ESI (Employees' State Insurance) Registration
ESI (Employees' State Insurance) Registration:
Comprehensive Health and Social Security for Your Workforce
The Employees' State Insurance (ESI) scheme is one of the most beneficial social security and health insurance schemes for businesses in India, including manufacturing, service, or retail industry businesses. ESI is a scheme formulated by the Employees' State Insurance Act of 1948, and the operation of this scheme is managed by the Employees' State Insurance Corporation (ESIC) to provide full medical and cash benefits to employees and dependents.
ESI covers various areas of unfortunate incidents such as sickness, maternity, disablement, and death due to employment injury, which in turn causes the employees financial hardship.
With ESI, the employers ensure that their eligible employees enjoy all-around medical treatment, financial assistance at times of incapacity, and also at times of unfortunate events. However, fulfilling the ESI norm is not only a statutory liability but also a demonstration of the commitment to employee welfare that certainly makes the organization more appealing in terms of being a responsible employer.
We, at TaxVice, can assist you through the process of social security legislation complexities, which can be challenging, especially for emerging businesses. For a start-up, MSME that seeks to enhance its business operations, as well as factories, understanding and completing ESI compliance falls within the spectrum of HR responsibilities. We simplify compliance with ongoing ESI registration so that you can concentrate on your business while protecting your employees' health and financial well-being.
What Exactly is the Employees' State Insurance (ESI) Scheme?
The Employees' State Insurance (ESI) scheme is a self-financing social security and health insurance scheme for Indian workers. It is managed by ESIC, an autonomous body under the Ministry of Labour and Employment, Government of India.
Main features of the ESI scheme are:
Why is ESI Registration Crucial for Employers?
The ESI Act of 1948 requires ESI registration to be performed compulsorily for eligible employers. Apart from being a legal requirement, it also provides many benefits both to the business and the employees.
1. Mandatory Legal Compliance & Avoidance of Penalties
- Problem: Due to non-registration and non-compliance with provisions under ESI, huge penalties may be imposed. These can include interest for non-payments of contributions (up to 12% per annum), liquidated damages varying from 5% to 25% of the amount in arrears, and, if the case is serious, prosecution, leading to imprisonment.
- Solution: Mandatory registration will ensure your compliance with the ESI Act. It safeguards the company from legal consequences and financial liability.
2. Comprehensive Medical Care for Employees & Families
- Problem: Employees often suffer from stress and demotivation when hospital bills add heavy financial burden without the workplace offering any assistance.
- Solution: ESIC provides total medical care to insured employees and their dependents from the first day of insurable employment, with absolutely no ceilings. The list includes outpatient treatment, hospitalization, specialist consultations, medicines, and diagnostic tests.
3. Financial Support during Illness & Disability
- Problem: Loss of income during periods of sickness or injury can drastically impact an employee's financial viability.
- Solution:ESI will pay cash benefits during certified sickness (70% of daily wages for a maximum of 91 days), temporary disablement (90% of daily wages during the period of disablement), and permanent disablement (90% of daily wages for life).
4. Maternity Benefits for Female Employees
- Problem: Financial stress during maternity leave remains a concern for the female workforce.
- Solution: Insured women get cash benefits equivalent to their average daily wage during maternity leave (up to 26 weeks, extendable), thereby ensuring financial stability during this crucial period.
5. Dependent's Benefits & Funeral Expenses
- Problem: Sudden death/permanent disablement of a breadwinner due to employment injury can financially jeopardize the family.
- Solution: ESI pays monthly financial support to dependents of an insured person who dies due to employment injury. It also pays for funeral expenses (up to ₹15,000) to the family or the person performing the last rites.
6. Greater Employee Morale & Retention
- Problem: When employees don't feel financially secure, it can result in low employee morale and a high rate of attrition.
- Solution: The provision of full ESI benefits can increase employee morale, instill confidence in them, and help retain talent, thus making your company an employer of choice.
Who Needs ESI Registration (Applicability)?
ESI registration is mandatory for the following entities:
- Factories: All factories employing 10 or more persons (irrespective of their wages).
