What is ESI

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Glossary

ESIC or Employee’s state insurance scheme is a self-financing social security and health insurance scheme for Indian workers regulated by the Indian government. ESIC scheme comes under the Indian ESI act of 1948 whose main objective was to protect the employees in their trying times such as disability, illness, maternity, employment injury, and so on. If the employee has an ESIC scheme they can claim that insurance money in medical care for their family.

ESI scheme is applicable in all forms of working establishments such as corporate companies, factories, entertainment industry, medical care, food business, etc. If a company has more than 10 employees then this scheme is applicable in that organization. Employees whose monthly income is Rs. 21,000 or less can avail of the benefits of this scheme.

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Let’s look at the following to know more about ESIC.


ESI meaning

As mentioned earlier, ESI is a scheme launched and regulated by the Indian government to help employees in their testing times when they might be short on finances and in urgent need like illness, injury, and such.

What is ESI in Salary?

In India, employees have a right to certain benefits, which are governed by the Employee State Insurance Act of 1948 and administered by the ESI Corporation. One of them is the Employees’ State Insurance Scheme (ESI) which is a health insurance scheme that provides medical and cash benefits to employees, as well as their family members, in the case of sickness, maternity, or injury.

Eligibility criteria – An employee earning a monthly salary of less than INR 21,000.

What is ESI Scheme?

The ESI Scheme is a salary insurance program that the government of India provides to its citizens. The goal of the ESI Scheme is to provide health benefits to employees and their families in various sectors.

The scheme covers all factories (and other establishments as defined in Section 2(12) of the Act) employing ten or more persons, using power, and non-power-using factories employing twenty or more persons, and shops/establishments employing twenty or more persons whether using power or not.

It is managed by the Employees’ State Insurance Corporation (ESIC) according to rules and regulations established by the ESI Act of 1948 and subsequent amendments passed in 1966 and 2010. The ESIC has its headquarters in New Delhi.


ESI full form

The full form of ESI is Employees State Insurance. ESIC- employee state insurance corporation is set as an autonomous body by the government to manage the ESI scheme.


How to do ESI calculation?

The ESI is calculated on an employee’s gross salary i.e. income earned before any taxes, benefits, or deductions such as gratuity and all.
The money contributed for ESI comes from employees’ and employers’ pockets. An employee contributes 1.75% of their salary/gross pay while an employer contributes 4.75% of the employee’s salary/gross pay. The total contribution made is 6.50% of the employee’s salary.

This can easily be managed using payroll management software.


What is the ESIC act 1948?

The ESIC act 1948 is made to secure employees in times of adversity and it is applicable for all the working establishments. This act is applied to every person with or less than 21,000 income. It benefits them by giving an unemployment allowance equivalent to 50% of the wage for up to two years. For instance- ESI hospitals and dispensaries during the IP period are given unemployment allowance for medical care. Moreover, expense on fees and traveling allowance for vocational training is also borne by ESIC.

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Sukriti Saini

Sukriti Saini works as a content marketing strategist at HROne. She has done Bachelors in Journalism from Delhi University and carries several years of experience in content development. HR trends, Productivity, Performance and topics related to Employee Engagement garner most of her writing interest here. During leisure, she loves to write and talk about fashion, food & life.

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