Employees’ State Insurance (ESI) is a social security scheme in India that provides medical care, cash benefits, maternity benefits, and other benefits to employees and their families. Employers must comply with ESI rules and regulations, such as registering employees, making timely contribution payments, and filing necessary returns. Compliance with these rules would allow the employees to access medical and financial benefits under the Employees State Insurance (ESI) scheme. After reading this comprehensive guide on ESI registration, the readers will have a clear understanding of:

• Importance of ESI registration
• Eligibility criteria to register for ESI
• Registration procedure for ESI
• Contribution rates
• Employee benefits

ESI registration process:

Employers must register on the ESIC official portal within 15 days of eligibility.

Eligibility criteria:

Any business that operates throughout the year with more than 10 employees (or 20 in some states) must register under the Employees’ State Insurance scheme. This scheme applies only to employees with a salary of 21000 INR or less.

Contribution of amount:

The employer must contribute 3.25% of the total monthly wage towards the scheme, while the employee must contribute only 0.75%.

For disabled people:

For disabled people, the scheme only applies to those with a salary of less than 25000.

Online registration process:

People had to do manual registration in the past, but now it is entirely online and easy. An individual can register their businesses by following these steps:

Step 1:

Login to the ESIC official portal: The employer must first register on the ESIC portal. They can do so by clicking on the “employer login” option.

Step 2:

Confirmation email:

After submitting the sign-up form, they receive a confirmation email containing the username and password for registering as an employer or employee under the ESIC scheme.

Step 3:

Employer registration Form-1

After logging in to the ESIC portal, users must select “new employer registration” and “type of unit.” After that, an “employer registration-Form 1” appears that they have to fill out. The employer needs to write details about the unit of the employer, employer details, business details, etc. After filling out the entire form, they must click the submit button.

Step 4:

Payment for registration:

After submitting the form, individuals have to submit the payment for registration.

Step 5:

Registration letter:

After submitting the 6-month advance contribution, the ESIC system automatically generates a registration letter (C-11) and sends it to the employer’s email. The C-11 letter proves that the employer is registered under the ESI scheme.

Required documents for ESI registration

While filing for the ESI registration, the following documents must be submitted:

• Registration certificate obtained under the Factories Act or Shops and Establishment Act
• Certificate of incorporation
• GST certificate of the company.
• Memorandum of Association (MOA), Articles of Association (AOA), and PAN card.

Address proof of the establishment:

For the address, proof of the company, utility bills, e.g., electricity bill, gas connection bill, or telephone bill not older than 3 months, can be submitted. The individual can also submit a rental agreement of the land or property tax receipts, as he address proof.

A list of all the company employees, directors, and shareholders must be submitted.

Post-Registration Benefits Activation

Issuance of TIC:

Employees also receive a temporary Identification Certificate (TIC) until they get a permanent ESI card. The ESIC mobile app provides its users with digital access to medical benefits.

Post-registration benefits activation:

After registering for the ESI scheme, the person gets many benefits.

9- digit insurance number:

Individuals are given a unique 9-digit insurance number (IP number) to track their contributions and claims.

Sickness benefits:

Employees can get sickness benefits after completing 3 months of contribution from the registration date. The employees can access medical treatments at ESI hospitals and dispensaries immediately after registration:

Family’s medical benefits:

Employee’s family, including their spouse, children, and dependent parents, also gets free medical benefits.

Contribution calculations and payments

2.1 Contribution rates:

Both employers and employees must contribute a fixed percentage of their wages to the funds.

Employer contribution:

The employer must contribute 3.25% of the total monthly wage towards the scheme.

The employee must contribute only 0.75% of the total monthly wage to the scheme.

Total contribution: The total contribution is about 4% of the employee’s wages. The contributions are calculated based on gross wages, basic pay, dearness allowance (DA), house rent allowance (HRA), etc.

2.2 Wage ceiling and exemptions:

This scheme applies only to employees with a salary of 21000 INR or less.

If the employee’s salary exceeds 21000 INR, they cannot register for the ESI scheme.

During Unpaid leaves: Employees are only directed to pay for active earning months and not to contribute during periods of unpaid leave.

During maternity leave: Women are not required to contribute during their maternity leave.

For part-time employees:

Contribution is calculated based on pro rata for the Employees who only work for a partial month. A pro rata calculation means the ESI contribution is only calculated for the employee’s work days.

2.3 payment calendar and process:

Employers registering for the Employees’ State Insurance (ESI) scheme must follow the payment schedule to avoid high penalties.

