Employees State Insurance (ESI) Scheme in India

calendar18 Jul, 2020
timeReading Time: 4 Minutes
ESI scheme

To empower social security for workers in India, the Employees State Insurance Act, 1948, was promulgated by the Government of India by the Parliament.

Under this ESI scheme, it is made to cover workers who protect them with medical care for the insured and their dependents and offer a variety of other benefits during the loss of wages or disablement. Also, the scheme offers pension known as a dependent benefit to the insured person’s family members in case of death or any injury due to any occupational hazards while at work.

What Is Employees State Insurance (ESI) Scheme?

The primary objective by the Government is to implement the ESI scheme and give cover to workers from certain health-related contingencies such as a permanent or any temporary disablement, sickness, death due to employment injury or occupational disease, which can impact upon the earning capacity of the worker who leads to loss of income. This scheme enables workers to lessen the financial burden due to any unfortunate casualties. The scheme also provides maternity benefits to the workers or beneficiaries. 

Employees State Insurance Act, 1948

The Parliament notified the Employees State Insurance Act, 1948, or popularly known as the ESI Act. It was the first legislation on Social Security for workers post-independence of a country. The ESI Act 1948 gives medical cover and other essential benefits to workers, and employees are working in factories, business establishments, and organizations such as hotels, road transport, cinemas, newspapers, educational or medical institutions, shops, wherein ten or more persons get employed.

The ESI scheme offers benefits to both workers and their dependents in case of any unfortunate eventualities. Under the ESI Act, employees, and workers employed at the categories mentioned above, earning wages up to Rs. 21,000 per month are entitled to this social security scheme. The ESI Act aims at respecting human dignity during crises by protecting them from poverty, deprivation, and social degradation.

What is covered under ESI Scheme?

Initially, the ESI Scheme was implemented in Kanpur and Delhi in 1952, two major industrial centers at that time. However, this scheme found itself being adopted across the country with the industrial revolution picking up pace. The ESI scheme of 31 March 2019 has been implemented in more than 34 states and Union Territories.

What is not covered under the ESI Scheme?

The ESIC scheme presently does not cover workers and employees earning more than Rs. 21,000 per month. In the case of person with a disability, the maximum wage is capped at Rs.25000 per month. Also, in the state of Maharashtra and Chandigarh, the current threshold for coverage is 20 employees and not the 10 employees in the case of other states or UTs.

Read our article: EPFO Slashed Interest Rate on Provident Fund Deposits to 8.5%

Features & Benefits of Employees State Insurance Scheme ESIS

The salient features of the ESI scheme are as below which is provided by the Employees State Insurance Corporation (ESIC)

Employees State Insurance Scheme ESIS


Under this scheme, the insured’s medical expenses are covered through affordable and reasonable healthcare facilities. Also, the worker or an employee is covered from day one of the person’s employment.


Under this scheme, the beneficiary can avail 100% of the daily wages for up to 26 weeks, which can be further extended to one month based on medical advice. In the case of a miscarriage, the benefit is 6 weeks, while in the case of adoption, it is 12 weeks.


In the temporary disablement of the worker, they are eligible for the monthly wage of 90% until they recover. In the case of any permanent disability, 90% of the monthly wage can be availed for a lifetime.


During medical leave, a scheme offers cash flow during the said period. The worker can avail upto 70% of the daily wage for a maximum of 91 days. This must be availed in two consecutive periods.


For a period of 24 months, this scheme offers a maximum of up to 50% of the average monthly wage in a case of involuntary loss of non-employment or due to permanent invalidity due to injury.


Through this scheme, dependents of the insured receive financial assistance in case of illnesses or injuries while at work. For instance, dependents are eligible for the monthly payments, which must equally be distributed among surviving dependents.


Under a scheme, workers and employees are covered from day one of their employment. It includes both the insured and their dependents.

Funeral Costs

The ESIC gives an amount of Rs. 15 000 towards funeral costs. This is paid to the dependents or to the individual who does the last rites of the insured person.

Confinement Costs

In case of the confinement occurs at a location where required medical care under the scheme is not available, the insured or their dependent can have an available confinement cost.

Vocational Rehabilitation

The ESIC provides this scheme benefit based on the requirement of the insured. This is extended to permanently disabled, injured individuals for Vocational Rehabilitation (VR) training at VRS.

Physical Rehabilitation

This scheme benefit is also provided based on the need, especially in the case of any disability due to employment injury.

Old Age Medical Care

When any insured person gets to retire and attains retirement age or takes VRS and ERS or when a person has to leave the employment because of permanent disability, the insured and spouse will receive Rs. 120 per annum.


With an industrial revolution during the 1950s, manufacturing industries began employing several workers to speed up manufacturing processes. The legislation’s objective is to provide a security system to these vast numbers of workers, especially during health-related eventualities through the ESI scheme.

We, as CorpBiz, will be at your disposal if you seek expert advice on any aspect and complete compliance regarding ESI registration. We help you and ensure full compliance concerning various requirements based on your anticipated activities, ensuring the productive and well-timed completion as per your expectation.

Read our article: How to obtain ESI Registration in India and Returns Filing Procedure

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