The Employee’s State Insurance Act was passed in 1948 to provide medical facilities and unemployment insurance to industrial workers during their illness. This Act provides medical benefits in the form of medical attendance, treatment, drugs and injections to insured persons and to members of their families where the facility has been extended to the families also.
The ESI Act is applicable to all non seasonal factories run with power and employing 20 or more persons. It covers all types of employees-manual, clerical, supervisory and technical- not drawing a salary of Rs. 1000 P.M. (This amount was raised to Rs. 1,600 p.m. w.e.f. January 1985 and to Rs. 6,500 p.m. w.e.f. January 1997). This Act is a land mark in the history of social security in India and its object is to introduce social insurance for workers.
The Employees State Insurance Scheme introduced under this Act is compulsory and contributory. Compulsory in the sense that all workers covered under this Act must be insured and contributory in the sense that it is financed by the contributions from employees and employers.
The administration of the Act has been entrusted to an autonomous body called the Employees State Insurance Corporation. The corporation is managed by a governing body of 40 persons representing the Union and the State Governments, parliament, employers and employees organisations and the medical profession. This body elects a Standing Committee consisting of 13 members. A third body called the Medical Benefit Council is constituted consisting of 26 members to advise the corporation on matters relating to medical benefits. State-wise regional boards have also been constituted.
The scheme is financed by the Employees State Insurance Fund which consists of contributions from employers and employees, grants, donations and gifts from Central and State Governments, local authorities or any individual or body. The rate of contribution of employees depends upon the daily wages.
The Scheme provides for five types of benefits to the injured workers and their dependents. There benefits are –
Benefits Under Employee State Insurance Act
(i) Sickness Benefit – Sickness benefit consists of cash payment for a maximum period of 91 days per year to the sick worker. The daily rate of sickness benefit is calculated at half of average daily wages. The Insured worker who is getting this benefit must be under the medical treatment at a dispensary or hospital maintained by the Corporation. The benefit is useful to a worker who is unable to attend his work due to sickness. Workers suffering from long term diseases like T.B., leprosy etc. are entitled to extended sickness benefit at 62.5% of average wage for a period of 309 days.
(ii) Maternity Benefit – An insured women is entitled to receive cash benefit for confinement, miscarriage or sickness arising out of pregnancy. The benefit is paid at double the sickness benefit rate for a period of 12 weeks of which not more than 6 weeks shall precede the expected date of confinement. If the insured woman dies during the period of confinement, her nominee will receive the benefit for the entire period.
(iii) Disablement Benefit – Disablement benefit is given in case of temporary as well as permanent disablement. An insured person is entitled to receive disablement benefit for any injury arising out of and in the course of employment which lasts for not less than 3 days excluding the date of accident. In case of temporary disablement, full pay is paid in addition to free medical treatment. In case of permanent partial disablement, the insured worker is entitled for cash benefit for life to be paid at a percentage of the full rate on the basis of percentage of disability. In case of permanent total disablement, the cash benefit will be paid at full rate for the whole life.
(iv) Dependent Benefit – This benefit is given to the dependents of an insured deceased person. If a person dies as a result of employment accident, his widow and children are entitled to pension. The widow get it throughout her life or till remarriage. The sons get it upto the age of 18 years while the daughters get it upto the age of 18 years or marriage whichever is earlier.
(v) Medical Benefits – This benefits is given to a worker claiming sickness benefit, maternity benefit or disablement benefit. This benefit is also available to the family members of the worker. It consists of free medical treatment at dispensary or hospital run by the corporation or at home of the sick.
The ESI Act has provided much needed protection to workers. However, the ESI scheme is criticised on the grounds that the medical treatment given is not satisfactory and there is delay in providing benefits to insured workers. The Act needs to be enforced more effectively. However, in general, the scheme is working in a satisfactory manner. In 1996, there were 124 ESI hospitals in India with 23000 beds and 1440 dispensaries for providing medical facilities.