Employment State Insurance Act, 1948

Advisory committee and powers

BY:

Name: PRASHANS
Roll No-27

B.B.A. LLB.(Hons.)
 INTRODUCTION

The Employee State Insurance Act, [ESIC] 1948, is a piece of social welfare
legislation enacted primarily with the object of providing certain benefits to
employees in case of sickness, maternity and employment injury and also to make
provision for certain others matters incidental thereto. The Act in fact tries to attain
the goal of socio-economic justice enshrined in the Directive principles of state
policy under part 4 of our constitution, in particular articles 41, 42 and 43 which
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 strives to materialise these avowed objects through only to a
limited extent. This act becomes a wider spectrum then factory act. In the sense
that while the factory act concerns with the health, safety, welfare, leave etc of the
workers employed in the factory premises only. But the benefits of this act extend
to employees whether working inside the factory or establishment or elsewhere or
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 ever expanding industrial horizon and reciprocal uprising of labour

consciousness necessitate the employee and employer to be conversant with the
current labor legislation that govern their relationship, rights and obligation.
In the conference of Labour Ministers held in January 1940, it was declared to
invite the views of provincial Government, employers and workers about
compulsory contribution of the sickness insurance fund. The second conference
was held in year 1941, was of the opinion that any such legislation must be
preceded by an actual examination of the problem in certain industries. In 1942
third conference was called for to examine a tentative sickness scheme prepared by
the Labour department of the Government of India. The Conference agreed to
introduce the scheme on a selective basis and recommended a sickness insurance
scheme to workers in jute, cotton and heavy engineering industries. In 1943
government appointed Prof. B.P. Adarkar as a special officer to report on health
insurance of the industrial workers in India. He submitted a report in 1944 which
contained comprehensive contributory scheme of social insurance. Some
improvements in the above scheme were suggested by Maurice Stack and
Raghunath Rao, members of ILO, who examined it at the invitation of government
of India. The Adarkar Report and suggestions made by the two ILO members were
discussed by the Labour Conference in October 1944, and by Standing Labour
Committee in March 1945. The following recommendations were made:
· The central Government should proceed with the preparation of a scheme of

health insurance applicable to all perennial factories and covering

employment injuries sand maternity benefits if possible.
· The scheme should be circulated to Provincial governments and association

of employers and workers before a bill was drafted.

The Employees’ State Insurance Bill providing for compulsory sickness, maternity
and employment injury benefits for workers in perennial factories was introduced
in the central Legislature on 6th November 1946. The Employee State Insurance act
was promulgated by the Parliament of India in the year 1948.To begin with the
ESIC scheme was initially launched on 2 February 1952 at just two industrial
centres in the country namely Kanpur and Delhi with a total coverage of about 1.20
lac workers. There after the scheme was implemented in a phased manner across
the country with the active involvement of the state government.

The Employees’ State insurance Act is a legislation which aims at bringing about
social and economic justice to poor labour class. It aims at the labour welfare. But
labour welfare is an elastic term bearing somewhat different interpretation in one
country from another according to different social customs, the degree of
industrialisation and the educational development of the workers. Investigation
Committee of the Government of India has preferred to include under welfare
activities anything done for the intellectual, physical, moral and economic
betterment of workers whether by employers, by Government or other agencies,
over and above what is laid down by law or what is normally expected as part of
contractual benefits for which workers have bargained. Labour welfare is a very
comprehensive term and includes everything undertaken by the State, employers
and association of workers for the improvement of workers’ standard of living and
promotion of their social and economic well being.
These welfare activities need to be considerably extended so as to cover workers of
every factory, industry, mines, plants and communications, etc. A definite
minimum standard of welfare should be laid down, which has to be observed by all
employers.

APPLICABILITY

The ESIC 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. Under the enabling provisions of the act, a
factory or establishment, located in a geographical area, notified for
implementation of the scheme, falls in the purview of the act. Employees of the
aforesaid categories of factories or establishments, but drawing wages only up to
Rs 6,500 a month are entitled to health insurance cover under the ESI act. The
wage ceiling for purpose of coverage is revised from time to time; to keep pace
with rising cost of living and subsequent wage hikes. The present ceiling of Rs
6,500 has been effective from 1 January 1997 the appropriate government state or
central is empowered to extend the provision of the ESI Act to various classes of
establishment, industrial, commercial, agricultural or otherwise in nature. Under
these enabling provisions most of the state governments have extended the ESI act
to certain specific classes of establishments. Like shops, hotels, restaurants,
cinemas, employing 20 or more persons. But no industry has the right to opt out of
the scheme.