Contribution due date:

Employers must deposit the Employees’ State Insurance (ESI) by the 15th of every month to avoid late fees. The payment must be made through the ESIC official online portal.

Late payment fine:

If the employer doesn’t make the payment by the 15th of the month, they have to pay an extra 12% interest per annum on the contribution. If they continue to pay the required ESI contribution late, the ESIC department can impose a penalty of up to 25% of the unpaid contribution amount.

Challan generation:

The official ESIC portal allows users to generate and submit challans through a step-by-step validation system.

ESI return filings:

Employers registered under the ESI scheme must also submit specific returns to the ESIC department by the given deadlines.

Types of ESI returns

ESI return filing is an essential compliance requirement. There are following types:

Monthly returns:

The monthly returns must be submitted by the 15th of every month.

Half-yearly returns:

Employers are required to submit half-yearly returns two times a year. The due dates for half-yearly returns are 11 May and 11 November.

Annual returns:

The annual return must be submitted by 30 April every year.

Forms used for ESI filing:

While filing ESI returns, the employer must submit two specific forms, Form 01 and Form 01-A. Form 01 contains details of the total ESI contribution made by the employer during one particular time, including the total amount paid, the number of employees covered, etc. On the other hand, Form 01-A contains details about employee-wise ESI distribution.

Online filing process

Employers must file their ESI returns online through the ESIC portal. This is done to ensure compliance with the rules and regulations. The steps to file an ESI return online are as follows:

Login to the ESIC:

Firstly, the employer needs to log in to the ESIC portal using their registered credentials.

Generate contribution history:

Employers must extract contribution details from their payroll records and ensure that employee deductions and employer contributions are recorded correctly.

Upload contribution file:

Using the payroll software or ESIC tools, a file in XML format containing contribution details is also created and uploaded to the portal. The system automatically verifies the uploaded data, which can be corrected before submission.

Digital signature:

Sometimes, employers must also sign the return using a digital signature certificate (DSC).

Common filing errors and ways to fix them

The mismatch between challan amounts and Returns:

One of the common errors people make is that the contribution amount in the challan doesn’t match the details in the returns.

Solution: If the employer notices any discrepancy, they must recheck their payroll records and correct the mistake.

Incorrect employee details:

Sometimes, employers also make mistakes while entering personal or employee details, which can cause rejection or delays in documentation approval.

Solution: Employers must verify the employee record carefully before submission and update it in case of any error.

Wrong contribution calculation:

Sometimes, they also miscalculate the employee or employer contributions.

Solution:

To avoid this mistake, the employer must double-check wage components and ensure correct calculations.

Late filing penalties and rectification process:

If the employer doesn’t make the payment by the 15th of the month, they have to pay an extra 12% interest per annum on the contribution. If they continue to pay the required ESI contribution late, the ESIC department can impose a penalty of up to 25% of the unpaid contribution amount.

Solution:

Employers must submit the returns on a yearly basis to avoid high penalties.

Amendment procedure for previously filed returns:

If the employers find mistakes in the submitted return, they can submit it again by logging into the ESIC portal.

ESI Employee benefits

Employees under the ESI scheme get so many benefits. These benefits can be accessed through the following processes:

IP number linkage to the ESI dispensary:

Employees registered under the ESI scheme can take medical services from their nearest ESI dispensary due to the IP number linkage with their local ESI dispensary.

Online appointment:

Employees can also book an online appointment through the ESIC portal.

Referral system for specialized treatment:

If the patient needs specialized care, the ESI dispensary also provides free referrals to another hospital with more facilities for proper patient care.

Treatment in non-ESI hospitals:

In a medical emergency, employees can also seek treatment from non-hospitals.

Medical benefits during unemployment:

Under the Rajiv Gandhi Shramik Kalyan Yojana, employees who have lost their jobs can still receive medical benefits for up to two years of unemployment.

4.2 Cash Benefits Claims

Employees covered under the ESI scheme can claim various cash benefits based on eligibility. They must also submit some forms and documents to get these cash benefits.

Sickness Benefit:

Sickness benefits provide financial support during temporary illness.

Required documents:

Employees must submit Form 8 to the ESI branch office and submit a medical certificate from an ESI doctor to get sickness benefits.

Maternity benefit:

Maternity benefits provide financial assistance for female employees during pregnancy.

Required documents:

To receive a maternity benefit, the employee must submit Form 19 and a medical certificate from an ESI doctor at least 30 days before the expected delivery date.

Disabled benefit:

Employees with partial or total disability due to workplace injury can get this benefit.

Required documents:

The employer is required to report the accident within 24 hours and provide a medical certification explaining the extent of the employee’s disability.

