a spouse;
(ii)a minor legitimate or adopted child dependent upon the insured person;
(iii)a child who is wholly dependent on the earnings of the insured person and who is
           (a)receiving education, till he or she attains the age of twenty- one years,
          (b) an unmarried daughter;
(iv)a child who is infirm by reason of any physical or mental abnormality or injury and is wholly dependent on the earnings of the insured person, so long as the infirmity continues;
(v)dependent parents;

9) Factory:
According to Section 2 (12) of Factories Act, 1948, Factory means any premises including the precints thereof –
 (a) whereon ten or more persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on, or
(b) whereon twenty or more persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power or is ordinarily so carried on. But does not include a mine subject to the operation of Mines Act, 1952 or a railway running shed.

10) Immediate Employer:
As per section 2(13 )" immediate employer", in relation to employees employed by or through him, means a person who has undertaken the execution, on the premises of a factory or an establishment to which this Act applies or under the supervision of the principal employer or his agent, of the whole or any part of any work which is ordinarily part of the work of the factory or establishment of the principal employer or is preliminary to the work carried on in, or incidental to the purpose of, any such factory or establishment, and includes a person by whom the services of an employee who has entered into a contract of service with him are temporarily lent or let on hire to the principal employer; [ and includes a contractor];

11)Insurable employment:
As per section 2(13A)" insurable employment" means an employment in a factory or establishment to which this Act applies;

12) Insured person:
As per section 2(14)" insured person" means a person who is or was an employee in respect of whom contributions are or were payable under this Act and who is, by reason thereof, entitled to any of the benefits provided by this Act;

13) Managing Agent:
As per section 2(14A)" managing agent" means any person appointed or acting as the representative of another person for the purpose of carrying on such other person' s trade or business, but does not include an individual manager subordinate to an employer.

14) Manufacturing process:
According to Section 2 (14AA) of Factories Act, "manufacturing process" means any process for –
     (i)            making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal, or
(ii) pumping oil, water, sewage or any other substance; or;
(iii) generating, transforming or transmitting power; or
(iv) composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding;
(v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels;
(vi) preserving or storing any article in cold storage;

15) Mis-carriage:
As per section 2(14B)" mis- carriage" means expulsion of the contents of a pregnant uterus at any period prior to or during the twenty sixth week of pregnancy but does not include any miscarriage, the causing of which is punishable under the Indian Penal Code (45 of 1860 );

16) permanent partial disablement:
As per section 2(15A)" permanent partial disablement" means such disablement of a permanent nature, as reduces the earning capacity of an employee in every employment which he was capable of undertaking at the time of the accident resulting in the disablement.

17) permanent total disablement:
As per section 2(15B) " permanent total disablement" means such disablement of a permanent nature as incapacitates an employee for all work which he was capable of performing at the time of the accident resulting in such disablement.

18) principal employer:
As per section 2(17)" principal employer" means
(i) in a factory, the owner or occupier of the factory and includes the managing agent of such owner or occupier, the legal representative of a deceased owner or occupier, and where a person has been named as the manager of the factory under  the Factories Act, 1948  the person so named;
(ii) in any establishment under the control of any department of any Government in India, the authority appointed by such Government in this behalf or where no authority is so appointed, the head of the department;
(iii) in any other establishment, any person responsible for the supervision and control of the establishment;

19) Seasonal Factory:
As per section 2(19A)" seasonal factory" means a factory which is exclusively engaged in one or more of the following manufacturing processes, namely, cotton ginning, cotton or jute pressing, decorticating of ground nuts, the manufacture of coffee, indigo, lac, rubber, sugar (including gur) or tea or any manufacturing process which is incidental to or connected with any of the aforesaid processes and includes a factory which is engaged for a period not exceeding seven months in a year
(a) in any process of blending, packing or repacking of tea or coffee; or
(b) in such other manufacturing process as the Central Government may, by notification in the Official Gazette, specify.

20) Sickness:
As per section 2(20) " sickness" means a condition which requires medical treatment and attendance and necessitates abstention from work on medical grounds;

21) Temporary Disablement:
As per section 2(21)" temporary disablement" means a condition resulting from an employment injury which requires medical treatment and renders an employee, as a result of such injury, temporarily incapable of  doing the work which he was doing prior to or at the time of the injury.

22) Wages:
According to Section 2 (22) "wages"- means all remuneration paid or payable, in cash to an employee, if the terms of the contract of employment, express or implied, where fulfilled and includes any payment to an employee in respect of any period of authorised leave, lock-out, strike which is not illegal or lay-off and other additional remuneration, if any paid at intervals not exceeding two months, but does not include –
(i) any contribution paid by the employer to any person fund or provident fund or under any scheme of social insurance;
(ii) any traveling allowance or the value of any traveling concession;
(iii) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
(iv) any gratuity payable on discharge.

23)Wage period:
As per section 2(23)" wage period" in relation to an employee means the period in respect of which wages are ordinarily payable to him whether in terms of the contract of employment, express or implied or otherwise.

Constitution And Function Of Employees State Insurance Corporation.        
                       
The said corporation shall be responsible for the administration of the scheme of Employees’ State Insurance in accordance with the provisions of this Act.
Section 4 provides that the corporation shall consist of the following members, namely:--
      A chairman to be appointed by the Central  Government;
      A vice – chairman to be appointed by the central Government;
      Not more than five persons to be appointed by the Central Government;
      One person each representing each of the States in which this Act is in force to be appointed by the State Government concerned;
      One person to be appointed by the Central Government to represent the union territories;
      Ten persons representing employers to be appointed by the Central Government in consultation with such organisations of employers as may be recognised for the purpose by the Central Government;
      Two persons representing the medical profession to be appointed by the Central Government in consultation with such organisations of medical practitioners as may be recognised for the purpose by the Central Government;
      Three member of parliament of whom two shall be members of the house of the people and one shall be a member of the council of the states elected respectively by the members of the house of the people and the members of the council of states;

BIBLIOGRAPHY

P. SARAVANAVEL,S. SUMATHI ”LEGAL SYSTEMS IN BUSINESS “
             HIMALAYA PUBLISHING HOUSE

 A.M.SHARMA “INDUSTRIAL RELATION & LABOUR LAWS”
               HIMALAYA PUBLISHING HOUSE

 A.M.SHARMA “INDUSTRIAL JUSISPRUDENCE AND LABOUR LEGISLATION”
 HIMALAYA PUBLISHING HOUSE

  TAXMANN’S 2003 EDITION “LABOUR LAWS”
            HIMALAYA PUBLISHING HOUSE        

  SANJEEV KAPOOR “INDUSTRY & LABOUR LAW”
            HIMALAYA PUBLISHING HOUSE        

N.D.KAPOOR “HANDBOOK OF INDUSTRIAL LAW”
            HIMALAYA PUBLISHING HOUSE        
           
  DR. SANJEEV KUMAR,D.C. JAIN  “BHARATS’  INDUSTRIAL & LABOUR LAW”
BHARAT PUBLICATION HOUSE













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