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Unit 13: The Employees’ State Insurance Act, 1948

l z Describe the benefits of this Act Notes
l z Discuss the role of ESI Corporation
l z Get an overview of the role of ESI Hospital
l z Discuss penalties and damages under this Act

Introduction

In the previous unit, we dealt with the act relating to Maternity Benefit. The Employees’ State
Insurance Act was promulgated by the Parliament of India in the year 1948. It was the first major
legislation on Social Security in independent India to provide certain benefits to the employees
in the organized sector in case of sickness, maternity and employment injury. It is important
for the students to be thoroughly acclimatized with this branch of law to know its practical
significance. The Employees State Insurance Act, 1948 has been enacted with the objective of
welfare of the employees and benefits in case of sickness, maternity and employment injury
and certain other related matters. Articles 41, 42 and 43 of the Indian Constitution enjoin
the state to make effective provision for securing the right to work, to education and public
assistance in cases of unemployment, old age, sickness and disablement. The Act attempts to
achieve such goal of socio-economic justice enshrined in the Directive principles of state policy
under part 4 of the Constitution. The benefits extended under this Act are applicable to all
employees whether working inside the factory or establishment or else where they are directly
employed by the principal employee or through an intermediate agency, if the employment is
incidental or in connection with the factory or establishment. The Act applies to non-seasonal,
power using factories or manufacturing units employing ten or more persons and non-power
using establishments employing twenty or more persons. The purpose of this Unit is to enable
the students to comprehend basic expressions. At the end of this unit you should be able to
understand various concepts regarding ESIC.

13.1 Definitions

Employee

The term “employee” as defined under Section 2(9) of the Act, refers to any person employed on
wages in, or in connection with, the work of a factory or establishment to which this Act applies. It
has a wide connotation and includes within its scope clerical, manual, technical and supervisory
functions. Persons whose remuneration (excluding the remuneration for over-time work) does
not exceed ` 6,500 a month are covered under the Act. The Act does not make any distinction
between casual and temporary employees or between technical and non-technical employees.
There is also no distinction between those employed on time-rate and piece-rate basis.

Notes Employees employed directly by the principal employer and those employed
by or through a contractor on the premises of the factory and those employed outside the
factory premises under the supervision of the principal employer are all included under
the Act: It also covers administrative staff and persons engaged in the purchase of raw
materials or the distribution or sale of products and similar or related functions. However,
the definition of “employee” does not include any member of the Indian naval, military or
air force.

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