ESI Registration

ESI Registration in India

The Employees' State Insurance Act, 1948 was enacted by the legislature as an integrated need based on the social insurance scheme. ESIC stands for Employee State Insurance Corporation which is an autonomous body created by the Ministry of Labor and Employment that governs and regulates the Employee State Insurance in India. To be eligible for ESI Registration in India, you must have more than 10 employees or workers.

Employee State Insurance is a self-financing social security scheme, initiated for the benefits of the Indian workers by providing them with the necessary benefits such as medical facility, monetary facilities and such other benefits from his employer.

Any non-seasonal factory and company having more than 10 employees (in some states it is 20 employees) who have a maximum salary of Rs. 21,000/- has to mandatorily register itself with the ESIC. Under this scheme, the employer needs to contribute an amount of 3.25% of the total monthly salary payable to the employee whereas the employee needs to contribute only 0.75% of his monthly salary every month of the year.

What are Eligible Entities for ESI Registration?

Following entities employing 10 or more employee are liable to get ESI Registration done:

• Newspaper Establishment
• Private Education Institutes
• Establishments engaged in Motor Transportation
• Cinemas
• Restaurants and Hotels
• Shops

What are the Benefits of ESI Registration

• Unemployment Benefits
• Medical Benefits
• Maternity Benefits
• Deceased Employee
• Funeral Expenses
• Retirement Benefits
• Benefits for Permanent Disablement
• Sickness Benefits

Sickness Benefits

Sickness benefits are provided to the employee at the rate of 70% of his salary in case such sickness continued for exceeding 91 days in a year, and the same is also certified.

Medical Benefits

Medical benefits are provided to the insured person along with his family members. Full medical care is provided to all persons registered under ESI and their family members from the day the person enters insurable employment. There is no ceiling on expenditure on the treatment of an Insured Person or his family member.

Maternity Benefits

Maternity benefits are provided to the women in the form of paid leaves. Maternity benefit for confinement/pregnancy is provided for three months, which is extendable by further one month on medical advice at the rate of full wage subject to contribution for 70 days in the preceding year.

Deceased Employee

90% of the salary of the insured person is given to the family of a deceased employee, in case such death occurred while in employment.

Funeral Expenses

Funeral expenses are provided in case of death of any employee covered under ESIC. An amount of Rs.10,000/- is payable to the dependents or to the person who performs last rites from day one of entering insurable employment.

Retirement Benefits

Medical care and benefits are provided after retirement or in old age.

Benefits for Permanent Disablement

In case there is any permanent disablement to the insured person, 90% of his salary is provided as a monthly payment in the form of insurance benefit.

Unemployment Benefits

An insured person having insurance for more than three years is provided unemployment benefits when they become unemployed. Under the Rajiv Gandhi Shramik Kalyan Yojana, unemployment allowance is payable to an insured person who becomes unemployed after being insured three or more years, due to closure of factory/establishment, retrenchment or permanent invalidity.

What are the Documents Required for ESI Registration in India?

• A registration certificate obtained either under the Factories Act, or Shops and Establishment Act
• Certificate of Registration in case of Company, and Partnership deed in case of a Partnership
• Copy of Bank Statement
• Copy of License issued in the Name of Establishment
• Memorandum of Association and Articles of Association of the Company
• A list of all the employees working in the Establishment
• Copy of Electricity Bill
• Copy of Rent/Lease Agreement
• PAN Card of the Business Entity as well as all the Employees working under the entity
• Copy of Board Resolution
• The compensation details of all the employees
• A cancelled cheque of the Bank Account of the Company
• List of Directors of the Company
• List of the Shareholders of the Company
• A register containing the attendance of the employees

Penalty in Failure to get ESI Registration & Returns

In case of any non-compliance by an employer, such as failure to get ESIC employer registration online or not fulfilling ESI return filing procedure, he shall be liable for a fine of INR 10,000/-.

What are the Post-Registration Compliances Under ESI?

• Maintenance of attendance register
• A complete register of wages for workers
• Inspection book
• Monthly return & challan within 15th of succeeding month
• The register maintained to record any accidents that happened on the premises.

ESI Monthly Contribution

Both employee's and employer's contribution is required at a specific rate:

• Employee: Employee has to contribute 0.75% of his basic wages to the ESI Fund.
• Employer: Employer has to contribute 3.25% of the basic wage paid to employees.

Employees who earn up to Rs.137 of daily average wage are not entitled to be a part of contribution. However, it is the responsibility of the employer to contribute their own shares in respect of these employees.

Returns Filed Every Year After the Registration is Finalized

After the registration, ESI Returns have to be filed twice a year. The following Documents are required for filing the returns:

• Register of attendance of the employees.
• Form 6 – Register.
• Register of wages.
• Register of any accidents which have happened on the premises of the business.
• Monthly returns and challans.