ESIC AMENDMENT ACT, 2010- KEY HIGHLIGHTS

The Government of India has notified ESIC Amendment) Act 2010 vide official gazette dated 25 May
2010. The Employees State Insurance Act, ESI Act for short, was enacted by the Government of India in
1948. The Government of India through notification in Official Gazette dated 25 May 2010 has enacted
The Employees’ State Insurance (Amendment) Act, 2010 to amend the earlier ESIC Act, 1948.

These amendments will substantially improvise the medical and other benefits under the Scheme.
Emphasis has been given for development and expansion of infrastructure for augmenting the
benefits under the Scheme.
Benefits under the scheme have also been extended to apprentices and trainees employed under
Apprentice Act and Standing Order Act. Amendments also aim to improvise the administration of the
scheme and to overcome practical difficulties experienced in past during inspection and assessment.

The ESI Act of 2010 replaces the old Act of 1948. The rationale is to expand the infrastructure for
augmenting the benefits available under the scheme. The scope of existing benefits is also being
extended by adding/ modifying the existing provisions.

Introduction
The Government of India through notification in Official Gazette dated 25 May 2010 has enacted The
Employees’ State Insurance (Amendment) Act, 2010 to amend the ESIC Act, 1948. Except section 18,
provisions as contained in Amendment Act will be applicable with effect from 1 June, 2010. Provisions of
section 18 shall be deemed to have come into force with effect from 3 July, 2008.

Objective
These amendments will substantially improvise the medical and other benefits under the Scheme.
Emphasis has been given for development and expansion of infrastructure for augmenting the benefits
under the Scheme. Benefits under the scheme have also been extended to apprentices and trainees
employed under Apprentice Act and Standing Order Act. Amendments also aim to improvise the
administration of the scheme and to overcome practical difficulties experienced in past during
inspection and assessment.

Salient features of some of the important amendments

1. Vide amendment in sub-section 5 to section 1 of the ESIC Act, 1948 (hereinafter referred as Act), the
appropriate Government is empowered to extend the provisions of ESIC Act 1948 to any other
establishment or class of establishments, industrial, commercial, agricultural or otherwise after
giving one month notice of its intention of doing so by notification in Official Gazette instead of notice
period of six months.
2. Definition    of “dependents” as contained in clause 6A of section 2 of the Act, has been extended to
enlarge the number of beneficiaries under the act such as;
—   A widow, a legitimate or adopted son below the age of 25 years and an unmarried legitimate or
adopted daughter.
—   The age limit of the dependants has been enhanced from 18 to 25 [sub-clause (i) and (ii)]
—   Exclusion granted to apprentice engaged under the Apprentices Act, 1961 or under the Standing
Orders of the establishment for coverage under scheme has been withdrawn vide amendment   in clause
9 of the Act. Hence, apprentices engaged under the Apprentices Act, 1961 or under Standing Orders of
the establishment will also be covered under the purview of the ESIC Scheme with effect from 1 June,
2010.
—   A dependent parent as   per definition of   “family” has been substituted so as to include “A minor
brother or sister wholly dependent upon the earnings of the insured person in case the insured person is
unmarried and his or her parents are not alive”. It has been also clarified that de pendent parents to   
include “Dependent parents,   whose income from all sources does not exceed such income as pre
scribed by the Central Government”.
3. The definition of Factory under Section 2(12) has been amended to expand coverage of smaller
factories. The amended Act covers all factories which employ 10 or more persons irrespective of the fact
whether the manufacturing process is being carried out with the aid of the power or without the aid of
the power.
4. I Deputy General – ESIC is being made Chairman of the Medical Benefit Council to improve quality of
medical benefits. (Section 10 of the Act)
5. I The ESIC Corporation can now appoint consultants and specialists on contract basis for better
delivery of super-specialty         services.  (new proviso added to clause (a)     sub? section (2) of section
17)
6. The designation of Inspector has been re-designated as “Social Security Officer to enroll them as
facilitator of the Scheme rather than to                act            as            mere        inspectors. (amendment to
section 45)
7. The ESIC Corporation may nominate any officer duly authorized to carry out re-inspection or test
inspection of the records and returns already inspected by Social Security Officer. (A new sub-section 4
added to section 45 of the Act).

