Open Access Research Article
EXAMINING THE EFFICACY OF THE EMPLOYEE’S STATE INSURANCE ACT, 1948 IN ENSURING SOCIAL SECURITY IN INDIA
Published Paper
Article Details
AUTHORED BY - VIVEK
PANWAR
ABSTRACT
The implementation of the Employee’s State Insurance Act,
1948 in India serves as a cornerstone in the pursuit of socio-economic justice
as enshrined in the constitutional principles outlined in Articles 41, 42, and
43. Aligned with international labor conventions such as the Social Security
(Minimum Standards) Convention, 1952, the Act provides a framework for securing
the rights to work, education, and public assistance in instances of
unemployment, old age, sickness, and disability. Through its provisions for
medical and cash benefits, the Act ensures comprehensive coverage for employees,
with the latter structured to complement the former effectively. Mandating
contributions from employers, employees, and the government, the Act
establishes a sustainable funding mechanism through the Employment State
Insurance Corporation (ESIC). This paper examines the multifaceted
implementation of the Act and its efficacy in safeguarding social security in
India.
Keywords: Employee’s State
Insurance Act, 1948; socio-economic justice; constitutional principles;
international labor conventions; medical benefits; cash benefits; funding
mechanism; Employment State Insurance Corporation (ESIC).
INTRODUCTION
Social Security holds a pivotal role in the society; it helps
in abridging gaps between people which is often caused due to low income and
status in the society by giving a sound working environment lowering the
inequity and inequality among people. Social Security eradicates the factors of
discrimination on the basis of nationality, ethnicity or gender by ensuring the
rights or benefits as a matter of legal entitlements.[1]
Although DPSPs are not enforceable before the Court of law,
the Apex Court in State of Madras v. Champakam Dorairajan[2] has recognized its significance and its need to run
subsidiary to the Fundamental Rights guaranteed under the Constitution.
The right to social security is recognized as a human right
in fundamental human rights instruments, namely the Universal Declaration of
Human Rights, and the International Covenant on Economic, Social and Cultural
Rights (ICESCR) and enshrined as such in other international and regional legal
instruments. In 1952 the International Labour Office defined social security
as:
"the protection which society provides for its members,
through a series of public measures, against the economic and social distress
that otherwise would be caused by the stoppage or substantial reduction of
earnings resulting from sickness, maternity, employment injury, unemployment,
invalidity, old age and death; the provision of medical care; and the provision
of subsidies for families with children."[3]
In February 2021, in the matter of Uber BV v. Aslam[4], the UK Supreme Court upheld that Uber drivers are “workers”
within the meaning of the statutory definition under labour laws (which
includes anyone employed under a contract of employment but also extends to
some individuals who are self-employed) and directed that Uber must pay its
drivers the national living wage, paid annual leave and other benefits provided
to employees, from the time that drivers log onto the Uber app, and are willing
and able to work.
The concept of Employees State Insurance Scheme is regarded
as one of the measures of social security. The scheme functions under the
Employees State Insurance Act 1948.[5] The Labour Department is one of the major departments of the
government which has the primary objective of bonding relations between the
industries and its workers by ensuring their basic rights for them in the
workplace.
There state and centre have worked on mechanism in providing
social security on the society in form of various measures in form of Minimum
Wages Act, Payment of Gratuity Act, Industrial Dispute Act, Trade Unions Act
and such others along with state based legislations.
Social Security and social protection has been guaranteed
under the Constitution under Part IV, Directive Principles of State Policy but
the these directives are not enforceable in the court of law though the Supreme
Court from time to time have said that for the proper functioning of the
Government it has to be an integral part and incorporating the same while
framing policies and laws. Social Security is usually given by the prevalent
social insurance laws and policies in the society. India did not have a formal
social security regime during the British Government, the concept of joint
family system was held to be a source of social protection.
In 2017, a writ petition was filed before the Delhi High
Court in Delhi Commercial Driver Union v. Union of India[6] for determining if taxi aggregators were merely playing the
role of online conduits connecting drivers to customers through a mobile app
and whether the drivers associated with these platforms came under the legal
category of “employees” qualifying for benefits under labour laws. However, the
petitioner withdrew the writ petition to approach the appropriate government
for making a reference under the Industrial Disputes Act, 1947.
The Employees State Insurance Act has a contributory nature
of functioning where employers, employees and to a certain extent the State
contribute to a fund out of which various types of benefits are provided to the
beneficiaries. The benefits covered under the Act are proportionate to the
average daily wage of the employee concerned. The Employers State Insurance Act
1948 encompasses is one of the primary social insurance schemes in India.
