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Legislations, The Profession

Employees State Insurance Act, 1948: Key Points

The ESI Act has been enacted to provide certain benefits to the employees in cases of sickness, employment injury, maternity, and such other matters as provided herein. It seeks to provide for provisions for certain other matters in relation thereto. The article elucidates the key points of the act.

By: Khushboo Kejriwal, 5th Year BBA LLB, KLE Society’s Law College, Bangalore. 

Applicability and Extent of Act

The Act applies to all factories including the factories belonging to the Central government other than seasonal factories. However, this shall not extend to factories or establishment belonging to or under the control of the Central Government which provides to its employees with such similar or superior services as provided other the Act. The provisions can be extended by the appropriate government in consultation with the Corporation and where the appropriate government is State government, with the approval of the Central Government after giving a month’s notice of its intention of doing so by notification in the official gazette. 

1. Employees State Insurance Corporation

The Central Government, may by notification in the Official Gazette, establish an ESI Corporation for the purposes of administration of this Act. It is a body corporate with perpetual succession and a common seal and can sue and be sued in its name.

1.1 Composition of ESI Corporation

It shall consist of a Chairman, Vice-Chairman, and not more than 5 persons, all appointed by the Central Government. 

  • There shall be one person from each of the States to which this Act applies, to be appointed by the concerned State Government. 
  • One person appointed by the Central Government to represent the Union territories. 
  • Ten persons representing the employers and ten for the employees shall be appointed in consultation with such organizations of the employers and employees) by the Central Government. 
  • Two persons representing the medical profession in consultation with such organizations of medical practitioners, as may be recognized by the Central Government. 
  • Three members of Parliament of whom two shall be members of Lok Sabha and one shall be a member of Rajya Sabha, elected respectively by its members. 
  • There shall also be appointed to the Committee a Director-General of the Corporation, ex-officio. 

1.2 Term of Members 

The term of the members of the Corporation shall be 4 years from the date of commencement of their appointment or when their election is notified. The member shall continue to hold office after the expiry of the term till his successor is appointed. An outgoing member of the Corporation, Standing Council, and Medical Benefit Council are eligible for reappointment.

All the orders/decisions of the Corporation shall be authenticated by the Director-General and all instruments issued by it shall be authenticated by the Director-General or any other person authorized by him.

2. Standing Committee

A standing committee of the corporation shall be constituted from among its members which shall comprise of the following members:

  • Chairman appointed by Central Government.
  • Three members of the Corporation appointed by the Central Government.
  • Three members of the corporation representing such three state governments as the Central Government may by notification specify in the official gazette from time to time.
  • Eight members elected by the corporation as follows:
  • Three members representing the employers.
  • Three members representing the employees
  • One member representing the medical profession
  • One member from among the members elected by the Parliament.
  • The Director-General, ex-officio.

2.1 Term of Members

The term of office of the members of the Standing Committee shall be 2 years from the date his election is notified who shall continue to hold his office on expiry of his term until his successor is notified.

The person shall cease to be a member of the standing committee if he ceases to be a member of the Corporation.

2.2 Powers and Functions

  1. The committee shall administer the affairs of the corporation and exercise any of its powers and functions. 
  2. It shall submit for consideration and decision of the corporation all such matters as specified in the regulations. 
  3. It shall also submit at its discretion any of the matter for decision by it.

3. Medical Benefit Council

The Central Government shall constitute a Medical Benefit Council. It shall consist of such persons who shall be the members of the Committee as specified in the Act. The term of office of the members shall be 4 years and shall continue to hold office on expiry of his term until a successor is notified. 

3.1 Powers and Functions

  1. The council shall administer matters about the medical benefits, certification for purposes of grant of benefits.
  2.  It shall also investigate matters relating to complaints against the medical practitioner for medical treatment and attendance. 

4. Resignation of membership

A member of the corporation, standing committee, and medical council may resign by a notice in writing to the Central Government. 

5. Cessation of membership

A person shall cease to be a member on the following grounds:

  1. If he fails to attend three consecutive meetings, provided that his membership can be restored subject to the rules made by the Central Government in this behalf.
  2. Where in the opinion of the Central Government, the member fails to represent the employers, employees, or the medical profession.
  3. Where the member ceases to be a member of the Parliament.

6. Disqualification of membership

A person shall be disqualified for being a member on the following grounds:

  1. He is declared to be of an unsound sound by a competent court.
  2. He is an undischarged insolvent.
  3. He has been convicted of any offense involving moral turpitude.
  4. He directly or indirectly or his partner has any interest in a subsisting contract with or any work being done for the corporation except as a medical practitioner or shareholder, not being a director of a company.

7. Fees & Allowances

Members of the Corporation, the Standing Committee, and the Medical Benefit Council shall receive such fees and allowances as may from time to time be prescribed by the Central Government.

8. Meetings

Subject to any rules made under this Act, the Corporation, the Standing Committee, and the Medical Benefit Council shall meet at such times and places and shall observe such rules of procedure regarding the transaction of business at their meetings as may be specified in the regulations made in this behalf.

9. Supersession

If in the opinion of the Central Government, the corporation or standing committee or medical benefit council make default in performing the duties imposed on it under the Act or abuses its power, the government may by notification, in the official gazette supersede the corporation and in case of the standing committee, a new standing committee shall be constituted in consultation with the corporation as per Section 8. The government shall give an opportunity to be heard and shall consider the explanations and objections if any. The offices of the members shall deem to have vacated. 

The Corporation may appoint Regional Boards, Local Committees and Regional and Local Medical Benefit Councils in such areas and in such manner, and delegate to them such powers and functions, as may be provided by the regulations.

10. Employees State Insurance Fund

All the contributions paid under this Act and all other funds received on behalf of the Corporation shall be paid into this fund. It shall be held and administered by the Corporation. This fund shall be expended for the some of the following purposes:

  1. Payment of benefits and provisions of medical treatment of insured persons
  2. Payment of fees and allowances to the members of the Corporation, Medical Benefit Council, Regional boards, etc.
  3. Establishment and maintenance of hospitals, dispensaries, and other institutions.
  4. Defraying cost of Employees Insurance Court under this Act and other such purposes as have been provided under the Act. 

11. Contributions

The contributions have to be paid at such rates as may be prescribed by the Central Government. The rates of contribution are 4.75% and 1.75% of worker’s wages by employers and employees respectively. The contributions payable shall ordinarily fall due on the day of the wage period.

12. Employees Insurance Court

 The State Government may by notification in the Official Gazette, constitute an Employee Insurance court for such local area as specified by the notification. It shall consist of such number of judges as it may deem fit.

Any person who is or has been a judicial officer or is a legal practitioner of 5 years standing shall be qualified to be a judge of the court. 

13. Exemption

The appropriate government may exempt any factory/establishment from the purview of this Act. such exemption is initially for one year and may be extended from time to time. These were some of the most relevant and important provisions under the Act. 

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