Medical benefits to the insured person and his spouse have been extended under circumstances
where insured person retires under Voluntary Retirement Scheme or takes premature retirement. In
earlier Act the benefit was applicable only on attaining the age of superannuation.

1. The procedure for determination of contribution has been streamlined to avoid undue hardship as the
Inspec tors shall not inspect the books of accounts of the establishment beyond the period of five years.
It will resolve all difficulties pertaining to production of records beyond the period of five years for the
purpose of inspection and verification. (new pro viso added to section 45A of the Act)
2. After section 45A, a new section 45AA has been inserted. It provides that, if an employer is not
satisfied with the order of the ESIC Corpora tion, he may prefer an appeal to an appellate authority
within sixty days of the date of order, after depositing 25% of the contribution so ordered OR the
contribution as per his own calculation whichever is higher. It also provides that, if the employer finally
succeeds in the appeal, the excess amount deposited shall be refunded together with interest thereon
as may be specified in regu lation.
3. Accident occurring to an insured person while commuting from his residence to the place of
employment and vice-a-versa shall be deemed to have arisen out of and in the course of employment
for the purpose of benefit under the Act. A new section 51 E has been added for this purpose.
4. Medical benefits to the insured per son and his spouse have been extended under circumstances
where insured person retires under Voluntary Retirement Scheme or takes premature retirement.
Proviso to sub section 3 of section 56 has been substituted to provide the same.
5. State Governments are allowed to set up autonomous organizations to provide certain benefits to
employees in case of sickness, maternity and employment injury under the Scheme. (sub-section 5 has
been inserted to section 58 of the Act)
6. The ESIC Corporation can enter into agreement with any local authority, private body or individual for
commissioning and running the ESI hospitals through third party participation for providing medical
treatment and attendance to insured persons. (sub-section 3 has been inserted to section 59 of the Act).
7. ESIC Corporation may establish medical colleges, nursing colleges and training institutes for its para
medical staff and other employees with a view to improve the quality of the services. A new section 59B
has been included in Act.
8. A new Chapter VA has been added to enable provision for extending medical care to non insured
persons against payment of user-charges to facilitate providing medical care to the below poverty line
(BPL) families and other un-organized sector workers covered       under the Rashtriya Swasthya Bima
Yojana (RSBY).
9. Exemption of a factory or establishment or class of factories or establishments from the operation of
this Act will be granted only if the                 employees in such factories    or  establishments are
otherwise in receipt of benefits substantially similar or superior to the benefits provided under this Act.
It has also been provided that application for renewal of exemption shall be made three months before
the date of expiry of the exemption period and a decision on the same will be taken by the appropriate
Government within a period of two months of receipt of such application. (new proviso added to section
87 of the Act)
10. Exemption granted to factory or establishment from the operation of this Act shall be prospectively
and not retrospectively as per section 91 of the Act.

Directives for Reimbursement of Expenditure

Introduction
In view of complaints received from various employers regarding delay/ non-reimbursement of
expenditure incurred by them for emergency treatment of their employees, ESIC Corporation has issued
guidelines to all the concerned authorities vide letter dated 21 May 2010 covering terms, conditions and
procedures to be followed for timely reimbursement of expenditure incurred by employer on treatment
of its employees covered under ESIC Scheme for providing medical care in emergencies.

Salient features of the guidelines

—   Like super specialty care, re-imbursement will be made by Senior State Medical Commissioner
(SSMC) / State Medical Commissioner (SMC) of the State concerned in respect of emergency treatment
and the total expenditure will be borne by ESIC
—   Employers will have to submit treatment papers and original bills to SSMC / SMC of the State.
—   SSMC / SMC shall check the entitlement of the Insured Person.
—   SSMC / SMC / Medical Referee shall verify the emergency nature of the case. The reimbursement
shall be limited to approved rates of the empanelled hospitals/ Central Government Health Scheme
(CGHS) rates.
—   To avail cash less facilities, employers, may take the Insured Persons in case of emergency to
empanelled hospitals of ESIC, if available nearby

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