Employee State Insurance Corporation (ESIC) registration is an essential scheme for the security of employees in India. It provides significant benefits through medical facilities, paid leaves, maternity benefits, and financial assistance for various unforeseen circumstances. This self-financing body is under the control of the ESI Act 1948 and is mandatory for organizations that have more than ten employees working therein. In this article, learn about the registration process and its benefits, along with a list of necessary documents required during the process.
Definition of ESIC
The Employee State Insurance (ESI) Scheme is a government-initiated program that provides social security to Indian workers. It is managed by the Employee State Insurance Corporation (ESIC), an autonomous body under the Ministry of Labour and Employment. Employers and employees make contributions towards ESI every month, with the former contributing 3.25% of the total monthly salary payable and the latter contributing 0.75% of their monthly salary. The scheme provides a range of medical, monetary and other benefits to workers covered under the ESI Act.
The ESI Act mandates that any non-seasonal factory or establishment having 20 or more employees must register with the ESIC within 15 days from the date of its applicability, while establishments with fewer than 20 employees who make less than Rs. 21000 per month are exempt from registration. The registration process has been made completely online, with employers needing to register on the ESIC portal by filling in the Employer Registration Form-1. Documents required for the registration process are limited to certificates of incorporation, partnership deeds, GST certificates or memorandums of association.
The ESIC registration process provides several benefits such as a 17-digit unique identification number, compliance to mandatory regulations, and access to a range of medical, monetary and other advantages. Overall, the ESIC scheme is aimed at providing workers with security and welfare, thereby improving their overall quality of life.
Importance of ESI registration for employees and companies
ESI registration is crucial for both employees and companies as it provides various benefits that help in ensuring the security and welfare of the employees. One of the significant advantages of ESI registration is that it assists employees in managing healthcare expenses for themselves and their family members. The employees are also entitled to paid leaves and pregnancy benefits, and in case of prolonged illness, they can claim up to 70% of the total salary until they are certified fit to work again. Moreover, if the employee faces any temporary or permanent injury during work hours or passes away, there is a provision of monetary benefits, and the family will be provided with a monthly salary equal to 90% of the total income.
ESI registration is equally essential for companies as it is mandatory for any establishment that has more than ten employees working in the company and pays a basic salary of INR 15000. As an employer, it is your responsibility to contribute 3.25% of the total monthly salary payable towards ESI, while the employee needs to contribute only 0.75% of his monthly salary every month of the year. By registering for ESI, companies not only comply with the government regulations but also ensure the security and welfare of their employees. Additionally, it safeguards companies from legal complications that might arise from non-compliance of ESI regulations. Therefore, it is crucial for both employees and companies to get registered under ESI and avail the benefits provided under this scheme.
II. Eligibility for ESI Registration
Minimum salary requirement
ESIC registration is mandatory for all the establishments which are covered under the Act, irrespective of the size of the organization. However, for employees to be eligible for coverage, there are certain minimum salary requirements that need to be met. The salary limit for employees to be eligible for ESI benefits is INR 21,000 per month. This means that any employee who earns less than INR 21,000 per month is eligible for ESI benefits.
It is important to note that for employees who earn more than INR 21,000 per month, they are not eligible for ESI benefits and hence ESI registration is not mandatory for them. However, as an employer, if you have employees who earn more than INR 21,000 per month, you have to provide them with an alternative form of medical insurance.
In addition, employers are required to contribute 3.25% of their total monthly salary payable towards ESI, while employees need to contribute only 0.75% of their monthly salary every month of the year. The only exception is for employees whose salary is less than Rs. 176/- per day.
It is essential for all employers to comply with the ESI Act and register for ESIC within 15 days from the date of its applicability. Non-compliance can result in penalties and legal issues. Therefore, Employers should ensure that they comply with the minimum salary requirement criteria for ESI registration to avoid any legal complications.
