Page 318 - DMGT106_MANAGING_HUMAN_ELEMENTS_AT_WORK

Managing Human Element at Work

Notes The ESIS is a breakthrough in the history of social security in India. The main objective of
this scheme is to launch social insurance for the employees of a company in order to provide
them social security during situations, such as illness, long-term sickness or any other health
hazard. According to this scheme, medical facilities are also provided to the retired insured
individuals and permanently disabled workers and also to their spouses at a minimal
payment of ` 10 per month.
The ESIS Act is monitored by the Employees’ State Insurance Corporation (ESIC), which is
established by Central Government. ESIC has its own funds, known as ESI fund that provides
cash benefits to insured persons, medical benefits, such as hospitals and dispensaries. Following
are the benefits provided by this act:

Sickness Benefits are given to the employees for maximum period of 91 days. The sickness
benefit is the half of the daily average wages of the employee. For getting the sickness
benefit the employee should be under the medical treatment at a hospital maintained by the
company. Extended sickness benefit is also given to the insured employees who are suffering
from long-term diseases. In this case the employee can get sickness benefit for a maximum
period of 309 days and the payment given to the employee is 63 percent of the wages.
Sickness benefit is useful to an employee who is unable to work due to illness. The employee
also gets medical treatment and financial support.
Medical Benefit is the form of free medical treatment that an employee claims in case of
illness, maternity and accident. The employee gets this benefit at ESI hospital or dispensary
of the doctor who is treating to the worker. The family of the insured worker also avails
this benefit. Workers suffering from critical diseases, such as T.B, Cancer, Leprosy and mental
diseases are provided special facilities.
Maternity Benefit is in the form of cash payment to the insured women for confinement,
miscarriage or illness arising out of pregnancy. This benefit is calculated at half of average
daily wages. If the insured woman dies during the period of confinement, the nominee gets
the benefit for the whole period.
Disablement Benefit is given in case of permanent disablement of an employee. The benefit
is given when an employee is caught in an industrial accident within the factory. The annual
benefits depend on the nature of disablement. In case of temporary disablement full pay is
given to the employee for the period of disablement. For the permanent disablement the
employee is given cash benefit for life at a percentage of full rate.
Dependents’ Benefit is given to the insured, deceased employee’s dependents. The benefit is
given if an employee dies in an industrial accident. The family of the employee is entitled
for cash benefit under this scheme. The widow will receive pension for life long.

Funeral Benefit is given in the form of cash up to maximum of ` 1,000 to the insured
individual for funeral. This benefit is given to the eldest person or the person who is actually
incurring the expenditure at the time of funeral.
The Employees’ Provident Fund Act, 1952
The Employees’ Provident Fund Act was launched in 1952 that provides retirement benefits
to the employees of a company. Retirement benefits include provident fund, family pension,
and deposit-linked insurance. This Act is applicable to the companies in India (excluding the
state of J&K) with 20 employees or more. This Act is not applicable on the companies that
registered under the Cooperative Societies Act, 1912 or under any other law related to
cooperative societies with less than 50 individuals. This scheme is applicable to the employees
getting the salary of ` 5000 per month.
According to this act, the employees need to contribute 8.33 percent of the basic salary and
dearness allowance comprising cash value of food allowances and maintaining allowances
given to the employees. Now, the government has increased the rate of employee contribution

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