Overview about ESI Registration

In ESI Registration, where ESI which stands for Employee’s State Insurance, is an independent organization operating under the Ministry of Labour and Employment, Government of India. This scheme is designed to be self-financing, meaning it funds itself through contributions from both employees and employers. Its main purpose is to provide social security and health insurance to workers across India. So, it’s like a safety net that offers financial and healthcare support to employees when they need it, and it’s a valuable system for the welfare of Indian workers.

ESIC (Employee State Insurance Corporation) registration is a mandatory registration process in India for employers who have a certain number of employees and meet specific criteria. The ESIC is a social security and health insurance scheme provided by the Indian government to protect the interests of employees in case of sickness, maternity, disability, or death due to employment-related injuries.

HOW DOES ESI REGISTRATION SCHEME HELP EMPLOYEES?

The ESI registration scheme is comprehensive in its coverage.

1. Medical Coverage: It offers complete medical coverage to employees who are registered under the ESI Act, 1948. This means that when they are unwell or incapacitated, the scheme takes care of their medical needs, including doctor consultations, hospitalization, and medicines.
2. Recovery Support: ESI helps employees regain their health and ability to work. It supports their journey back to recovery by providing necessary medical treatments and care.
3. Financial Assistance: The scheme also provides financial aid to compensate for the wages lost during the period when an employee cannot work due to sickness, maternity, or employment-related injuries. This ensures that employees don’t suffer financially during these challenging times.
4. Family Coverage: Importantly, ESI isn’t just for the registered employee. It extends its medical coverage to the employee’s family members as well. This means that the health needs of the family are also taken care of, which is a significant relief for the employee.

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Eligibility criteria of Employers and Employees for ESI Registration.

ESIC (Employee State Insurance Corporation) registration is required for certain categories of employers and their employees in India. Here are the key criteria for who requires ESIC registration:

1. Employer’s Criteria:
   • Any establishment or business entity that has 10 or more employees (in some states, it may be 20 or more employees) is required to register under ESIC.
   • Certain categories of businesses, like hotels, restaurants, cinemas, and private educational institutions, are required to register under ESIC, regardless of the number of employees.
2. Employee’s Criteria:
   • Any employee working in an establishment covered under ESIC, and whose monthly gross salary/wages do not exceed a specified limit (which may change from time to time), is eligible to be covered under the ESIC scheme.

It’s essential to note that ESIC is primarily applicable to employees in non-seasonal factories and certain specified establishments or businesses. The coverage and contribution requirements may vary from state to state, so it’s crucial for employers to check the specific rules and regulations applicable in their region. Compliance with ESIC regulations is mandatory for eligible employers, and failure to do so can result in legal penalties.

Advantage of ESI Registration for employees and employer

ESI (Employee State Insurance) registration offers several advantages to both employees and employers in India. Here are the key benefits for each:

Advantages for Employees under ESI Registration:

1. Healthcare Benefits: Employees covered under ESI registration and their dependent family members have access to a wide range of healthcare services, including medical consultations, hospitalization, medicines, and surgeries. This ensures that employees and their families receive quality medical care when needed.
2. Financial Security: ESI provides financial support to employees during periods of incapacity due to sickness, maternity, or employment-related injuries. This financial assistance helps employees maintain their standard of living even when they cannot work.
3. Maternity Benefits: Female employees are entitled to maternity benefits, including paid leave and medical care during pregnancy and childbirth. This supports working mothers during this important phase of their lives.
4. Sickness Benefits: In case of illness, employees receive cash benefits to compensate for their loss of wages. This helps alleviate financial stress during times of sickness.
5. Disability Benefits: If an employee becomes disabled due to an employment-related injury, ESI provides a disability pension. This ensures ongoing financial support for the disabled employee.
6. Dependent Benefits: ESI covers the dependent family members of employees, including spouses and children. This means that the medical needs of the entire family are addressed.

