India is one of the fastest growing economies in the world with rapid industrialisation and factors like favourable geographical location, cheap raw material, availability of labour force in abundance and large market makes it attractive for investment purposes. However, for ensuring economic development it is important to provide adequate safety measures and incentives for providing encouragement to employees through social security measures for ESI Registration.
Social security measures have been based on the idea that the state shall be accountable for ensuring basic rights and their welfare including cover for any unfortunate contingencies during life and even after death. India being one of the most populated countries with a considerable portion of percentage as working population, it has one of the strongest social security systems including a number of schemes and programs spread throughout a variety of laws and regulations providing for facilities like pension, medical insurance, compensation for partial or complete disability, Gratuity etc.
One of such social security measures, is the Employee State Insurance scheme, that is a self-financed inclusive scheme providing for protection to employees through insurance cover so as to ensure them assistance in the event of any major illness, disability or even death due to any injury in the course of employment.
The ESI scheme was implemented first through the Employee State Insurance Act on 19th April 1948 and an autonomous body namely, the Employee State Insurance Corporation was empowered under the Act to undertake and manage the provisions of the Act under the Ministry of Labour and Employment, Government of India responsible for its guidance and monitoring of its functions.
Under the provisions of the ESI Act 1948, it is mandatory for every factory/business establishment holding more than 10 employees (20 employees in exceptional cases) and earning wages/salaries either equal to or lesser than Rs. 21000/-(25000/- per month in case of persons with disability) are required to register themselves under the Act under the jurisdiction of the applicable ESIC.
Section 2A along with section 10-B prescribes that it is the statutory responsibility of the employer of factory/business establishment. If the employer fails to adhere to applicable provisions such as registration, deliberate errors in filling returns etc. such employer shall be liable for a fine of INR 10,000/-
On registration, the employees of such registered entity shall be allowed multiple benefits such as full medical cover till the period of his incapacity, restoration of working capacity, financial assistance in case of loss of wages during the period of his absence due to any prolonged illness, maternity or any injury happened in course of his/her employment. Further, in case of death of any employee registered under the Act, the family members will be provided a lump-sum compensation.
As per the ESI scheme, all eligible employees are required to be insured in a manner obligated by the Act. ESI scheme is self-financing in nature, it provides for contribution payable to the ESIC with respect to employee insurance shall be a total of contribution made by employer towards insurance of the employee as well as a certain percentage of the income of the employee which is subject to revision from time to time. At present, the rate of contribution for employer is 3.25% of the total salary/wages payable to the employee for each wage period, whereas a total of 0.75% of the salary/wages of the employee is liable to be deducted towards ESI scheme for each wage period.
However, as per the provisions of the ESI Act 1948, such employees who receive a daily wage of Rs. 137 per day or lesser are exempted from the requirement of making deductions from their wages towards ESI scheme. However, employers employing such workers/ employees earning lesser than Rs. 137 per day shall be still under the obligation to make their contribution on the applicable percentage of income.
For the purpose of making deductions from the income of the employees and submitting both the contribution of employer as well as employee, the employer has been made responsible under the Act. Such contribution must be submitted within 15 days of the last day of the Calendar month with respect to contribution for each month.
The Employee state insurance Act also mandates submission or returns with respect to ESI deductions and payments, which should be submitted on a half-yearly basis, which are liable to paid as provided below-
|Period of return submission||Last date for filling|
|Period of return submission||Last date for filling|
|From April to September||11th of November|
|From October to March||11th of May|
However, such dates are prone to be change or extension that shall be communicated by the ESIC department by way of notification.
ESI Registration with Legalmart
The process of ESI registration is online process that is simple and hassle-free to process, but requires application filling with precision, as not undertaking the same with care can lead to failure of application or requirement to file the form all again. Thus, for expert assistance in form filling and getting ESI registration certificate successfully for any factory or business establishment, refer to Legalmart for getting ESI registration with 1-2 days.
Benefits of ESI Registration
- Medical benefit –Once ESI registration is granted, the employees registered under the same can avail medical facilities for themselves as well as their dependents benefits in such hospital/hospitals registered with ESI.
