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Employee's State Insurance Act, 1948

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HomeBrud.gifIndian LawBrud.gifIndian ActsBrud.gifEmployee's State Insurance Act, 1948


  • The Royal Commission of Labour appointed by the British Government has recommended that:
    • Workers should be helped at their pitiable and helpless condition for sickness, maternity and disablement
    • Sickness benefits should be provided in two modes: Medical benefits and financial benefits
    • The State should provide a system for control
    • Amounts are to be mutually arranged by contributions of both employers and employees
    • Contributions are premiums of insurance
    • Provident fund etc. should be made available for employees who retire or die
  • The Bombay Textile Labour Enquiry Committee, 1940 recommended the introduction of sickness insurance as recommended by the Royal Commission of Labour and stressed for a legislation for the same


  • The Act has 100 Sections and 3 Schedules
  • Employees State Insurance Rules, 1950 deals with the procedural implementations of this Act
  • The ESI Scheme was introduced in India as an integrated social security scheme to provide social production to workers and their dependents, in the organized sector, in contingencies, such as Sickness, Maternity and Death or Disablement due to an employment injury or occupational hazard.
  • Preamble: Act to provide certain benefits to employees in case of sickness, maternity and employment injury and to make provisions for certain other matters in relation thereto
  • Contributory Principal: Employers: 4% and Employees: 1.5%
  • Application of the Act
  • Applicable to all factories, including Government factories, run with power and having 20 or more employees.
    • Non-seasonal Factories using power in and Employing ten (10) or More persons
    • Non –seasonal and non‐power using factories and establishments employing twenty(20) or more persons
    • Employees of the Factories and Establishments in receipt of wages not exceeding Rs.7500 /‐Per month are covered under this Act.
  • Wages for ESI contributions - two lists
    • Certain payments deemed as wages
    • Certain payments not to be deemed as wages
  • Definition of Wage
  • Funding the ESI - Finances
  • Contribution and Benefit period
  • Advantages to Employers
  • Benefits to Employees
    • Medical Benefit
    • Sick Benefit
    • Extended Sick Benefit
    • Maternity Benefit
    • Disability Benefit
    • Permanent Disability Benefit
    • Dependents Benefit
    • Other Benefit (Funeral expenses, Rehabilitation Allowance etc)
  • Levy of Interest & Damages
  • Obligation of the Employers
  • Excludes Mines under the Mines Act and Railway running sheds
  • Section 2(8): Defines 'Employment Injury'
    • 'arising out of and in the course of employment'
    • Could be because of an accident or an occupational disease
    • Within or outside the territorial limits of India
    • Personal Injury (is wider than bodily injury)
    • Does not include members of the Indian Military, Navy and Air Force
  • Section 2(13): Defines 'Immediate Employer'
  • Section 3: Establishment of the Employees State Insurance Corporation

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