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Employee State Insurance registration
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WORKERS' STATE INSURANCE (ESI)
ESI stands for Employee State Insurance.
The Indian Parliament passed the Employees’ State Insurance Act in 1948. It was the first major Social Security legislation in independent India to provide certain benefits to employees in organized sector in the event of illness, pregnancy, or occupational injury. The Employees’ State Insurance Corporation, established by the federal government, is the premier social security organization in the country. It is the highest policy-making and decision-making authority under the ESI Act and is responsible for the administration of the ESI Scheme.
The Employees’ State Insurance Act of 1948 establishes an integrated, need-based social insurance program that protects the interests of workers in situations such as sickness, maternity, temporary or permanent physical disability, and death resulting from an occupational injury that causes a loss of wages or earning capacity. In addition, the Act ensures that workers and their immediate dependents receive reasonable quality medical care.
The contribution payable to the Corporation on behalf of an employee consists of an employer contribution and an employee contribution at a predetermined rate. The rates are periodically revised. As of 1.07.2019, the employer contribution rate is 3.25 percent of earnings paid or receivable to employees during each pay period, whereas the employee contribution rate is currently 0.75 percent of wages. Employees earning a daily average wage of up to Rs.176/- (as of 01.09.2019) are exempt from contribution payment. However, employers will contribute their own share to these employees.
Purpose of Employees State Insurance:
- The purpose of Employees State Insurance is to provide certain benefits to employees in the event of sickness, maternity, or work-related injury, as well as to address other pertinent issues.
What is the Current Wage Limit for Employees to be Covered by ESI?
- current wage limit for coverage under the Act is up to Rs.21,000/- per month (with effect from 1.01.2017).
Contribution Period Benefit Period:
There are two six-month contribution periods and two six-month benefit periods corresponding to those contribution periods.
- 1st April to 30th September; 1st January to 30th June of the following year.
- 1st October to 31st March 1 July to 31st December of the following year
Who must register for ESI?
The ESI Act of 1948 applies to following categories of factories and establishments in the implemented areas. ESI covers every state besides Nagaland, Manipur, Tripura, Sikkim, Arunachal Pradesh, and Mizoram.
- Non-seasonal factories that use electricity and employ at least ten (10) people.
- Non-seasonal and non-energy-using factories and businesses employing at least twenty (20) people.
- Employing 20 or more people are stores, hotels, restaurants, cinemas, including preview theaters, road motor transport enterprises, and newspapers.
Who are not required to register under ESI:
- Seasonal factories are not required to register under ESI.
- Non-seasonal factories that utilize electricity and employ fewer than ten people.
- Non-seasonal and non-energy-consuming factories and businesses with fewer than 20 employees.
- Shops, hotels, restaurants, cinemas (including preview theaters), road motor transport companies, and newspapers with fewer than 20 employees.
Who is an Employee according to ESI:
A person who is hired for compensation in connection with the work of a factory or establishment to which this Act applies is referred to as “employee” in accordance with Section 2(9) as amended by the Employees’ State Insurance (Amendment) Act 2010, as well as the following:
- who is directly engaged by the primary employer to carry out any job that is connected to, incidental to, necessary to, or related to the operation of the factory or establishment, whether the work is carried out in factory or elsewhere; or,
- who, while 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, performs work that is typically a part of the work of the factory or establishment, that is preparatory to the work carried out, or that is incidental to its purpose; or
- whose services are temporarily rented or hired out to the major employer by the party with whom the party providing the services has a service agreement;
The term “employee” does not include apprentices, members of the Indian Naval, Military, or Air Forces, or those earning more than Rs. 21,000 per month.
Employer Responsibilities:
- Register establishment with ESI upon exceeding the eligibility threshold - 10/20 employees or more of specified establishment types.
- Deduct the employee contribution from the employee's wages, add the employer contribution and administrative fees, and remit to ESI (last date 15th of the month). Establishments have an economic incentive to pay ESI premiums on time. On 16th April 2012, the Reserve Bank of India issued a directive requiring all Scheduled Commercial Banks to ensure that all statutory dues, including ESI dues, are paid annually by the borrower. Establishments utilizing Bank credit from any Scheduled Commercial Bank are required to annually certify this fact to their auditors.
- Enroll all eligible employees (permanent or temporary) on its payroll – wages up to Rs 21,000 at the time of hire.
- Prior to releasing payment to such contractors, the remittance status of contractual employees belonging to an ESI-registered establishment must be confirmed. Before making payment to a contractor, the Principal Establishment should confirm that ESI contributions have been made. If remittance is not made, deduct the amount from contractor payments and remit it to ESI.
- Update the family information and nomination of all ESI participants.
What Benefits are Available to Employees?
Listed below are the available employee benefits at the organization.
Sickness Benefits
It is advantageous for the employees, as they receive 70 percent of their salary in the form of sickness benefits if they become ill.
Medical Benefits
The employee and his family have access to medical benefits.
Maternity Benefit,
As a maternity benefit, pregnant employees are compensated.
Death & Disability
If an employee dies or becomes disabled while employed, 90 percent of their monthly salary is paid to their dependents on a monthly basis.
How to Register a Business under ESI
Now Establishment ESI registration filings have been streamlined through a single window. Listed below are the Required Documents and ESI Registration Procedure Step-by-Step.
Documents Required
Three-Step Registration:
What are the ESI Returns to be filed?
The following are the Employee State Insurance Corporation filing requirements.
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Let's Deal With Your Confusions
ESI means employee state insurance.
Certain businesses with 10 (in some states, 20) or more employees are required to register for the purpose of providing medical benefits.
0.75% on salary.
3.25% on salary.
Every member is required to pay this sum upon joining the cooperative group.
You can obtain it entirely online within 30 minutes.
Registration for the ESI is conducted entirely online and is free of charge.
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