Advantages for Employers under ESI Registration:

1. Legal Compliance: Registering for ESI ensures that employers comply with the legal requirement to provide social security benefits to their employees. Non-compliance can lead to legal penalties.
2. Employee Welfare: ESI registration demonstrates an employer’s commitment to the well-being of their workforce. It enhances the company’s reputation as a caring and responsible employer, which can improve employee morale and retention.
3. Reduced Absenteeism: When employees have access to medical care and sickness benefits, they are more likely to seek timely treatment, reducing absenteeism due to prolonged illness.
4. Recruitment and Retention: Offering ESI benefits can make a company more attractive to potential employees. It also contributes to employee retention by providing a safety net for them and their families.
5. Reduced Financial Liability: ESI registration coverage reduces the financial burden on employers by sharing the cost of medical care and benefits with the ESI Corporation. Employers contribute a percentage of their employees’ wages to fund the scheme.

ESI Registration contribution by Employers and employees.

The contributions made by both employers and employees to the Employee State Insurance (ESI) scheme in a more conversational style.

Contributions by Employers:

Employers play a significant role in the ESI scheme. They are responsible for contributing a 3.25% of their employees’ wages to the ESI fund. This contribution is typically higher than what employees contribute. Here’s why employers do this:

1. Compliance with the Law: It’s a legal requirement for employers to contribute to ESI for their eligible employees. This ensures that employers follow the law and provide social security benefits to their workforce.
2. Supporting Employee Welfare: By contributing to ESI, employers help provide healthcare and financial security to their employees during times of need. It’s a way of looking out for the well-being of the workforce.
3. Sharing the Financial Burden: ESI is a self-financing scheme, and employer contributions help fund the medical care and benefits provided to employees. Employers essentially share the financial responsibility with the ESI Corporation, making healthcare more accessible to their employees.

Contributions by Employees:

Employees also make contributions 0.75%  to the ESI scheme, although their share is smaller compared to that of employers. Here’s why employees contribute:

1. Access to Benefits: Employees contribute a small portion of their monthly wages to ESI to become eligible for the scheme’s benefits. This contribution gives them access to medical care, sickness benefits, and other support services provided by ESI.
2. Financial Security: While the employee’s contribution is relatively small, it provides significant financial security. It ensures that employees can receive financial support when they are unable to work due to sickness, maternity, or employment-related injuries.
3. Peace of Mind: Knowing that they and their families are covered under ESI provides peace of mind to employees. It means they can focus on their work and family without worrying about sudden healthcare expenses.

PENALTY IN CASE OF FAILURE TO GET ESI REGISTRATION & ESI RETURNS

Failure to obtain ESI (Employee State Insurance) registration and submit ESI returns can lead to penalties and legal consequences for employers in India. Here’s an overview of the potential penalties:

1. Penalty for Non-Registration:
   • Employers who are required to register under the ESI Act but fail to do so can face penalties. The penalty can be a fine of up to ₹10,000, and in some cases, imprisonment for a term up to one year.
2. Penalty for Delayed Registration:
   • If an employer fails to register under ESI within the specified time frame after becoming liable, they may be subject to a daily fine until registration is completed.
3. Penalty for Late Payment of Contributions:
   • Employers are required to deposit their share of ESI contributions as well as the employees’ contributions on time. If there is a delay in payment, interest is levied on the outstanding amount. The interest rate is determined by the ESI Corporation.
4. Penalty for Non-Submission of ESI Returns:
   • Employers are also required to file regular ESI returns, which provide details of the contributions made and the number of employees covered. Failure to submit these returns can result in fines.
5. Penalty for False Statements or Documents:
   • Providing false information or documents to ESI authorities can lead to penalties and legal action. This includes misrepresenting the number of employees, their wages, or any other relevant information.

