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Frequently Asked Question's

INFORMATION ON E.S.I. AND E.P.F :-

1) The Employees’ State Insurance Act, 1948
By enacting the Employees’ State Insurance Act, 1948, the Government introduced a scheme of social insurance for the industrial workers, Under the scheme the workers also are required to continue to a social insurance fund which is to be utilised for conferring benefits on them. The Employees’ State Insurance Act, 1948, provides to the workers not only accident benefit and medical benefit. With effect from 1.10.2006, every employee drawing wages upto Rs. 10,000/- per month is required to be insured under the Act.
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FAQ's :

  • Q. What is the object of the Employees’ State Insurance Act, 1948?
    A.  The object of the Act is to secure sickness, maternity, disablement and medical benefit to employees of factories and establishment and dependents’ benefits to the dependent of such employees.

  • Applicability of the Act
  • Q.  Which establishment are covered by the Act?
    A.  (1)  The Act is applicable, in the first instant, to all factories other than seasonal factories.
         (2)  The appropriate Government may extend the provision of the Act or any  of them to any other industrial, commercial or agricultural establishment.

Note :-   With effect from 12-11-1978 the Government of Maharashtra has extend the provision of the Act to establishments of hotels, restaurants, shop, cinemas and newspapers employing 20 or more employees situated in Greater Bombay and certain talukas of Thane District.

 

  • Q.  Are casual workers employed for the maintenance of an establishment employee under Section 2(9) of the Act?
    A.  Once the establishment is covered by the Act, the  employer is liable to pay contribution in respect of the employees in respect of repair and maintenance of the establishment.  The casual workers are employees under section 2 (9) of the Act.

    Note :-  Held in Regional Director, ESI Corporation v. Standard pottery Works, 2002 (94) F.L.R. 265 ( Ker. H.C. )

  • Q.  What is the meaning of  “factory” under the Act?
    A.  Prior to 1989 amendment of the Act, a factory was defined as any premises whereon 20 or more persons are employed and in any part of which a manufacturing process is carried on with the aid of “power”. By 1989 amendment of the Act a factory is now defined as :
    (1)  any premises whereon 10 or more person are employed and in any part of which a manufacturing process is carried on with the aid of “power”, or
    (2) any premises whereon 20 or more person are employed and in any part of which a manufacturing process is carried on without the aid of power.

  • Q. Who are required to be insured under the Act?
    A.  Every employee employed in or in connection with the work of a factory or establishment covered by the Act and drawing wages upto Rs. 10,000 per month is required to be insured under the Act. The provision is in force from 1.10.2006.

    Contribution
  • Q. What is the contribution payable by the employee and the employer under the Act?
    A.  Every insured employee and his employer have to pay to the ESI. Corpn. contribution at the rate of 1.75% and 4.75% respectively of the wages of the employee.

    Benefits
  • Q.  What are the benefits provided under the Act?
    A.  The following six kinds of benefit are provided under the Act :
           (1)  Sickness benefit.
           (2)  Maternity benefit
           (3)  Disablement benefit
           (4)  Dependents’ benefit
           (5)  Medical benefit and   
           (6)  Funeral expenses.

  • Q.  Does the Act apply to a person employed through a contractor?
    A.  The Act does apply to a person employed through a contractor if the person is otherwise covered by the Act.

  • 2) The Employees’  Provident Funds and Miscellaneous 

    Provision Act, 1952

The Employees’ Provident Funds and Miscellaneous Provision Act,1952 is enacted to provide a kind of social security to the industrial workers. The security however, differs from the security provided to them under the workmen’s compensation Act or the Employees’ State Insurance Act. The Employees’ Provident Funds and Miscellaneous Provision Act mainly provides retirement or old age benefits, such as provident funds, superannuation , Invalidation Pension, Family Pension and Deposit Linked Insurance. Provision for terminal benefit of restricted nature was made in the Industrial Disputes Act, 1947, in the form of payment of retrenchment compensation .  But this benefit is not available to a worker on retirement, on reaching the age of superannuation or voluntary retirement. The Employees’ provident and Miscellaneous Provision Act is intended to provide wider terminal benefit to the industrial workers.  For example, the Act provides for payment of terminal benefit in various contingencies such as retrenchment, closure , retirement due to incapacity to work.

APPLICABILITY OF THE ACT

  •  Q. Which establishment are covered by the Act?
    A.  The Act is applicable,
    1. to every factory engaged in any industry specific in Schedule I to the Act and employing 20 or more person; 
    2. to every other establishment employing 20 or more person specified by the Central Government in this behalf.
    Any establishment to which the act applies shall continue to be governed by the Act even if the number of person employed therein at any time falls below 20.

  • Q.  Can the Act be extended to other factories or establishments?
    A.  The central Government has been given wide powers to extend the application of the Act. It can apply the provision of the Act :-
    • to any factory  or establishment even if such factory or establishment is employing less than 20 person. 
    • to any factory or establishment whatsoever if the employer and the majority of the employees of such factory or establishment have agreed that the provision of the Act should be made applicable to it on and from the date of such agreement or from any subsequence date specified in such agreement.
    • to any factory employing 20 or more person but not engaged in any industry specified in schedule I to the Act, by including the industry, in which such factory is engaged, in schedule I to the Act.
    • where, immediately before the Act becomes applicable to any establishment, there is a provident fund which is common to the employees in that establishment and employees in any other establishment, to such other establishment.

