AMITY SCHOOL OF HOSPITALITY

Hotel law assignment

Employees State Insurance Act

SUBMITTED BY
JEET GANDHI
BHM VTH Sem.
Enrolment No. A20728917001
 Employees' State Insurance Act

Employees' State Insurance (abbreviated as ESI) is a self-financing

social security and health insurance scheme for Indian workers. The
fund is managed by the Employees' State Insurance Corporation
(ESIC) according to rules and regulations stipulated in the ESI Act
1948. ESIC is a Statutory Body and Administrative Ministry
is Ministry of Labour and Employment, Government of India.

History:
In March 1943, Prof. B.N.Adarkar was appointed by the Government
of India to create a report on the health insurance scheme for
industrial workers. The report became the basis for the Employment
State Insurance (ESI) Act of 1948. The promulgation of Employees’
State Insurance Act, 1948 envisaged an integrated need based social
insurance scheme that would protect the interest of workers in
contingencies such as sickness, maternity, temporary or permanent
physical disablement, death due to employment injury resulting in
loss of wages or earning capacity. The Act also guarantees reasonably
good medical care to workers and their immediate dependents.
Following the promulgation of the ESI Act the Central Govt. set up
the ESI Corporation to administer the Scheme. The Scheme thereafter
was first implemented at Kanpur and Delhi on 24 February 1952. The
Act further absolved the employers of their obligations under the
Maternity Benefit Act, 1961 and Workmen’s Compensation Act
1923. The benefits provided to the employees under the Act are also
in conformity with ILO conventions. The act was initially intended for
factory workers but later became applicable to all establishments
having 10 or more workers. As on 31 March 2016, the total
beneficiaries are 82.8 million.
About:
Employees' State Insurance Corporation (ESIC), established by ESI
Act, is an autonomous corporation under Ministry of Labour and
Employment, Government of India. As it is a legal entity, the
corporation can raise loans and take measures for discharging such
loans with the prior sanction of the central government and it can
acquire both movable and immovable property and all incomes from
the property shall vest with the corporation. The corporation can set
up hospitals either independently or in collaboration with state
government or other private entities, but most of the dispensaries and
hospitals are run by concerned state governments.

Benefits:
For all employees earning ₹21,000 (US$300) or less per month as
wages, the employer contributes 3.25% and the employee contributes
0.75%, total share 4%. This fund is managed by the ESI Corporation
(ESIC) according to rules and regulations stipulated there in the ESI
Act 1948, which oversees the provision of medical and cash benefits
to the employees and their family. ESI scheme is a type of social
security scheme for employees in the organised sector.

The employees registered under the scheme are entitled to medical

treatment for themselves and their dependents, unemployment cash
benefit in certain contingencies and maternity benefit in case of
women employees. In case of employment-related disablement or
death, there is provision for a disablement benefit and a family
pension respectively. Outpatient medical facilities are available in
1418 ESI dispensaries and through 1,678 registered medical
practitioners. Inpatient care is available in 145 ESI hospitals and 42
hospital annexes with a total of 19,387 beds. In addition, several state
government hospitals also have beds for the exclusive use of ESI
Beneficiaries. Cash benefits can be availed in any of 830 ESI centres
throughout India.

Section 46 of the Act describes all benefits that an injured employee

can avail. It is important to note that a worker can avail these benefits in
the course of employment only.

For example, if a worker suffers an injury, this injury must be an

employment injury only.

Section 2(8) says that an employment injury is a personal injury that an

employee suffers. Such injury must be the result of an accident or
occupational disease that arises out of employment.

Apart from benefits related to injuries and sickness, some ESI benefits
can arise after maternity as well. The ESI Corporation provides some
compensation and financial support to employees during these periods.

The following are some ESI benefits that employees can avail
under the ESI Act

 Medical benefit
 Sickness benefit
 Maternity benefit
 Dependants benefits
 Disablement benefits
 Other benefits
1. Medical benefit
Every insurable employee under the Act gets medical benefits the day
he becomes an employee. This benefit extends to his family members
as well. This medical benefit has no ceiling in terms of expenditure on
healthcare.