1. Short title, extent, commencement and application

(1) This Act may be called the Employees' State Insurance Act,1948.
(2) It extends to the whole of India.
(3) It shall come into force on such date or dates as the Central Government may,
by notification in the Official Gazette, appoint, and different dates may be
appointed for different provisions of this Act and [ for different States or for
different parts thereof].
(4) It shall apply, in the first instance, to all factories (including factories belonging
to the government) other than seasonal factories:
[PROVIDED that nothing contained in this sub-section shall apply to a factory or
establishment belonging to or under the control of the government whose
employees are otherwise in receipt of benefits substantially similar or superior to
the benefits provided under this Act.]
(5) The appropriate government may, in consultation with the Corporation and
[where the appropriate government is a State Government, with the approval of the
Central Government], after giving six months’ notice of its intention of so doing by
notification in the Official Gazette, extend the provisions of this Act or any of
them, to any other establishment or class of establishments, industrial, commercial,
agricultural or otherwise[PROVIDED that where the provisions of this Act have
been brought into force in any part of a State, the said provisions shall stand
extended to any such establishment or class of establishments within that part if the
provisions have already been extended to similar establishment or class of
establishments in another part of that State.]
[(6) A factory or an establishment to which this Act applies shall continue to be
governed by this Act notwithstanding that the number of persons employed therein
at any time falls below the limit specified by or under this Act or the manufacturing
process therein ceases to be carried on with the aid of power.]

THE STANDING COMMITTEE

The Standing Committee is constituted with three members representing

central and state governments and three elected from among employers and

employees and others one each from paramedical professionals. Director General,

ESI Corporation is also an ex-officio member of the Standing Committee. The

Committee holds its quarterly meetings. The Standing Committee is vested with

powers to administer the affairs of the Corporation, exercise any of the powers
and

perform any functions of the Corporation subject to the overall control and

supervision of the Corporation. Standing Committee is also empowered to

constitute any non-statutory sub-committees for specific purposes as the need be.

Powers of the Standing Committee

Subject to the general superintendence and control of the Corporation the

Standing Committee shall administer the affairs of the Corporation and may

exercise any of the powers and perform any of the functions of the Corporation.

The Standing Committee shall submit for the consideration and decision of the

Corporation all such cases and matters as may be specified in the regulations
made

in this behalf. The Standing Committee may in its discretion submit any other case

or matter for the decision of the Corporation.

THE MEDICAL BENEFIT COUNCIL

Medical Benefit Council is an advisory body on matters related to the

administration of medical benefit under the ESI Scheme. The council is

constituted by the Central Govt. for a specific term and consists of:-

1. Director General, Central Health Services(ex-officio Chairman)

2. Deputy Director General/Addl. Director General, Central Health Services.

3. One member each representing respective State Govts.

4. Three members each representing employees, employers and the medical

profession.
5. Medical Commissioner, ESI Corporation(ex-officio member)

The ESI Act empowers the Medical Benefit Council to advise the Corporation

on matters related to developments and improvements in the medical service

delivery system. The constitution of the Corporation, Standing Committee and the

Medical Benefit Council are dealt with in Section 4, 8 and 10 of the ESI Act, 1948

respectively. Powers of the Standing Committee and duties of the MBC are given

under Section 18 and 22 respectively. Duties of Medical Benefit Council

The Medical Benefit Council shall -

a) Advise the Corporation and the Standing Committee on matters relating to the

administration of medical benefit the certification for purposes of the grant of

benefits and other connected matters;

(b) Have such powers and duties of investigation as may be prescribed in relation

to complaints against medical practitioners in connection with medical treatment

and attendance; and

(c) Perform such other duties in connection with medical treatment and
attendance

as may be specified in the regulations.

COVERAGE

The ESI Act 1948 enacted on 19th April 1948 provides certain benefits to

the employees in case of sickness, maternity and employment injury and to make

provisions for certain other matters in relation thereto. The ESI Act 1948 in the

first instance applies to factories using power in the manufacturing process and
employing 10 or more persons and non-power using factories or establishments
employing 20 or more persons for wages. The provisions of the Act are being

implemented area wise by stages. The Act contains an enabling provision under

which the Appropriate Government is empowered to extend the provision of the

Act to other classes of establishments Industrial, Commercial and Agricultural or

otherwise.

EMPLOYEES’ STATE INSURANCE CORPORATION – A

NATIONAL VIEW

The Employees’ State Insurance scheme was inaugurated on 24th February,

1952 in the industrial town of Kanpur and Delhi and was gradually followed in the

rest of the country subsequently. The scheme was an experimental and ambitious

one. Originally it envisaged to cover about 25lakhs of industrial workers. In 1978

the scheme was reported to be in operation at 410 centres throughout the

country.

About 55 lakhs employee were already covered as per the report. Including those

members of families of employees the total number of beneficiaries under the

scheme was said to have gone to 501.97 lakhs in 1978. It was first of its kind in

south East Asia.

The Employees’ State Insurance Scheme is a unique multidimensional self

financing social security scheme in which every contributor is a benefactor and a

beneficiary. This integrated scheme of health insurance provides comprehensive

medical cover and cash benefits in the contingencies of sickness, maternity,

disablement and death due to employment injury to the insured persons and their
dependants. The ESI Act, 1948 provide the conceptual breakthrough in the

development of a social security scheme that has over the years metamorphosed

into the country’s largest worker welfare programme in terms of geographical

reach, demographic coverage and multi-faceted services. The ESI Act is

applicable to over two lakh industrial units, across the length and breadth of the

country. In the ESI Scheme employer is the only link between the administrative

machinery and its service system on one hand and the workers on the other hand.