    OFFENCES

    Q.  what are the offences under the Act what is the punishment for them?
    A. Punishment's
    • If any person, for the purpose of avoiding any payment to be made under the Act or the scheme, knowingly makes any false statement or false representation, he would be punished with imprisonment upto one year, with fine upto Rs. 5,000, or whth both.
    • If any employer makes default in payment of the employer’s contribution or the employee’s contribution payable under the Employee’s  Provident Funds Scheme or paragraph 38 of the said scheme relating to the payment of administrative charges, or under section 17(3)(a) of the Act relating to the payment of inspection charges, he would be punished with imprisonment upto three years but it shall not be less than one year and a fine of Rs. 10,000/-in case of default in payment of the employee’s contribution which has been deducted by the employer from the employees’ wages and six months and a fine of Rs. 5,000/- in any other case..
    • If any employer makes default in payment of the employer’s contribution or the administrative charges payable under the Deposit Linked Insurance Scheme under section 6-C or contravenes the provision of section 17(3)(a) relating to the payment of inspection charges, he would be punished with imprisonment upto I year, but which shall not be less than 6 months, plus fine upto Rs. 5,000.
    • If any person contravenes or makes default in complying with any other provision of the Act or any condition for exemption from any scheme, he would be punished with imprisonment upto six month but which shall not be less than 1 month and with fine upto Rs. 5,000 or with both.
    • If any person convicted of an offence under the Act or the Scheme commits it again, he would be punished with imprisonment upto five years but which shall not be less than two years, plus fine upto Rs. 25.000.

    THE EMPLOYEES’ PENSION SCHEME, 1995

    APPLICABILITY OF THE SCHEME
    Q.  Who is eligible to become a member of the fund?
    A.  Every employee employed in or in connection with the work of a factory or other establishment covered by the scheme other than excluded employee is entitled and required to become a member of the Fund from the date of the joining the factory or establishment. An excluded employee shall, on ceasing to be such an employee, be entitled and required to become a member of the Fund from the date he ceased to be such employee.

    Q.  What are the benefit provided under the Scheme?
    A.  The following three kinds of benefit are provided under the scheme :-
          (1) withdrawal benefit. (2) Benefit of non-refundable advances, (3) Benefit of financing of life Insurance Policies.
    (1) Withdrawal Benefit :
    (a) A member can withdrawal the full amount standing to his credit in the fund in the following circumstances immediately.
    • Retirement after attaining the age of 55 years.
    • retirement due to incapacity for work .
    • migration for permanent settlement abroad.
    • mass retrenchment,
    • voluntary retirement, 
    • closure of establishment,
    • transfer to an establishment not covered under the Act.
    • discharge with payment of retrenchment compensation, etc.

    (b) In all the other cases of leaving services he can withdraw the full amount if he remains unemployed after the waiting period of two months unemployment.


    (2) Benefit of Non-refundable Advances
    Non-refundable advance from the amount standing to the credit of a member in the Fund can be sanctioned for the following purposes :
    (a) purchase of a house ,
    (b) repayment of a loan, for housing,
    (c) unemployment due to lock – out or temporary closure,
    (d) unemployment due to illness,
    (e) marriage of a self or of daughter, son, sister or brother,
    (f) education of son or daughter,
    (g) exceptional calamity, etc.
    (h) withdrawal for investment in Varishta Pension Bima Yojana

    (3)  Benefit of financing of Life Insurance  Policies :- This benefit can be available as specified in Paragraph 62 to 67.
    Q.  What is the purpose of the Employees’ Pension Scheme?
    A.  The purpose of the scheme is to provide for (1) superannuation pension, retiring pension or permanent total disablement pension to employee covered by the Employees’ Provident Funds Act, and
    (2) widow or widower’s pension, children pension or orphan pension payable to the beneficiaries of such employees.

    THE EMPLOYEES’ DEPOSIT-LINKED INSURANCE SCHEME,1976
    Q.  What is the purpose of the Employees’ Deposit – Linked Insurance 1976 and to whom is it applicable?
    A. The purpose of the scheme is to provide life insurance benefit to the employees of the establishment covered by the E. P.F. & M.P. Act such the scheme is applicable to the employees of all factories and other establishment covered by the said Act.

    BENEFIT
    Q.  What is benefit provided under the scheme?
    A.  The benefit provided under the scheme in the nature of life insurance is as follows.  On the death of an employees while in service a lumpsum insurance amount is payable to his nominee or family members.  The insurance amount is equal to the average balance in the account of the deceased employee in the provident fund during a period of 12 months immediately preceding his death. In case the average balance exceed Rs.35,000/- the insurance amount payable is Rs.35,000/-plus 25% of the amount in excess of Rs. 35,000/-subject to a ceiling of Rs. 60,000/-