IMPACT AND IMPORTANCE OF SOCIAL
SECURITY ON SOCIETY
Social security benefits must reach the targeted groups at
optimised cost. The benefits are required to be managed in a proper way so that
there is no miss-utilisation of funds and stop any such mal-practice which
might come in the way of the beneficiaries of the Scheme. There has been a
discussion over time with proper delivery, adjudication and supervision of the
scheme. The study compiled by ILO in regard to cash transfer programmes which
have run for ten years in the developing countries has resulted in a positive
human impact along with bringing stability in the society. Families also
benefitted from the cash transfer schemes economically as they would invest the
cash in purchasing cattle’s or in setting up or adding small business.[7]
The medical benefits such as such as sickness, maternity,
temporary or permanent disablement, Occupational disease or death due to
employment injury, resulting in loss of wages or earning capacity-total or
partial covered under the Act holds a pivotal position in the ESI Scheme
because this is the only benefit which provides benefit to the insured person
as well their families. The cash benefits included under scheme are linked in
such a way that it caters to the need of medical treatment. The benefit can be
given out to out-patient treatment and attendance in a hospital or dispensary,
clinic, or other institution or by visit to the home of the insured person or
treatments relating to in-patient in a hospital. The scheme provides facilities
such as immunizations of young children of the insured persons for diseases
like diphtheria, pertusis, polio, tetanus, measles, mumps, rubella,
tuberculosis, etc. The ESI scheme caters for the social welfare of the
beneficiaries by providing cash benefits by encouraging sterilization method by
sickness cash benefit to that of equal to full wage for a period of seven days
for vasectomy and fourteen days for tubectomy. Insured persons long with their
family are also provided with medical treatment of artificial limbs, hearing
aids, artificial appliances like spinal supports, cervical collars, walking
callipers, crutches, wheel chairs, pace makers as a part of medical benefits
under the act.
Convention on Maintenance of Social Security Rights, 1982
ensures that each member can participate with every other concerned member in
schemes for the maintenance of rights with respect to various branches of
social security. The Convention mandates that the members to provide schemes
for maintenance and to determine the policy for benefits disbursement of old
age, survivor’s benefits and pensioners benefit in respect of occupational
diseases and the calculation of cost for such disbursement. The Convention
further ensures that each member shall guarantee the provision of invalidity,
old age and survivor????s cash benefits, pension in the case of
employment injuries and death grant and other benefits, which are received by
the parties when they mutually agree. The members are also required to promote
the efficiency of services to assist person who come under the purview of this
convention, primarily for the migrant workers along with their family.[8]
The concept “Basic Social Security Floor” is an international
concept which is practised by social transfers in cash and in kind for all
citizens ensuring:
1. All the residents having
access to essential health care benefits with the help of the State make sure
the proper delivery of the benefits and its smooth financing.
2. All children enjoy income
security at least when they are at the poverty level by various family and
child benefits policies whose primary objective is to provide nutrition,
education and care.
3. Targeted income support
for the poor, unemployed in the active age group who are able and fit to work.
4. Old-age residents or
persons with disabilities to enjoy social security benefits by way of pensions.[9]
In Regional Director, ESI Corporation v. Francis De
Costa[10], the Supreme Court held that security against sickness and
disablement is a fundamental right under Article 21 read with Section 39(e) of
the Constitution of India. The Court emphasized the importance of social
security measures for workers to ensure their well-being and livelihood.
The Court in Life Insurance Corporation of India v.
Consumer Education and Research Centre[11] observed that social security is assured under Article 41
and Article 47 of the Constitution of India. It imposes a positive duty on the
State to raise the standard of living and improve public health. The Court
highlighted the State's responsibility to ensure social security measures to
enhance the quality of life and well-being of its citizens
BENEFITS UNDER THE ESI ACT
The Employees State Insurance Act discusses various benefits
Act the insured employees and their dependants are entitled to. The benefits
are categorized as medical benefits and cash benefits. Under medical benefits
(a) medical benefit (b) sickness benefit (c) extended sickness benefit (d)
maternity benefit (e) temporary disablement benefit (f) permanent disablement
benefit (g) dependents benefit and (h) funeral expenses. Section 46[12] of the Act enumerates the following:
1. Medical Benefit: The
Medical Care and Sickness Benefits Convention, 1969 protects the workers by
determining the amount of medical care by adopting a curative and preventive
approach along with determining compensation for loss of earning through
sickness. The Convention mandates the ratifying states to implement the
provisions of medical care and sickness benefit for the employees or specified
classes of persons. It further talks about expanding the scope of medical care
to wives and children of persons covered and must include the provisions of
hospitalisation, pharmaceutical and surgical supplies and dental treatment. The
provision of sickness benefit must be a periodical payment in relation to the
wage of a male member of a beneficiary’s previous earnings or at proper rate by
which their family can be maintained which cannot be less than 60% of the
earnings of the respective class of employees to which the beneficiary belongs.