Documents Required for ESI Registration

To register for ESI registration in India, employers need to provide specific documents and information. The following documents are needed:

1. Registration Form: Employers must complete the ESI registration form. This form is available on the official website of the ESI Corporation and should be filled out accurately.
2. Certificate of Incorporation or Business Registration: A copy of the certificate of incorporation or registration of the business entity is typically required. This document proves the legal existence of the company.
3. Memorandum and Articles of Association (MOA and AOA): In the case of a company, a copy of the MOA and AOA is usually needed to confirm the company’s structure and objectives.
4. PAN Card: The Permanent Account Number (PAN) card of the company or establishment is required.
5. Address Proof: Documents confirming the business’s address, such as a utility bill, lease agreement, or property tax receipt, should be provided. ESI registration.
6. Bank Statement: A bank statement or canceled check leaf that displays the company’s name and bank account details.
7. List of Employees: A list of all employees, along with their name, gender, date of joining, and salary details, must be submitted. ESI registration.
8. Photographs: Passport-sized photographs of the employer or authorized signatory.
9. Aadhaar Card: The Aadhaar card of the employer or authorized signatory.
10. ESI Bank Account Details: Details of the bank account in which ESI contributions will be deposited, including the bank’s name, branch, and account number.
11. Attendance Register: The attendance registers or other relevant documents used to track employee attendance.
12. Specimen Signature: Specimen signature of the employer or authorized signatory.
13. Factory License: If applicable, a copy of the factory license.
14. Power of Attorney: A Power of Attorney document if someone other than the employer is authorized to sign and submit the registration application.
15. GST Registration Certificate: A copy of the Goods and Services Tax (GST) registration certificate, if applicable.
16. Other Supporting Documents: Depending on the specific requirements of the ESI office in your area, additional documents may be requested. ESI registration.

Remember, the ESI registration process is usually done online. Scan these documents and upload them as part of your application. Check with your local ESI office or their official website for the latest document requirements.

BENEFITS OF ESIC REGISTRATION

ESI Registration provides monetary and medical benefits to employees in case of sickness, maternity and employment injury and to make provisions for related matters.

Some of the benefits of ESI Registration are :

• Sickness benefits at the rate of 70% (in the form of salary), in case of any certified illness certified and which lasts for a maximum of 91 days in any year
• Medical Benefits to an employee and his family members
• Maternity Benefit to the women who are pregnant (paid leaves)
• If the death of the employee happens while on work – 90% of the salary is given to his dependents every month after the death of the employee
• Same as above in case of disability of the employee
• Funeral expenses
• Old age care medical expenses

How can apply for ESI Registration online in 2023?

1. Visit the ESIC Website: Start by going to the official Employee State Insurance Corporation (ESIC) website. You can find it through a simple internet search or by visiting the ESIC’s official website.
2. Create an Account: If you haven’t registered on the ESIC portal before, you’ll need to sign up. Look for an option like “Sign Up” or “New User Registration.” To create your account, you’ll typically need a valid email address and mobile number. Follow the instructions to set up your account.
3. Log In: Once your account is created, log in to the ESIC portal using the username and password you just created.
4. Choose Your Application Type: Depending on whether you’re an employer registering your company or an individual employee registering yourself (Insured Person – IP), select the appropriate option from the main menu. You might see options like “IP Registration” or “Employer Registration.”
5. Fill in the Application:
   • If You’re an Employer: Select “Employer Registration” and complete the application form with accurate details about your company. This includes information about your business, address, and bank details.
   • If You’re an Employee (Insured Person): Choose “IP Registration” and fill out your personal information, employment details, and nominee information.
6. Upload Required Documents: Scan and upload the necessary documents as per the checklist provided in the application form. These documents may include your business registration certificate, proof of address, employee list, bank details, and other relevant paperwork.
7. Review and Submit: Carefully go through the information you’ve provided and the documents you’ve uploaded. When you’re sure everything is correct, submit the application.
8. Pay the Contribution: After submitting the application, you’ll need to make the initial ESI contribution payment. Have your bank account details ready to complete this step.
9. Keep the Acknowledgment: Once your application is successfully submitted, and the payment is made, you’ll receive an acknowledgment receipt. This is an important document, so make sure to keep it safe for future reference.
10. Wait for Approval and Certificate: Your application will be processed. If everything is in order, you’ll receive your ESI Registration Certificate online. This certificate confirms your ESI registration.

 

Sample of ESI Registration Certificate

Above is the ESI Registration certificate.

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