- Establishments (Non-Factories): n most States and UTs, establishments (e.g., shops, hotels, restaurants, road motor transport establishments, cinemas, educational institutions, medical institutions, newspaper establishments) employing 10 or more persons are covered. (Note: Some states may have a higher threshold; typically, 20 employees).
- Employee Wage Limit:Only employees whose gross monthly wages (excluding overtime remuneration) do not exceed ₹21,000 (or ₹25,000 for persons with disability) are covered under the ESI scheme.
- As soon as any establishment is covered under the ESI Act, it shall continue to be so covered even if the number of employees at a later date falls below the threshold.
Key ESI Compliance Requirements for Employers (Post-Registration)
- Upon obtaining ESI registration, employers will have some continuous obligations to carry out.
- Monthly Contribution & Deposit:The contributions by the employee and employer are to be calculated based on gross wages. All contributions are to be deposited with ESIC by the 15th of the next month after they have been calculated.
- Half-Yearly Returns Filing: Half-yearly return filings on Form 5 will be submitted for the employee-wise contributions and wages for the period April to September (due by November 11th) and October to March (due by May 12th).
- Employee Registration & e-Pehchan Card Generation: All newly eligible employees are to be registered within 15 days of joining. Companies must generate and issue e-Pehchan Cards (Smart Cards), which are used by each insured employee to avail of benefits.
- Maintaining Records: Maintain proper records of employee attendance, wages, amounts deducted for contributions, and records of any accidents or injuries that take place at the workplace (Form 11).
- Accident Reporting: Report any accidents or injuries that occur on the worksite to ESIC within a time span of 24 hours using Form 16.
- Claims Facilitation: Educate employees on their entitlements under ESI and assist anyone who requires help with the claims process.
How to Register for ESI as an Employer?
The ESI registration is done online via the ESIC portal (or the Sharam Suvidha portal merging ESIC and PF).
Employer Sign-Up on the ESIC Portal:
- Access the official website of ESIC (www.esic.gov.in).
- Click on the "Employer Login" followed by "Sign Up."
- Fill in basic particulars such as the company name, employer name, region, email, and mobile number.
- Receive a confirmation email with login credentials (Username and Password).
Login & New Employer Registration:
- Log in to the ESIC portal with the credentials received.
- Select "New Employer Registration" and select the "Type of Unit" (factory/shop/establishment).
Fill Employer Registration Form-1:
- Fill out the exhaustive Employer Registration Form-1, giving details of your establishment (PAN, GSTIN, address, nature of business, license details), employer details, and initial employee strength.
Payment of Initial Contribution:
- After submission of Form-1, there will be a prompt in the system to pay an advance contribution (generally for six months). The payment has to be made online through the payment gateway.
Receipt of Registration Letter (C-11) & ESI Code:
- Upon successful payment, the Registration Letter (C-11) will be generated in the system and sent to the registered email with the unique 17-digit ESI Registration Number (Employer Code). This letter will serve as valid proof of registration.
Your Partner in ESI Compliance
ESI compliance is an ongoing responsibility that requires precision and timely action. It is a testimony to your organization's commitment to securing and improving the work environment. At TaxVice, we are your trusted partner in the myriad obligations of ESI. Full support is offered for:
- ESI Registration: Guide you through the online application, assist you with correct documentation, and obtain your unique ESI Employer Code.
- Monthly Compliance:Follow proper procedures and calculations for the calculation of contributions, generate challans, and make payments online on time.
- Half-Yearly Returns Filing:Assisting preparation and filing of half-yearly ESI Returns on time and accurately.
- Employee Management:Assist with employee registration, e-Pehchan card generation, and KYC updates.
- Expert Advisory:Continuous guidance regarding every provision and any new amendments with respect to the ESI Act and best practices to ensure compliance and avoid penalties.
Do not allow ESI compliance to become a source of anxiety.
Ready to secure social security for employees while keeping your regulatory procedures flawless?
Contact us by filling out our contact form and setting up a free, no-obligation consultation. Let us know about your workforce requirements and build a robust, compliant ESI system for your business.