Number of employees in an organization
When it comes to registering for ESI in India, one of the key factors to consider is the number of employees in your organization. According to the ESI Act, any establishment that employs 20 or more people must register for ESI. However, establishments with fewer than 20 employees who make less than Rs. 21,000 a month in salary are exempt from registering for ESI. It’s important to note that certain establishments, such as hotels, restaurants, and movie theaters, are required to register for ESI regardless of the number of employees they have. Additionally, the Act specifies that certain individuals must also be tallied in order to assess if a factory or facility is covered by ESI, including those who are on paid or unpaid leave, replacement or badli workers who are paid, directors who receive compensation from a corporation, and individuals who are employed by or through a contractor but directly supervised by the employer.
Once a company is registered with ESIC, it must contribute roughly 4.75 percent of the total monthly income of their workers to be able to qualify for the perks under the plan. On the other side, each month 1.75 percent of the qualified employees’ monthly salaries must be paid into the firm’s ESI account. Failure to register for ESI or to comply with the regulations could lead to fines and penalties. Therefore, it’s essential for companies to carefully consider the number of employees they have and whether they meet the eligibility requirements for ESI registration in order to avoid any legal issues.
Mandatory registration for certain organizations
Certain organizations in India are mandated by law to register for ESI under the Employee State Insurance Act. The law requires that any non-seasonal factory or establishment having more than 10 employees are covered under the act and hence must mandatorily register with the ESIC within 15 days from the date of its applicability. The registration is mandatory for employees working in restaurants, hotels, movie theaters, and newspaper establishments that are not covered under the Factory Act. The registration process is fairly simple and can be completed online. Once the registration is done, both employers and employees contribute to the ESI scheme a certain percentage of their monthly salary, and in return, they get a wide range of medical and monetary benefits.
It is essential for employers to comply with the ESIC regulations as failure to do so might result in penalties and legal action. Companies that fail to register for ESI are liable to pay a hefty fine of INR 25,000 or imprisonment for up to 3 years. Additionally, in case of any mishap or accident at the workplace, the company might be held liable to compensate the affected employee. Therefore, it is critical for organizations to stay compliant with the ESIC regulations and register for the scheme in a timely manner. ESI registration ensures the wellbeing and security of employees, which is paramount for any organization that values its workforce.
V. ESIC Registration Process
Steps involved in registering for ESI
The registration process for ESI is relatively straightforward, as it can be done completely online. Here are the steps involved in registering for ESI:
1. Visit the ESIC registration portal and select ‘Click Here to Login’.
2. Click on ‘Sign Up’ and fill in the details such as company name, principal employer name, state, etc.
3. Check the box to confirm your establishment/factory and submit the details.
4. Receive your login credentials in an email from the ESIC insurance team.
5. Access the ESIC portal and enter your login details.
6. Click on the ‘New Employer Registration’ link and select the type of unit.
7. Fill in the details in Employer Registration- Form 01 and submit the form.
8. Once the form is submitted, an Employer Code will be generated and displayed on the screen.
9. Using this Employer Code, the employer can then register employees under the ESI scheme.
It is important to note that the employer must register for ESI within 15 days from the applicability time, and failure to do so can lead to penalties. Additionally, small businesses with less than 10 employees can voluntarily register for the scheme. By registering for ESI, employees can avail of various benefits related to healthcare, leaves, financial assistance, retirement, and more. Overall, ESIC registration is an essential step towards providing security and welfare for employees in India.
Duration of the verification and submission process
The verification and submission process for ESIC registration is relatively simple and hassle-free. However, the duration of the process can vary depending on a few factors. Typically, it takes about 10-15 days for the process to be completed. Here’s a breakdown of the duration of the verification and submission process:
1. After submitting the employer registration form, the payment of advance contribution needs to be made. This is an important step as the 17-digit registration number is generated after successful payment. This can take about 2-3 days.
2. Once the payment is completed and the registration number is generated, the employer must print the Registration Letter (C-11). This can take another 2-3 days.
3. After receiving the registration number, the employer must register all the employees under the scheme. This process can take around 5-7 days.
4. Once all employees are registered, the employer must submit the Declaration Form and Accident Book to the local ESIC office. The duration of this step can vary from one office to another, but it typically takes around 2-3 days.
