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Employee's State Insurance Act 1948 - ESI Act

ESI Act is also know as Employee's State Insurance Act 1948. It is the first major legislation on social security for the industrial workers in India. 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. It has offices across India to help with the implementation of the scheme. Apart from it ESCI also runs medical, dental, nursing and paramedical schools in many locations across India.


The ESI Act 1948, encompasses certain health related eventualities that the workers are generally exposed to; such as sickness, maternity, temporary or permanent disablement, Occupational disease or death due to employment injury, resulting in loss of wages or earning capacity-total or partial. It also provide dependent benefits to the employee family, 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.


ESI acts as a social welfare scheme for the employees in organized sector. It is applicable to all factories and other establishments with 10 or more workers as defined in the act . The scheme is to applicable employees who are earning ₹21,000 or less per month as wages.

In terms of contribution the employer share is 3.25% and the employee share is 0.75%.


If any one makes a make false statement for the purpose of causing any payment or benefit which is not authorized under or tries to avoid the payment to be made by himself under this act through any other means as such shall be punishable with imprisonment for a term which may extend to six months or with not exceeding 2000 or both.


In terms of punishment for failure to pay contribution by the employer through deductions from the wages, non-compliance with the act, dismisses, reduces or otherwise punishes an employee, obstructs any Inspector or other officials of the corporation in the discharge of duties then it is an offence and carries imprisonment for a terms which may extend to one year or with fine which may to extend to ₹ 4000 or both.


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Read other: Employee Stock Option Plan also known as ESOP's are allocated by companies to their employees either as a part of pay check or incentive. ESOP's are mostly allocated in India by Startups, Bootstrapped companies and by some major Tech firms and MNC's.



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