Amended ESIC rules regarding employee contribution and maternity benefit

Government makes amendments to ESIC, and increases the maternity benefit entitlement to members.

Amended ESIC rules regarding employee contribution and maternity benefit

On 27 October 2020, the Ministry of Labour and Employment (MoLE) announced an amendment to Rule 51B of the Employees’ State Insurance Corporation (ESIC). Under the ESI (Central) Amendment Rules, 2020, it stated that Rule 51B shall be omitted. Rule 51B dealt with the rate of employee contribution.

The MoLE has abolished the provision of a lowered percentage contribution by employees and employers to the ESIC scheme. At the same time, following an amendment to the Act, it has increased the maternity benefit entitlement to its subscribers from Rs 5000 to Rs 7500 in case of confinement.

What does Rule 51B provide?

As per Rule 51B of ESIC, the contribution from an employer should be 3% of an employee’s wages and the employee should contribute 1% of their wages during the initial couple of years in all those areas where the Act is being implemented for the first time.

However, after the completion of the first two years beginning from the date on which the Act was implemented, the rate of the employer’s contribution is restored to 4.75% and the employee’s contribution gets restored to 1.75% as per Section 51 of the Rule. This entire provision has been terminated through the amendment.

Maternity benefit

Apart from this, ESIC has announced an increase in the maternity benefit entitlement (from Rs 5000 to Rs 7500) to all of its insured members in case of confinement. This notification of enhanced reimbursement under maternity benefits for ESIC subscribers applies both to an insured woman and an insured person in respect of his wife. Such a medical bonus is on account of confinement expenses, provided that the confinement occurs at a place where requisite medical facilities under ESIC are not available. 

It was clarified that the confinement expenses shall be paid for up to two confinements only. For both instances, the revised amount is Rs 7500 per case.

The impact of the amendments

The first amendment (to rule 51B) relieves employers and employees from mandatory contributions during the initial stage of implementation of the Act in an area. Since they are not compelled to contribute, they can use the funds for more important purposes instead, such as saving for a house, kids’ education, etc.

The second amendment – increase in maternity benefit – is a medical bonus that will be extremely beneficial for insured members of ESIC. A new arrival in the family can result in many unexpected expenses to cope with. Some of these expenses can be handled by the increased maternity benefit.


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