5. Finally, the employer will receive the ESI Card for each employee. This can take around 2-3 days.
Overall, the duration of the verification and submission process for ESIC registration is reasonable, and the benefits that come with it make it a vital step for both employees and employers.
VI. Entities Covered under ESIC Registration in India
Eligibility requirements for registration under ESI Act
In order to be eligible for registration under the Employees State Insurance (ESI) Act, there are certain requirements that an organization must meet. Here’s a breakdown of the eligibility requirements for ESI registration in India:
1. Establishment: An establishment is any organized group of men or women or an institution, regardless of whether they are located in a specific location or not. As per the ESI Act, an establishment would need to register for ESI if it employed 20 or more people.
2. Minimum salary requirement: Establishments with fewer than 20 employees who make less than Rs. 21000 a month in salary are exempt from registering for ESI.
3. Number of employees: The minimum number of employees needed to register for ESI is 10. In addition to the people who are directly employed, the following groups of people must be tallied in order to assess if a factory or facility is covered by ESI:
-People who are employed at a factory and are on paid or unpaid leave.
-A replacement or badli worker who is paid.
-Directors who receive compensation from a corporation.
-Individuals receiving monthly wages of more than ₹ 21000 but who are otherwise uncoverable.
-Individuals who are employed by or through a contractor and are directly supervised by the employer.
4. Mandatory registration for certain organizations: Shops must also be registered. According to the Supreme Court, the ESI Act is a useful piece of law, hence the phrase “shop” must be interpreted broadly. Additionally, the Supreme Court has ruled that a “store” encompasses any location where commercial actions that result in a sale or purchase are conducted. Therefore, if other requirements are met, service providers such as advertising agencies, liaison offices, consultant service providers, estate service providers, and more will need to seek ESI registration. However, Chartered Accountants & private commercial hospitals are not included when examining the coverage of stores, academic facilities, hospitals, clinics, offices of Auditors and Solicitors.
Meeting these eligibility requirements is important for organizations as ESI registration provides a wide array of financial, common medical, and other benefits for their workers, ensuring employee security and welfare.
Rules and regulations for entities with less than 20 employees
Entities with less than 20 employees are entitled to certain rules and regulations under the ESI Act. The following are some of the important points businesses need to consider:
1. Smaller entities can register under the ESI Act on a voluntary basis.
2. In case of ESI registration, the employer contributes 3.25% of their monthly wages towards the scheme, while the employee contributes 0.75% of their wages. This payment is mandatory.
3. If an employee’s salary is less than or equal to Rs. 176/- per day, they are exempt from contributing towards ESI registration.
4. Entities that have registered in the ESI scheme can use their benefits throughout the country.
5. Any establishment that is in an ESI-covered area and employs 10 or more persons must mandatorily register with the ESIC within 15 days from the date of its applicability.
6. Entities that have previously been covered under the ESI and employ less than 10 persons can also continue to avail its benefits.
7. Employers must get their employees registered under the ESI scheme within 10 days of their joining. The employer must also submit the necessary details of the employee, including their name, address, salary details, and family members’ details.
By adhering to these rules and regulations, small entities with fewer than 20 employees can ensure that they’re doing their part to provide social security to their employees. ESI registration is essential as it helps secure employee welfare and also provides benefits not only to the individual worker but their family members as well.
Summary of important points
To summarize, ESI registration in India is crucial for the welfare and security of employees. The registration is provided under the autonomous body ESIC, which ensures immediate treatment to any worker and provides monetary benefits in case of injury or death during employment. It is mandatory for organizations with more than ten employees and a basic salary of INR 15000 to register for ESI. However, small businesses can register voluntarily as well. Specific organizations like construction companies, restaurants, and shops are bound to provide ESI registration to their employees. It is also essential for individuals to register for ESI to avail benefits like healthcare expenses, maternity benefits, sickness benefits, and medical care for self and family members. Moreover, ESI also provides unemployment benefits to insured persons after they become unemployed due to closure of factories, establishments, or permanent invalidity. The registration process is made online, and the Employee State Insurance Act 1948 governs and regulates the ESI scheme. The employee needs to provide various documents, such as a copy of the license issued in the organization’s name, financial statements, and certificates of registration or incorporation. ESIC regulations and provisions vary across different states. Therefore, it is essential to understand the eligibility criteria and benefits of ESI registration to make informed decisions and secure a better future for employees and their families.