- Sickness Benefit –In pursuance of the ESI scheme, an employee can avail sickness benefits up to a limit of 70% of the total salary, where sick leave is taken for) for a maximum limit of 91 days(under certified illness). Similarly, employees registered with ESI are allowed to avail leave and sickness benefit up to a period of two years(in case of chronic disease), after the initial period of 91 days has been passed. Further, those ESI insured employees who undertake registered sterilisation procedures are entitled sickness benefits up to of 100% of their daily average wages, availing further grant of a recovery period up to 7 days in case of vasectomy and 14 days in case of tubectomy either from date of admission in hospital or from the date of admission in the hospital depending upon state to state.
- Maternity related benefits –Employees in pursuance of ESI scheme are entitled to Maternity benefits that include fully paid leave to women employees up to a period of 3 months. Such women employees are allowed to avail maternity benefits that are eligible for payment up to a period of 26 weeks, which could be further extended for a further period of 30 days. However, for the eligibility to qualify for maternity benefits, such woman/women employee/s should have contributed up to 70 days in the last two contribution periods.
- After Death Benefits– In case an employee meets death in the course of his employment, the dependents of such employee are allowed up to 90% of the salary post his death to his dependent every month.
- Old age medical care expenses – for employees registered under ESI, a provision for old age benefits is made for which a payment of ₹120 is made annually during course of employment to ensure medical care benefits for employees who are either retiring after completion of services or for employees opting for voluntary retirement.
- Vocational training for Rehabilitation- For employees who have been met with an accident in course of employment and have become permanently disabled, are provided with vocational training programs for rehabilitation purposes.
- Confinement Expenses- A woman employee/or wife of an employee registered under the ESI scheme, who happens to be occurred/confined in a place with no medical facilities is allowed to avail confinement expenses under the ESI scheme.
Disadvantages of ESI Registration
Some of the drawbacks associated with ESI registration are as follows-
- Higher costs for business enterprises- Though ESI scheme is a beneficial scheme to ensure protection and welfare to the employees working in an organization. However, it also results in increase in costs for a business enterprise, which is especially difficult for smaller organizations. Any factory/establishment or business enterprise must make ESI contributions every year regardless of any actual need for the employees, which means that they need to pay more than the amount they are required to be paid in actual.
- Difficulties created due to inflation- Inflation is a common phenomenon for developing countries. As the goods and services keeps on increasing, the costs of insurances also do keep changing and so the rate of contribution required to be made towards ESI scheme. Thus, increase in rates of contribution may be sometimes difficult to accommodate for a business enterprise especially when it is going through financial stress or losses.
- Compliance costs- Not only a factory/business enterprise eligible for registration is required to obtain ESI registration within 15 days of meeting eligibility criteria under the Act, but also is required to maintain various compliances under the Act such as making deductions and submissions , submitting half-yearly returns etc. may lead to a hefty sum of penalty and may also invite prosecution.
- Inadequacy of costs- Sometimes even after contributions, the amount of medical cover may not be enough to cover all expenses related to treatment, which may leave the worker/employee helpless at difficult times.
- Diversion of funds- Every factory/business enterprise/establishment eligible for registration has to mandatorily get itself registered under the Act and pay contributions from time to time though such funds could have been used for any other purpose.
Applicability of ESI Registration
Following is the list of entities applicable for ESI registration–
- All non-seasonal factories holding either equal to or more than 10 employees:
- Under section 1(5) of the ESI Act 1948, the applicability of the ESI scheme has been extended to-
- Shops, Hotel, Restaurants, Cinemas including preview theatres.
- Transport undertakings through road, Business establishments engaged in Newspaper business, privately operated medical and educational institutions etc.
- Contractual and Casual employees of Municipal Corporation/Municipal Bodies engaging either equal to 10 or more employees in States/UTs, where the appropriate Government is the State Government.
- Business Establishments functioning in the business of offering insurance services, Establishment engaged in Insurance Business, Non-Banking Financial Companies, Port Trusts, Airport Authorities, Warehousing establishments either engaging equal to or more than 20 persons, where the appropriate Government is the Central Government of India.
It is to be noted that only having twenty or more employees in case of a business establishment is not enough for applicability of the ESI scheme. Therefore, for ensuring applicability the amount of wages prescribed under sub-section 2(9) of the Act needs to be read along with the above-mentioned conditions.
