Employee State Insurance (ESI)

What is Employee State Insurance (ESI)?

Employee State Insurance (ESI) is a health insurance and social security scheme for employees who earn less than or equal to Rs. 21,000 per month. This scheme applies to any firm which employs 10 or more employees and therefore the companies need to register with ESIC within 15 days from the date of its applicability to them. ESI is a contributory self-fund for the employees.

The ESI scheme is meant to protect employees in the organization against disablement, sickness, unemployment, & death because of injury or illness. Employees covered under ESI receive many benefits for their families as well.

Under this scheme, the employee also receives cash compensation for loss of salary or because of employment injury or sickness. Other benefits under ESI include maternity benefits, disablement benefits, funeral expenses, family pensions, etc.

The employee contribution rate is 1% and the employer contribution rate is 4% for the first 24 months. The employee’s contribution rate to ESI is 1.75% of gross salary and the employer’s contribution to ESI is 4.75% of the gross salary. Year by year, it is changed.

The rate of the contribution in the ESI scheme is calculated on the wages paid.

Advantages of ESI Scheme:

• Employees easily get medical support for themselves and their families at an uncertain.
• Pregnant women take maternity leave and expenses as per this scheme.
• Elder members will get medical expenses.
• If an employee dies during employment then 90% of their salary is paid to their dependents every month under this scheme.

Also, See: ESI card