Hence, the ESI Corporation takes care of all treatment expenses as per
its rules.

Apart from general healthcare benefits, retired and permanently

disabled workers also get an annual premium of Rs. 120. This benefit
extends to the spouses of the workers as well.

2. Sickness benefit
Insurable employees under the Act can draw some cash compensation
in case they fall sick. This compensation is generally 70% of
their wages during the period of sickness for a maximum of 91 days in
a year.

In order to avail this sickness benefit, a worker must pay his

contribution for 78 days out of 6 months. Hence, he cannot seek this
benefit if he contributes for less than 78 days.

3. Maternity benefit
All female insurable employees can avail maternity benefits under the
Act in cases of pregnancy or confinement.

Confinement, in this case, means labour which results in the birth of a

living child. It can also mean birth after 26 weeks of pregnancy,
whether the child is living or not.

This maternity benefit is generally payable to employees for three

months. It may, however, be extendable for one more month depending
on medical advice.
The compensation amount in such cases is the full wage amount of the
employees. This is payable only if the employee makes a contribution
for 70 days in the preceding year.

4. Dependants benefits
ESI benefits extend not only to the employees but to their dependents
as well in case of the employee’s death. Such death, however, must
occur in the course of an employment injury or an occupational hazard.

This compensation is generally 90% of the dead employee’s wages in

the form of monthly payments.

5. Disablement benefits
In case an employee suffers some disablement due to an employment
injury, he can seek disablement benefits. Such disablement may be
either temporary or permanent.

In the case of temporary disablement, the compensation is generally

90% of the wage amount until the disablement continues. The
employee can claim this benefit irrespective of whether or not he paid
his contribution.

As far as permanent disablement is concerned, the compensation

amount depends on 0n the extent of the injury. The Medical Board first
determines the extent of the employee’s loss of earning capacity and
then decides it.

6. Other benefits
Apart from these five basic ESI benefits, an insurable employee can
avail the following miscellaneous benefits also:

a) Funeral expenses: The dependents of a deceased employee receive

Rs. 10,000 to perform his last rites.
b) Vocational/physical rehabilitation: This is generally payable to
permanently disabled employees. They can avail of this benefit for
undergoing vocational and physical rehabilitation.

c) Old age medical care: This is payable for employees retiring on

superannuation or under VRS/ERS. Even persons who leave
employment after suffering a permanent injury and their spouses can
avail this benefit. The compensation amount here is generally Rs. 120
per month.

Recent years have seen an increasing role of information technology

in ESI, with the introduction of Pehchan smart cards as a part
of Project Panchdeep. In addition to insured workers, poor families
eligible under the Rashtriya Swasthya Bima Yojana can also avail
facilities in ESI hospitals and dispensaries. ESI Corporation also runs
medical, nursing and paramedical schools in some ESI hospitals
across India.

Medical and dental colleges:

Employees' State Insurance Corporation runs medical, dental, nursing
and paramedical schools in many locations across India. Presently,
there are 9 medical colleges and 2 dental colleges established by the
ESI Scheme. These colleges admit students on the basis of marks
obtained in the competitive examinations conducted at the central
level, the National Eligibility cum Entrance Test (NEET-UG).

There are 6 medical colleges managed by the Ministry of Labour and

Employment (India) under the ESI Corporation which are located
at Kolkata, Faridabad, Hyderabad, Chennai, Bengaluru and Gulbarga.

The administration of the remaining 3 medical colleges have been

handed over to the respective State Governments under various MoU.
They were established by the ESI Corporation but are managed by the
state government since inception. They are:
 Shri Lal Bahadur Shastri Government Medical College & Hospital
Mandi, Himachal Pradesh.
 ESIC Medical College, Coimbatore, Tamil Nadu.
 Government Medical College, Kollam, Kerala.
 ESIC Medical College, Gulbarga, Gulbarga.