Document Required for ESI Registration
The procedure of ESI registration is a simple online process that requires no submission of physical documents, only information needs to be filled in the online registration form with the help of certain documents. Therefore, following documents are required to be filed for completing the process of registration-
- Scanned copy of documents evidencing legal incorporation of the business enterprise (Certificate of incorporation in case of company, LLP Deed in case of LLP and Partnership Deed in case of Partnership Firm)
- Business constitution related documents such as MOA & AOA in case of company.
- List of the employees working in the business PAN organization/factory/establishment.
- PAN card of the business organization/factory/establishment and PAN Card of each person employed under the same.
- Details related to compensation available for employees in the business organization/factory/establishment.
- Cancelled cheque of the Business Bank Account.
- List of Directors/Partners/officers of the business organization/factory/establishment.
- Details related to shareholders of the business organization.
- Register details providing for details related to attendance of the employees.
- In case of factory, copy of registration certificate granted under the provisions of the Factories Act, 1948 . On the other hand, in case of a shop/establishment, copy of then the Shops and Establishment certificate is required.
- Overall number of working days for all the employees.
Online Process for ESI Registration
The process of ESI registration was earlier offline and required form filling and submission manually to the jurisdictional office of the ESIC located in the State. To reduce the time involved in the process of registration and to simplify the process of registration, the process of ESI registration has been made completely online involving fewer steps.
Provided below is the step-by-step process of ESIC Registration:
Step 1: Log in to ESIC Portal
For facilitating registration, an eligible employer needs to register himself on the ESIC portal by creating a username and password for accessing the online ESIC. For which, such employer shall be required to clicking ‘Sign Up’ button provided under the ‘Employer Login’ option on the portal.
On clicking, sign up, the applicant employer shall be required to fill a form seeking contact details among other information. After filling such information, the applicant shall be required to submit the form.
Step 2: Receipt of Acknowledgment
On successful submission of the form, the applicant shall receive a confirmation mail providing for username and password for accessing the ESIC portal on the email and mobile number details earlier submitted by the applicant.
Step 3: Filing & Submission of Registration Form
Once the applicant receives username and password, he/she can move further for the process of registration by logging on to the portal earlier provided in the mail. Next, the applicant will get to view the option namely, ‘New Employer Registration’.
Select “New Employer Registration” and select from a list of the types of units provided under the portal and click “Submit”. Once you click submit, you will be able to view, ‘Employer Registration – Form 1’ and fill the requisite details such as business unit details, details of employer and employees working in the organization.
On successfully filling the details, verify details once and click “Submit” button.
Step 4: Payment for Advance Contribution
In the next step, the employer shall be required to make payment of applicable amount of contribution in advance for six months “through the option “Payment of Advance Contribution” after which an acknowledgement shall be generated on the portal.
Step 5: Issue of Letter of Registration
As soon as the bank processing payment of advance contribution will realize payment, the applicant will received a system generated ESI registration letter, also known as C-11, which shall include a 17 digit unique number granted by the ESIC. C-11 is a system generation registration letter that is electronically signed and doesn’t require physical registration. Once issued, it is a valid and conclusive proof of registration of applicant factory/establishment/business entity under the ESI Act and could be used as a valid proof for all legal purposes.
Why you Choose Legalmart?
We at Legalmart are committed to provide expert level assistance with our professional knowledge and years of experience in ESI registration, ESI return returns filling and submissions from time to time. Further, we offer to provide following services in case you intend to apply for ESI registration–
Preparation of Application & collection of documents
At Legalmart, We sincerely believe that managing the business as a business owner is a difficult task and inadequate knowledge about legal formalities could be hectic to perform on your own. Thus, at Legalmart we have an entire team of professionals having years of knowledge and expertise in the field of registration, and who undertake the process of registration, collect necessary documents and prepare your application ready to be submitted to the portal in an efficient manner.
End to End assistance in registration process
Once documents are collected, our professional experts will fill and submit application for approval with the ESIC having relevant jurisdiction in the area where the business entity is located. After which authorities will verify form and on being satisfied, issue ESI registration certificate .We are also open to 24*7 customer assistance or for entertaining any requisite queries about the process.
Fulfilment of ESI payment submissions and return filing
On registration, an applicant is expected to take note of the fact that a business enterprise holding ESI registration is subject to half-yearly returns and various other compliances. At Legalmart, we have our professional experts to help you for assistance in filling returns and compliances in a simple, quick and efficient manner at standard charges.