Understanding the ESI Act, 1948: A Social Security Lifeline for Indian Workers

The Employees’ State Insurance (ESI) Act, 1948 is a landmark legislation in India aimed at providing social security to workers in the organized sector. Enacted by the Government of India, this Act offers medical, monetary, and other benefits to employees and their families in times of need such as sickness, maternity, disability, or death due to employment injury.

What is the ESI Act, 1948?

The ESI Act was passed on 19th April 1948 and came into force on 24th February 1952. It led to the creation of the Employees’ State Insurance Corporation (ESIC), an autonomous body under the Ministry of Labour and Employment.

Objectives of the ESI Act

• To provide financial protection to employees during health-related contingencies.

• To ensure medical care and treatment for employees and their dependents.

• To reduce hardship and ensure a secure working environment.

Who is Covered Under the Act?

• Applicable to non-seasonal factories with 10 or more employees.

• Covers employees earning up to ₹21,000 per month (₹25,000 for persons with disabilities).

• Also extended to shops, hotels, cinemas, road transport, and newspaper establishments in many states.

Key Benefits Provided Under ESI Scheme

1. Medical Benefits: Free and comprehensive medical care to insured persons and their dependents.

2. Sickness Benefit: Cash compensation at 70% of wages during certified medical leave.

3. Maternity Benefit: Paid leave for female employees during pregnancy.

4. Disablement Benefit: Compensation in case of temporary or permanent disability due to work injury.

5. Dependents’ Benefit: Pension for dependents in case of death due to employment injury.

6. Funeral Expenses: A lump-sum amount for funeral costs of the deceased insured person.

7. Rehabilitation Allowance: For physical or vocational rehabilitation of disabled persons.

Contribution Structure

• Employer’s contribution: 3.25% of wages.

• Employee’s contribution: 0.75% of wages.

• Employees earning less than ₹176 per day are exempted from paying their share.

Recent Developments

The government has been working to expand ESI coverage by including more sectors and simplifying digital services for registration and claim processing. The goal is to provide “Security to Every Worker” in line with modern workforce needs.

Conclusion

The ESI Act, 1948, plays a crucial role in supporting India’s workforce by offering medical and financial relief. For employers, understanding and complying with the Act is essential not just for legal reasons, but to ensure the well-being and motivation of their employees.