The Employees’ State Insurance Act, 1948, stands as a cornerstone of social security legislation in India, aiming to provide a comprehensive range of benefits to workers in the organised sector. Enacted shortly after India’s independence, the Act was a pioneering effort to safeguard employees against the contingencies of sickness, maternity, disablement, and death due to employment injury, along with offering medical care. It established the Employees’ State Insurance Corporation (ESIC) as the primary administrative body responsible for its implementation, operating on a contributory principle where both employees and employers contribute a small percentage of wages to a common fund. This fund then serves as the financial backbone for delivering the various benefits.

The primary objective of the ESI Act is to create a robust social safety net, ensuring that workers and their dependents are not left vulnerable to the economic hardships that can arise from health issues or work-related accidents. Beyond providing financial relief, the scheme also emphasizes preventative and rehabilitative measures, striving to restore the health and earning capacity of its beneficiaries. The range of benefits offered under the Act is designed to be holistic, covering not only immediate financial needs but also long-term medical care and support, thereby contributing significantly to the welfare, health, and productivity of the industrial workforce.

Benefits Under the Employees’ State Insurance Act, 1948

The Employees’ State Insurance Act, 1948, outlines a comprehensive package of social security benefits designed to protect insured persons and their dependents. These benefits can broadly be categorised into cash benefits and non-cash (medical) benefits. Each benefit is meticulously defined with specific eligibility criteria, rates, and durations, ensuring a structured and equitable distribution of support.

Medical Benefit

Medical Benefit is perhaps the most fundamental and widely utilized benefit under the ESI scheme. It provides comprehensive medical care to the insured person (IP) and their family members from the very first day of their insurable employment. This benefit is unique because it is not contingent upon specific contribution conditions for initial access, making it immediately available to new employees.

The scope of medical benefit is extensive, encompassing a wide array of healthcare services. This includes outpatient care, general practitioner services, specialist consultations, diagnostic tests (such as X-rays, pathology, and other sophisticated investigations), hospitalization services, surgical procedures, and the provision of necessary drugs, dressings, and artificial appliances. Medical care also covers ambulance services for transporting patients to ESI hospitals or other empanelled healthcare facilities. Furthermore, the ESI scheme extends to specialized treatments such as dialysis, chemotherapy, and organ transplantation in cases where such facilities are not available in ESI institutions, through tie-ups with other hospitals. The benefit extends throughout the period of need, and for certain chronic and long-term diseases, or for disablement due to employment injury, medical care can be provided for life. The delivery of these services is primarily through a network of ESI hospitals, dispensaries, and health centres, as well as through empanelled private clinics and hospitals where necessary.

Sickness Benefit

Sickness Benefit provides periodical cash payments to an insured person during periods of certified sickness, provided they are unable to work due to such illness. This benefit is crucial in mitigating the financial loss suffered by a worker during their absence from duty due to health reasons.

To be eligible for Sickness Benefit, an insured person must have contributed for at least 70 days in the immediately preceding two consecutive contribution periods. The standard rate of Sickness Benefit is 70% of the average daily wages of the insured person. This benefit is payable for a maximum of 91 days in any two consecutive benefit periods. The waiting period of two days for receiving this benefit has been abolished, meaning payment begins from the first day of certified sickness.

Beyond the standard Sickness Benefit, the ESI Act provides for two special categories:

  • Extended Sickness Benefit (ESB): This benefit is provided for prolonged periods of sickness arising from specified long-term diseases such as tuberculosis, cancer, leprosy, mental diseases, paraplegia, hemiplegia, chronic renal failure, and various other serious ailments listed by the ESIC. The rate for ESB is 80% of the average daily wages, and it is payable for a duration of up to 309 days, which can be further extended up to 730 days in certain chronic and debilitating cases, subject to medical certification. Eligibility for ESB typically requires the insured person to have been in continuous employment for at least two years and to have contributed for a specified number of days.
  • Enhanced Sickness Benefit: This benefit is specifically provided to insured persons who undergo sterilization operations (vasectomy or tubectomy) for family planning purposes. The rate for Enhanced Sickness Benefit is 100% of the average daily wages. It is payable for a period of up to 7 days for vasectomy and up to 14 days for tubectomy, with extensions possible in case of post-operative complications, subject to medical advice. This benefit encourages family planning initiatives among the insured population.