Dependent’s Benefit

 Dependent benefit provides financial support to family members in case of an insured employee’s death due to an employment-related injury.

Required documents:

The death certificate of the deceased and relationship proof of the dependents must be submitted.

Funeral Expenses

The dependents can also get one-time funeral expenses for a deceased insured employee.

Required documents:

To receive funeral expenses, the dependent must submit a claim form, the deceased’s death certificate, and proof of their relationship with the deceased.

Benefit tracking and grievance resolution:

Employees registered under the ESI scheme can track their benefits and resolve issues through an online portal and grievance redressal system.

Online Status Checking

Through the ESIC portal, employees can check the status of their cash benefits, medical reimbursements, and other claims.

Benefit Payment Reconciliation:

Employees without ESI benefits can check their bank statements to see whether the payment was made. They should report the issue to the nearest ESIC branch office if a payment is missing.

Grievance submission process:

Employees facing issues related to delayed payments, incorrect calculations, etc., can submit their complaints online through the centralized public grievance redress and monitoring system (CPGRAMS). If this doesn’t resolve the issue, they must contact the regional ESIC office. Moreover, they must keep copies of all submitted documents as proof.

Compliance management for employees

5.1 Documentation requirement:

All enrolled employees under the ESI scheme must keep specific documents to comply with the rules and regulations and claim benefits.

Employees must keep all ESI-related documents for at least five years to ensure smooth verification. They also must have employment certificates if they want to apply for benefits. To get sickness benefits, they must submit medical certificates from ESI dispensaries. Employers must keep the employees’ attendance records to avoid errors in contribution calculations.

5.2 Address and employment changes:

Employees must also keep their records updated. If they move to another place and change their residence, they must change the records yearly.

Address change form: If the employee moves to another state or place, they must fill out Form 105 to update their residential address in ESIC records. This will allow their ESI benefits to be transferred to a new ESI dispensary.

Job change: If employees change jobs, they must give their current ESIC number to their new employer to continue receiving benefits without re-registering.

5.3 Digital compliance tools:

As technology revolutionizes daily, ESIC now provides various online tools to help employees and employers comply with rules and regulations.

ESIC mobile app:

Employees can use the ESIC mobile application to check their contributions, benefit details, and more. They can also contact the ESIC IT support team in case of any technical issues.

Adhaar linkage:

The ESIC portal also allows employees to link their Adhaar card number to their ESIC account to simplify the verification process.

Digital verification process:

Employees and employers can also verify their ESI contributions through an online portal.

SMS/Email alerts:

ESIC offers notification services to keep employees and employers updated about policy changes.

Unique scenarios and exemptions

6.1 Contract and temporary employees:

Temporary and contract-based employees can also benefit from the ESI scheme. Like permanent employees, contract and temporary workers earning 21000 INR or less can be registered under ESIC. Contract employees have fluctuating wages, so the ESI contributions are calculated based on their actual monthly earnings. Contract and temporary employees can also get medical benefits like permanent ones.

6.2 Multiple employment management:

The employees who are working under multiple employees must follow the following rules:

If the employee works for more than one employer, ESI contributions are deducted separately, but the monthly wage shouldn’t exceed 21000 INR (25000 INR for disabled people). When registering with ESIC, employees must provide details, e.g., employment certificates, salary slips, and contribution statements of their multiple employers. Benefits are also calculated based on the total contributions from all the employers.

6.3 Exit process and post-employment benefits:

If an employee is leaving the job, then they must follow some processes to continue taking the benefits if eligible:

Unemployment allowance:

Employees who have lost their jobs can still receive medical benefits for up to two years of unemployment under the Rajiv Gandhi Shramik Kalyan Yojana. They must apply online for the unemployment allowance or visit the ESIC branch to take advantage of this opportunity.

Specialized treatment continuity:

If the employee received specialized treatment before losing their job, they can continue receiving it with ESIC approval.

Rejoining the job:

Employees who leave their jobs but return after a gap don’t need to register again, as their ESI number remains valid.

Conclusion

We understand that it can be difficult for employers and employees to handle their requirements, which is why Finocircle’s ESI Registration Service is available. We ensure that all your ESI requirements are handled swiftly.

After reading this guide, we conclude that the Employees State Insurance (ESI) scheme is crucial in providing social security and medical benefits to employees in India. It helps the worker to be financially stable. Employers can face some challenges while filing for ESI but can overcome them by complying with the rules and regulations. They must abide by timely contributions, accurate record keeping, and return filings to avoid penalties. Advancements in technology have made it easier for employees to register for ESIC, making it the lifeline for millions of workers.