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Explore the Benefits of Employees’ State Insurance Scheme (ESIS)

People who are under employment should be knowing about ESI and its benefits. The Employees’ State Insurance Scheme (ESIS) is a self-financing social security scheme that helps Indian workers in case of an emergency. But then, do you know how it works?

Let us read through the basics and benefits of the ESI Scheme.

ESI Scheme - Simplified

The Employees’ State Insurance (ESI) scheme is a social security and health insurance scheme for Indian workers. The ESI Act 1948 protects the employees against the events of sickness, maternity, disablement, and death due to employment injury and provides medical benefit to the insured employees and their families. The scheme provides financial assistance to compensate the loss of wages for non-working days due to sickness, maternity, and employment injury.

The ESI funds are maintained by the employer and employee contributions. There is a monthly fixed contribution of 1.75% from the employee and 4.75% from the employer. The establishments which have 10 or more employees are covered under this Act.

At present, an employee whose earning is Rs. 21,000/- or less per month is covered under the ESI. If an employee whose earning exceeds the wage limit of Rs. 21,000/- after the contribution period, will not be eligible for the benefit.

Contribution Periods and Benefit Period

The financial year for the ESIS is from April to March and this period is divided into two six months span, i.e.,

• H1 – April 1st to September 30th
• H2 – October 1st to March 31st

The relevant benefit period corresponding to each contribution period commences three months after the end of that contribution period, i.e., January to June and July to December

Benefits of the ESI Scheme

The Employee State Insurance Corporation offers several attractive features and benefits to the employees. It not only provides Indian workers with medical benefits but also comes along with different levels of financial security that helps employees during their unemployment or any other financial crisis.

Below are some of the major benefits of the Scheme, such as:

 Sickness Benefits
• Extended Sickness Benefits
 Temporary Disablement Benefits
 Permanent Disablement Benefits
 Dependents' Benefits
 Maternity Benefits
 Funeral Expenses

Sickness Benefit

If an insured person requires medical treatment that needs abstention from work on medical grounds, sickness benefit is paid for the period of abstention which is duly certified by the Authorized Medical Officer. This sickness benefit is paid for a period, not exceeding 91 days, in two consecutive benefit periods (say one year) @ 70% of an average Daily Wage. The employee must have completed 78 consecutive days in order to avail the sickness benefits.

Extended Sickness Benefit

Extended Sickness Benefit is an additional benefit that is provided by the Corporation in the exercise of its power under Section 99 of the Act. This benefit is applicable for an insured person who has completed 2 years of insurable employment and has contributed for not less than 156 days during this period. In that case, the person is entitled to get extended sickness benefit for a period of 309 days; this is applicable only for the 34 specified long-term diseases.

It is possible to extend this period up to 730 days or till the injured person attains the age of 60 years – whichever is earlier. Both the insured person as well as their family are entitled to receive the Medical Benefit during this extended period. The daily rate of the extended sickness benefit that is paid shall be equal to 80% of the average daily wages.


Disablement is a condition resulting from employment injury, which makes the insured person temporarily incapable of doing his work or it may totally deprive the insured person from the capacity of doing any work permanently (permanent total disability).

Temporary Disablement Benefit - It is a periodical payment that is paid to an insured person suffering from Disablement because of 'Employment injury' for the period of abstention from work duly certified by an Authorized Medical Officer. This is paid @ 90% of average daily wages till the temporary disability lasts and the employee can resume his normal duties.

Permanent Disablement Benefit - If there is any residual disability of permanent nature due to employment injury, the insured person is examined by a Medical Board to assess the loss of his overall earning capacity, if any, and its percentage. The insured person is paid monthly periodical payments of permanent disablement for her/his lifetime. This begins from the date of termination of temporary disablement. A periodical increase in the benefit is usually granted whenever there is an escalation in the cost of living.

Dependents' Benefit

Dependents’ Benefit, one of the benefits given by the ESI, is a monthly pension that is payable to the eligible dependents of an insured person who expires because of an occupational disease or an employment injury. The initial benefit payment is done from the Branch Office and the subsequent periodical payments are made via Direct Bank Transfer (DBT) to the beneficiary’s account.

What if the family is residing in a different place – either in the same state or a different state? Based on the declaration of the insured person and a certification from the employer, there is a provision to opt for 2 medical dispensaries to avail the medical facility. One is for IP himself at the workplace and another is for the family members who are living in their native place or some other place. By producing this Aadhar-based Pehchan Card, the family members can avail the medical facility from any Hospital/ESI Dispensary located either at their place or in any other parts of the country.

Maternity Benefit

Maternity Benefit is a periodical payment that is provided to women, covered under insurance, for a specified period of rest from work on the below grounds:

 Delivery of baby
 Miscarriage or sickness arising out of pregnancy
 Pre-mature birth of child

The rate of maternity benefit provided to an insured woman shall be equal to the standard/actual benefit rate. 

Funeral Expenses

A lump sum payment not exceeding Rs. 10,000/-is paid towards expenditure on the funeral of a deceased insured person to the eldest surviving member of the family. If the Insured Person did not have family or was not residing with his family at the time of death, funeral expenses are paid to the person who actually performs the funeral.


Thus, ESIC is one such great step by the Indian Government to bring several benefits to the workers and to help them at the time of financial crisis. Such insurance schemes with numerous benefits bring confidence in employees with lower wages. However, it is not possible for each and every employee to know their rights. Here comes the role of the Human Resource Managers. They must work effectively in spreading such awareness to the employees on their basic rights of insurance benefits, in case of mishaps.

ESIC – A Step Towards Building a better India!