Maternity Benefit

Maternity Benefit is a crucial provision aimed at protecting the income of insured women during their maternity period, ensuring they can take necessary rest before and after childbirth without financial strain. It also covers other related contingencies like miscarriage and medical termination of pregnancy.

To be eligible for Maternity Benefit, an insured woman must have paid contributions for at least 70 days in the two immediately preceding contribution periods. The rate of Maternity Benefit is 100% of the average daily wages. The duration of this benefit varies depending on the specific contingency:

  • Confinement: For confinement (childbirth), the benefit is payable for a total period of 26 weeks, of which not more than 8 weeks can be taken before the expected date of delivery, and the remaining 18 weeks after childbirth.
  • Miscarriage: In the case of a miscarriage, the benefit is payable for 6 weeks from the date of the miscarriage.
  • Medical Termination of Pregnancy (MTP): Similar to miscarriage, for a medically terminated pregnancy, the benefit is granted for 6 weeks from the date of termination.
  • Sickness Arising Out of Pregnancy/Confinement/Miscarriage/MTP: If an insured woman suffers from an illness arising directly from pregnancy, confinement, miscarriage, or medical termination of pregnancy, the benefit is extended for an additional period of one month beyond the initial duration, provided it is certified by a medical practitioner.
  • Adoption: For an insured woman who legally adopts a child below the age of three months, Maternity Benefit is provided for a period of 12 weeks from the date the child is handed over to the adopting mother.
  • Commissioning Mother: A commissioning mother (who procures a child through surrogacy) is also entitled to Maternity Benefit for 12 weeks from the date the child is handed over to her.

Disablement Benefit

Disablement Benefit is provided to an insured person who suffers a loss of earning capacity due to an employment injury or an occupational disease specified under the Act. This benefit is divided into two categories: Temporary Disablement Benefit and Permanent Disablement Benefit.

  • Temporary Disablement Benefit (TDB): This benefit is payable from the date of the employment injury and continues as long as the temporary disablement lasts. There is no waiting period for TDB. The rate of TDB is 90% of the average daily wages of the insured person. This ensures that the worker receives substantial financial support during the recovery period, allowing them to focus on healing without immediate financial stress.
  • Permanent Disablement Benefit (PDB): When the temporary disablement ceases, and a permanent impairment of earning capacity is assessed by a Medical Board, PDB becomes payable. The amount of PDB depends on the percentage of loss of earning capacity as determined by the Medical Board. If the loss of earning capacity is severe, the benefit is paid periodically for life. For minor disablements (where the assessed loss of earning capacity is below a certain threshold), the benefit may be commuted into a lump sum payment, providing immediate financial relief. The calculation for PDB involves multiplying the assessed percentage of disablement by the full rate of benefit (90% of average daily wages), effectively providing a proportionate benefit for life. Occupational diseases, as listed in Schedule III of the ESI Act, are treated as employment injuries for the purpose of disablement benefits.

Dependants’ Benefit

Dependants’ Benefit provides periodical payments to the eligible dependents of an insured person who dies as a result of an employment injury or an occupational disease. This benefit serves as a crucial social security measure for families who have lost their breadwinner due to work-related incidents.

The eligibility for Dependants’ Benefit is contingent upon the death of the insured person being directly attributable to an employment injury (which includes occupational diseases). The total rate of Dependants’ Benefit is 90% of the average daily wages of the deceased insured person, which is then distributed among the eligible dependents according to a prescribed ratio:

  • Widow: The widow of the deceased insured person is entitled to receive 3/5 of the full rate of benefit for life or until remarriage. If there are multiple widows, the amount is equally divided among them.
  • Widowed Mother: The widowed mother of the deceased is entitled to receive 2/5 of the full rate of benefit for life.
  • Children: Each legitimate or adopted son is entitled to 2/5 of the full rate until they attain the age of 25 years. Each legitimate or adopted unmarried daughter is entitled to 2/5 of the full rate until marriage. The total amount for all children is equally divided. If there are no primary beneficiaries (widow or children), other dependents such as an invalid child, dependent parent, or minor brother/sister may become eligible for the benefit under specific conditions. This benefit is a continuous source of income for the family, helping them cope with the sudden loss of financial support.

Funeral Expenses

Funeral Expenses is a one-time cash payment provided to the eldest surviving member of the deceased insured person’s family or to the person who actually incurs the expenditure on the funeral of the deceased. This benefit is provided irrespective of whether the death was due to an employment injury or otherwise, provided the deceased was an insured person at the time of death. The current amount payable for funeral expenses is Rs. 15,000/-. This small but significant benefit aims to alleviate the immediate financial burden associated with funeral arrangements during a difficult time for the family.

