ESIC Scheme: What is the ESIC Scheme, Purpose, Eligibility, and ESIC Benefits?

The ESIC Scheme offers protection to workers with numerous ESIC benefits. Workers with ESIC eligibility criteria are facilitated with some health insurance covered by a government organisation.

What is the ESIC scheme

Employees’ State Insurance Corporation (ESIC) is an autonomous organisation by the Ministry of Labour and Employment of the Government of India. The essential target of the organisation is to protect insured workers from health and wellness issues.

What is the ESIC scheme?

The ESIC Scheme is a multidimensional social security scheme run by a government organisation that aims to provide socio-economic protection to employees working in the organised sectors. The ESIC scheme is meant to provide medical and financial assistance to employees when they are unable to carry out their duties due to employment injury, sickness, maternity, or some other reason.

Let’s dig deep into the topic –

Purpose of ESIC

There was a time when the industry was still in its emerging stage, and the workforce worked hard to contribute to the development of India. These working-class people contributed to the growth and development of the industry in India. To protect the health and finances of these workers, the government implemented the Employees’ State Insurance Act, 1948 (ESI Act).

Workers are exposed to several health-related issues, including temporary or permanent disability and any type of sickness or injury. As a result, they often find themselves in financial crisis due to the loss of wages or earning capacity. The ESI Act functions as a financial safety umbrella for workers against such ailments.

ESIC is a self-financing scheme. Here, an employee is required to subscribe to the scheme. Then, the employee and employer would give a certain percentage of their wage as the monthly contribution to the scheme.

What are ESIC eligibility criteria?

The ESIC comes with a wide range of benefits. To use these benefits, an employee is expected to meet certain eligibility criteria set by the committee. Let’s find out who can avail the ESIC scheme –

As per Section 2 (12) of the ESI Act, an employee needs to work in a non-seasonal factory that is operated by more than 10 employees.

Effective from 1 January 2017, the monthly wage of an employee is set at Rs. 21,000 to come under the coverage of the ESI scheme.

Entities come under ESIC

As per Section 1(5) of the ESI Act, the following establishments with 10 or more employees need to register with the ESIC –

  • Shops
  • Private educational institutions
  • Private medical institutions
  • Hotels and restaurants only in sales
  • Cinemas
  • Road motor transport establishments
  • Newspaper establishments (which are exempted from the Factory Act)

Related: Why the ESI Act of 1948 is one of the most popular social security schemes in India?

Key Benefits of ESI

The ESIC offers numerous appealing benefits to employees who come under the social security scheme. It functions like health insurance that offers a level of financial help during times of financial hardships such as prolonged illness or unemployment. Here are some of its key benefits –

Medical benefit

An employee under the ESIC scheme is eligible to receive medical expenses provided by the ESIC. He comes to the medical care coverage from day one of his employment.

Disablement benefit

One of the major ESIC benefits is that in case of disability or injury of an employee, they can get their monthly wages for the period of disability or injury. This benefit comes in two forms – temporary disablement benefit and permanent disablement benefit – at the rate of 90% of the wage as a monthly payment to an employee.

Sickness benefit

The sickness benefit ensures an employee gets 70% of the average daily wage during the time of certified medical sickness. The insured person and family members would get the flow of cash for 91 days of 2 consecutive benefit periods.

Maternity benefit

ESIC comes with a maternity benefit that enables an employee to get 100% of the daily wage for the period of 26 weeks from the time of starting the labour and six weeks for any miscarriage. Moreover, ESIC provides 12 weeks of pay in case of an adoption.

Dependants benefit

Assume that an insured person dies as a result of a work-related hazard or accident. In that circumstance, the dependants of the deceased insured person are eligible for the ESIC dependent benefit, which pays 90% of the monthly wage.

Other benefits that ESIC offers are –

  • Funeral expenses
  • Confinement expenses
  • Vocational rehabilitation
  • Physical rehabilitation
  • Old Age Medical Care

Apart from these above benefits, ESIC also introduced another benefit in 2005 –

Unemployment allowance

The unemployment allowance scheme allows an insured person to receive 50% of the wage for a period of up to 2 years in case of unemployment due to the closure of a factory, retrenchment, or permanent invalidity. Moreover, the scheme supports the person to upgrade his or her skills by bearing the expenditure of fees/travelling.


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