Importance of ESI registration for employee security and welfare
ESI registration is a crucial step towards securing the welfare of employees. It provides numerous benefits to both employees and employers. Here are some of the reasons why ESI registration is important:
1. Security and welfare of employees : ESI registration ensures immediate access to medical facilities and financial support in case of any injury or unforeseen circumstance related to the employee’s health. It also provides paid leaves and pregnancy benefits to women during pregnancy. In case of prolonged illness, employees can claim up to 70% of their salary until they are fit to work again.
2. Financial aid and benefits: ESI registration provides financial assistance of up to INR 15,000 for funeral costs in case of an employee’s death. It also provides a minimum grant of two years to employees who are unemployed and whose unemployment is unrelated to them. After retirement, employees can also avail of financial benefits.
3. Obligatory for certain organizations: ESI registration is mandatory for organizations with more than ten employees that pay a basic salary of INR 15,000. Certain organizations like restaurants, shops, construction companies, and editing and publishing houses are bound to provide ESI registration to their employees.
4. Protection for employers: ESI registration serves not only the employees but also the employers. It ensures that the organization is compliant with the rules and regulations and avoids any legal issues in the future. Additionally, it establishes the organization as a responsible entity that looks after its employees’ welfare.
In summary, ESI registration is vital for employee security and welfare. It provides financial aid, immediate medical facilities, and other benefits to employees. It also serves as protection for employers and ensures compliance with the rules and regulations.
VIII. Advantages of ESIC Registration in India:
1. Provides medical insurance cover to employees and dependents in case of illness, injury, or maternity.
2. Offers cash benefits to employees during periods of sickness, injury, or long-term disability.
3. Reduces the burden on the company to provide individual health insurance to employees.
4. Increases goodwill among employees, and in turn, improves the overall productivity of the company.
IX. Disadvantages of ESIC Registration in India
1. The company needs to pay a monthly contribution towards the scheme regardless of whether the employees utilize its services or not.
2. The company needs to maintain detailed records and documentation for all employees registered under the scheme.
X. Process of getting ESIC Registration in India
1. Obtain the necessary documents as mentioned above.
2. Go to the ESIC website, and register for a new employer code.
3. Fill in the details of the company and its employees.
4. Upload all the necessary documents, including a digital signature.
5. Pay the required fee online.
6. Wait for the approval of the employer code.
XI. Types of ESIC Registration in India
1. New Employer Registration: For newly established companies or businesses.
2. Temporary Identification Number (TIN) Registration: For companies who are yet to obtain the TIN.
3. Permanent Identification Number (PIN) Registration: For companies who have already obtained the TIN.
XII. Frequently Asked Questions about ESIC Registration in India
1. What is the ESIC scheme, and who is eligible to register for it?
ESIC is a social security scheme that provides health and medical insurance benefits to employees and their dependents. All companies employing ten or more workers are eligible for ESIC registration.
2. How much contribution is required to be made towards ESIC for registration?
The contribution that needs to be made towards ESIC for registration is 4.75% of the employees’ gross salary, with the employer contributing 3.25% and the employee contributing 1.5%.
3. How long does it take to get the ESIC registration certificate?
It usually takes about 15-20 days to obtain the ESIC registration certificate.
4. Is ESIC registration mandatory for all companies?
No, ESIC registration is mandatory only for companies employing ten or more workers, and optional for companies employing fewer than ten workers.
5. Can the ESIC registration certificate be renewed annually?
No, once registered, an ESIC employer code is valid for a lifetime, and renewal is not required. However, regular monthly contributions towards ESIC need to be made.