Rehabilitation Allowance

Rehabilitation Allowance is a cash payment provided to an insured person who is undergoing physical rehabilitation treatment at an ESI Medical Institution or any other approved institution, after suffering an employment injury or a severe illness that has rendered them temporarily incapable of earning. The purpose of this allowance is to support the insured person financially during their rehabilitation period, which might involve intensive therapy, training, or recovery that prevents them from working. The rate of this allowance is equivalent to the Disablement Benefit (90% of wages) and is payable during the period the insured person is admitted in the rehabilitation center for treatment.

Vocational Rehabilitation

Vocational Rehabilitation is not a direct cash benefit in the same way as Sickness or Maternity Benefit, but rather a facilitative benefit aimed at enabling disabled insured persons to regain their earning capacity. This involves providing vocational training to insured persons who have suffered disablement due to employment injury and are unable to continue in their previous occupation. The training is aimed at helping them acquire new skills that would allow them to take up alternative gainful employment. These training programs are typically provided through Vocational Rehabilitation Centres (VRCs) established by the Ministry of Labour & Employment. During the period of vocational training, the insured person continues to receive their Disablement Benefit, ensuring they have financial support while retraining for a new career path.

Unemployment Allowance (Rajiv Gandhi Shramik Kalyan Yojana - RGSKY)

The Rajiv Gandhi Shramik Kalyan Yojana (RGSKY) was introduced as an unemployment allowance scheme under the ESI Act, providing relief to insured persons who lose their employment involuntarily due to factory closure, retrenchment, or permanent invalidity. This benefit acts as a crucial safety net during periods of economic hardship caused by job loss.

To be eligible for Unemployment Allowance, an insured person must have been in insurable employment for a minimum period of two years and must have contributed for at least 78 days in each of the four immediately preceding contribution periods. The allowance is paid at the rate of 50% of the average daily wages for the first 12 months of unemployment, and then at 25% for the subsequent 12 months, for a maximum cumulative period of 24 months. Beyond the cash allowance, eligible insured persons and their families also receive medical care from ESI hospitals and dispensaries during the period they are receiving unemployment allowance. Additionally, the scheme facilitates vocational training to help the unemployed insured persons re-skill themselves and find new employment opportunities.

Confinement Expenses

Confinement Expenses are provided as a one-time lump sum payment to an insured woman or the wife of an insured person who is not eligible for Maternity Benefit due to non-fulfilment of the required contribution conditions, but where medical services are available at an ESI institution. This benefit ensures that even in cases where the full Maternity Benefit cannot be availed, some financial assistance is provided for the expenses associated with childbirth. The current amount payable for confinement expenses is Rs. 7,500/- per confinement, provided the delivery takes place in an ESI hospital or in an empanelled private hospital as referred by an ESI doctor.

The ESI Act operates on a contributory principle, where both employees and employers contribute a fixed percentage of the wages to the ESIC fund. These contributions are directly linked to the eligibility for most cash benefits, ensuring a sustainable model for the provision of social security. The Employees’ State Insurance Corporation (ESIC) is the autonomous body responsible for the administration of the Act, including the collection of contributions, disbursement of benefits, and management of the vast network of ESI hospitals and dispensaries. Any disputes regarding benefits are typically resolved through a structured process involving Medical Boards for assessment of disablement and ESI Courts for legal adjudication.

The Employees’ State Insurance Act, 1948, fundamentally redefines the relationship between employers and employees by placing a collective responsibility for social welfare. It has successfully established a multi-faceted social security scheme that offers a robust safety net against various contingencies of life and work. By providing comprehensive medical care, financial assistance during illness, maternity, and unemployment, and support in cases of disablement or death due to employment injury, the ESI scheme significantly contributes to the economic stability and well-being of the working class and their families.

The continuous evolution and expansion of the ESI scheme, including the introduction of new benefits like the Unemployment Allowance and enhanced provisions for existing ones, reflect its adaptive nature and commitment to addressing the contemporary needs of the workforce. By ensuring access to quality healthcare and providing crucial income support, the ESI Act not only protects vulnerable workers but also fosters a more secure and productive working environment, thereby playing an indispensable role in India’s social security architecture and contributing to national development.