Scheme and Applicability:

Employees’ State Insurance Corporation (“ESIC”) is a statutory
corporate body set up under the ESI Act 1948, which is responsible
for the administration of ESI Scheme. The ESI scheme is a self-
financed comprehensive social security scheme devised to protect the
employees covered under the scheme against financial distress arising
out of events of sickness, disablement or death due to employment
injuries.
The ESIC has its headquarters at New Delhi besides 23 regional
offices, 26 sub-regional offices in the states and over 800 local offices
throughout the country to support the implementation of ESI scheme.
In addition, the Medical Benefit Council, a specialized body that
advises the ESIC on the administration of Medical benefit is
functioning.

The ESI scheme is applicable to all factories and other establishments

as defined in the Act with 10 or more persons employed in such
establishment and the beneficiaries’ monthly wage does not exceed
Rs 21,000 are covered under the scheme. Whether the employer has
employed 10 or more employees, all employees employed by the
employer, agnostic of the salary are reckoned.
The applicability of the scheme is explained through a flow chart
below:
Features of the scheme:

Complete medical care and attention are provided by the scheme to

the employee registered under the ESI Act, 1948 at the time of his
incapacity, restoration of his health and working capacity. During
absenteeism from work due to illness, maternity or factories accidents
which result in loss of wages complete financial assistance is
provided to the employees to compensate for the wage loss. The
scheme provides medical care to family members also. As on 31
March 2017, 2.93 crore employees are covered under this scheme
with the total number of beneficiaries summing up to 12.40 crores.
Broadly, the benefits under this scheme are categorized under two
categories, 1) cash benefits (which includes sickness, maternity,
disablement (temporary and permanent), funeral expenses,
rehabilitation allowance, vocational rehabilitation and medical bonus)
and, 2) non-cash benefits through medical care.
The scheme is self-financing and being contributory in nature. The
funds under the ESI scheme are primarily built out of the contribution
from the employees and employers payable monthly at a fixed
percentage of wages paid. Currently, the employee contribution rate is
1.00% of the wages and that of employers is 4.00% of the wages paid.
For newly implemented areas, the contribution rate is 1% and 3%
respectively for employee and employer for the first 24 months. The
employer makes the contribution form its own share in favor of those
employees whose daily average wage is Rs 137 as these employees
 are exempted from own contribution The employer is required to pay
his contribution and deduct employees’ contribution from wages and
deposit the same with ESIC within 15 days from the last day of the
calendar month in which the contribution fall due. The payment can
either be done online or through designated and authorized public
sector banks.

ESIC contribution rates (Reduced w.e.f. 15/02/2019)

Particulars Current Rate Reduced Rate

Employer Share 4.75% 4.00%

Employee Share 1.75% 1.00%

Total 6.50% 5.00%

Is ESIC mandatory?

ESI is mandatory if the employee is having salary of less than or

equal to 21000 and the establishment has 10 or more workers.
However, while counting workers only permanent employees count,
not hourly/daily wage contract workers. Also till now the whole
country is not covered by esi act. Only those areas notified by govt. of
India (ministry of Labour) is covered. The areas notified is a dynamic
list and progressively newer areas are added. You can check with the
esi website or nearest esi office to know if your particular area is
covered.
Also, if I may add, esi service provides important health / disability /
unemployment insurance. Denial of esi facility by eligible employers
is not only illegal but also immoral.
How it is related to Hotel Industry?
As going through the above information on Employees Insurance Act
I completely agree that it is not only interconnected with every other
sector but with the hotel industry too; because esi states that a factory/
organization/ entity is only recognized when it has 20 or more than
20 employees working in it.

So according to the law it is much more related to an Hotel as it has

all kinds of employees i.e. on contract base, interns, temporary and
permanent. And this law is applicable to all kinds of employees
working in the hotel.

This law covers their(employees) wages, medical charges if any

accident during duty, sickness benefits, cases of maternity etc. Hotel
has to provide 90% of wages to his/her family in case of death during
his/her duty. And due to this law nowadays hotel has to mandatorily
pay every intern also.

If hotel fails to do such all things than very employee can complain
and file a case on this…