Introduction

ESIC, or the Employees’ State Insurance Corporation, registration is a vital and mandatory step for businesses in many countries, including India. This registration process ensures that employees receive proper medical and financial benefits in case of illness, injury, or other contingencies. It is a significant aspect of business compliance that not only safeguards the interests of the workforce but also protects the employer from legal troubles. This blog discuss in brief about how ESIC Registration is an important Step in Business Compliance.

When a business registers with ESIC, it becomes responsible for contributing to the ESIC fund, which provides employees with various benefits such as medical treatment, maternity leave, and disability benefits. This is a social security measure that enhances employee well-being and productivity, as it relieves them of financial burdens during times of distress. Compliance with ESIC registration also demonstrates a business’s commitment to ethical employment practices and adherence to labor laws. Non-compliance can result in penalties, fines, or even legal action, which can be detrimental to a company’s reputation and financial stability.

ESI Scheme

ESI (Employee State Insurance) operates following the ESI Act of 1948. It is a government scheme designed to provide social security benefits to workers. The administration of this scheme falls under the purview of the Employee State Insurance Corporation (ESIC). Employers must formally register their establishments with ESIC and furnish worker details for inclusion in the program.

Complying with the intricate regulations stipulated by the government can pose a significant challenge for employers. Tmwala’s ESI experts are available to assist you with these matters.

Definition and Scope of Establishments Under the ESI Act

The Employee State Insurance (ESI) Act categorises an establishment as any organised entity involving men or women, regardless of its physical location. This includes retail outlets and commercial shops, which are mandated to enroll in the ESI scheme if they employ 10 workers or 20 in certain states, provided these employees earn up to Rs. 21,000 per month, or Rs. 25,000 for individuals with disabilities.

Entities Covered Under ESIC

As per the government notification, under Section 1(5) of the ESI Act the following entities under state government are covered:

• Shops.
• Restaurants or hotels engaged only in sales.
• Cinemas including preview theatres.
• Road motor transport establishments.
• Newspaper establishments (which is not covered under the Factory Act).
• Private medical institutions.
• Private educational institutions.
• Casual employees of Municipal Corporation or Municipal Bodies

When the above-mentioned establishments employ 10 or more persons, the owner/employer of the establishment must compulsorily register it with the ESIC.

The Central Government has extended the coverage under Section 1(5) of the ESI Act to the following entities under Central Government: 

• Shops
• Hotels and restaurants 
• Road motor transport establishments 
• Cinema including preview theatres 
• Newspaper establishments 
• Establishments engaged in: 

• Insurance business 
  • Non-Banking Financial Companies (NBFCs) 
  • Port trust 
  • Airport authorities 
  • Warehousing 

When the above-mentioned establishments employ 20 or more persons, the owner/employer of the establishment must compulsorily register it with the ESIC.

Eligibility criteria for ESI registration

The eligibility criteria for ESI registration are as follows:

• Employees in establishments, factories, or shops with more than 10 employees are eligible for ESI benefits under Section 2(12) of the ESI Act, 1948.
• All workers and their dependents across various industries and sectors can receive ESI medical benefits from ESIC-run hospitals and dispensaries.

Women employees earning less than Rs. 21,000 per month and individuals with disabilities earning less than Rs. 25,000 per month are eligible for maternity benefits under the ESI Act. This includes medical and cash benefits, as well as paid leave for various conditions such as pregnancy (pre and post-delivery), medical termination, miscarriage, and adoption.

Documents Required for ESIC Registration

Since the procedure for registration is online, no physical documents are required to be submitted. The documents required while filling the ESIC online registration form are:

• Registration Certificate obtained either under the:
  • Factories Act, or
  • Shops and Establishment Act.
• Certificate of incorporation of the establishment, which are as follows:
  • Certificate of Company Registration in case of a company.
  • Partnership deed in case of a partnership firm.
  • GST certificate of the establishment.
• Memorandum of Association and Articles of Association of the company.
• Address proof of the establishment. Any one of the following can be submitted as address proof:
  • Utility bills (Electricity bill, gas connection bill or telephone bill of the establishment not exceeding three months)
  • Rental agreement of the land on which the establishment is situated
  • Property tax receipts of the land on which the establishment is situated
• A list of all the employees working in the establishment.
• PAN Card of the business establishment as well as all the employees working in the establishment.
• The compensation details of all the employees.
• A cancelled cheque of the bank account of the company.
• List of directors of the company.
• List of the shareholders of the company.
• A register containing the attendance of the employees.

Benefits of ESIC Registration

The benefits of registering under this scheme are varied. Some of them are:

• Sickness benefits at the rate of 70% of wages for a maximum period of 91 days in any year in case of any certified illness.
• Extended sickness benefits upto two years to the employees in the case of 34 malignant and long-term diseases at the rate of 80% of wages.
• Enhanced sickness benefits equal to full wages for employees undergoing sterilization for family planning upto 7 days for Vasectomy and 14 days for Tubectomy.
• Medical benefits to an employee and his/her family members. 
• Medical benefits to retired employees and their spouses upon payment of an annual premium of Rs.120.
• Maternity benefit at the rate of full wage to the women who are pregnant (paid leaves for 26 weeks, which can be extended by one month).
• If the death of the employee happens due to employment injury or occupational hazards, dependent benefit of 90% of the wages is given to his/her dependents in the form of a monthly payment after the death of the employee.
• Temporary disablement benefits in case of employment injury at the rate of 90% of wages till the disability continues.
• Permanent disablement benefits at the rate of 90% of wages is given every month depending upon the extent of loss of earning capacity certified by a Medical Board.
• Funeral expenses of Rs.15,000 is given to the dependents of the employees or the person who performs the last rites of the employee.

Compliances After ESIC Registration

After ESI registration, an establishment must adhere to specific compliances and file requisite ESI returns. These obligations are crucial for ensuring seamless operation and adherence to regulatory standards. The mandatory compliances include:

• Attendance Register Maintenance: The establishment must diligently maintain an attendance register to record the attendance of all employees. This serves as a fundamental document for compliance and internal record-keeping.
• Register of Wages: A comprehensive register of wages for workers should be meticulously maintained. This register is vital for transparent documentation of salary details and ensures compliance with ESIC regulations.
• Inspection Book: An inspection book must be kept to record any inspection on the premises. This facilitates transparency and regulatory compliance during official inspections.
• Monthly Return and Challan Submission: The establishment must submit monthly returns and challans within the first 15 days of the succeeding month. This includes providing details of employees, their attendance, and the corresponding contributions to the ESIC.
• Accident Register: A register documenting accidents on the premises is mandatory. Accurate recording of accidents is essential for compliance. It facilitates a proactive approach towards workplace safety.

Simplifying ESIC Registration for Employers

ESIC Registration: A Crucial Step in Business Compliance

When it comes to ensuring the well-being of employees, employers in India must comply with ESIC registration, a statutory requirement mandated by the Indian government to safeguard the monetary benefits and health of Indian employees. In this conclusion, we will explore the key aspects of ESIC registration and its significance in the corporate world.

Streamlining the Registration Process

Streamlined Registration Process. The Indian government has simplified the process of ESIC registration, making it remarkably straightforward and accessible. Employers can complete the registration process through an online registration form, where they provide essential employee details, including bank account information and proof of registration. The ease of this process, along with expert guidance and assistance, simplifies the complexities of compliance and ensures a hassle-free registration experience.