The insured persons under the ESI Act across areas along with
their family members are entitled to hospitalisation which comes as medical
care for the employees. In-patient services are provided to the insured persons
in the ESI hospitals or by making reservations in government- run hospitals or
such other private organisations. Benefits under medical care include indoor
treatment for IP’s and their families in hospitals, including all specialities.
In- house treatment of implantation of pacemaker, cardiology treatment,
oncology, hand surgery and other treatments are provided. Facilities for
out-patient treatment including Service Dispensaries Insurance Medical
Practitioners clinics are also provided. Women beneficiaries are provided with
ante-natal and post-natal care.
2. Sickness Benefit: The
ESI Act prescribes periodical payment of Cash Benefit made to the insured
persons in respect of sickness certified by insurance medical practitioners.
The Supreme Court in the case of Kishore Lal v. Chairman, Employees State
Corporation[13] has made a point to hold the medical practitioners of the
ESIC liable to the members, the court further ruled that the Consumer
Protection Act, 1985 is applicable to the dispensaries and hospitals run by the
ESIC and in such instances the doctors and hospitals can be held responsible
for the consequences of their negligence towards consumers this will increase
the sense of responsibility amongst the doctors.
The rate of Sickness Benefit corresponds to the Standard
Benefit Rate and the rate at which, such benefit is payable, is around 66% of
the average daily wages at the maximum, which an employee gets for a maximum
period of 91 days in two consecutive benefit periods. The insured person has to
work for at least 78 days during the contributing period to avail this benefit.
3. Extended Sickness Benefit: This benefit is provided to an I.P. for any of the 34 listed
specific long-term diseases, like TB, Cancer and other malignant diseases
requiring prolonged treatment. The rate at which Extended Sickness Benefit is
given to the employee is 40% more than the Standard Benefit Rate, which comes
to 80% of the average wages at the maximum, which is initially payable for a
period of 124 days, in addition to 91 days' of Sickness Benefit and can be
extended to 309 days. In certain cases, Extended Sickness Benefit for an
additional period of 330 days is also allowed, on recommendation of the Special
Medical Board. A few uncommon diseases, over and above 34 diseases listed, can
also qualify for the same benefit under discretion of the competent Medical
Authority of E.S.I. Corporation, New Delhi.
4. Maternity Benefit: Maternity Protection Convention 1952 covers industrial
organisations, non- industrial establishments, home workers and domestic
servants. The objective behind this convention is to provide adequate period of
leave with allowance and medical benefit. Maternity Benefit represents
periodical payment in cases of confinement, miscarriage, medical termination of
pregnancy and sickness arising out of pregnancy. The rate of benefit is double
the standard benefit rate, which works out to full average wages and more. The
criteria for payment being that an insured woman should have worked for 70 days
in two consecutive contribution periods immediately preceding the date of
confinement, expected date of confinement, etc. The maximum period for which
this benefit is admissible is twelve weeks in case of confinement and six
weeks, in case of mis-carriage. Additional period of one month benefit is also
admissible, in case, there is prolongation of sickness arising out of
pregnancy/confinement.
In Ram Bahadur Thakur (P) Ltd. v. Chief Inspector
Plantations[14], the Supreme Court clarified the interpretation of Section
5(2) of the Maternity Benefit Act concerning the calculation of the 160-day
period for eligibility to claim maternity benefits. The Court held that the
period during which a woman worker was laid off should be taken into
consideration for ascertaining eligibility. It was emphasized that during the
lay-off period, a woman worker cannot be expected to have actually worked in
the establishment. Therefore, actual work for 160 days cannot be insisted upon
as a condition precedent for claiming maternity benefits.
5. Disablement benefit consists of temporary disablement
benefit and permanent disablement benefit.
5.1. Temporary Disablement Benefit: This type of benefit is available for injuries caused during
employment. The maximum limit for the disbursement of benefit not limited;
however, the employer should be certified to be incapacitated to work for the
entire period. The employee is entitled for the benefit from the first day of
his insurable employment.
5.2. Permanent Disablement Benefit: This type of benefit is further categorised as permanent
partial disablement benefit and permanent total disablement benefit. This
benefit is extended to an insured person who loses earning capacity either
partially or fully during the course of employment. The loss of earning
capacity is assessed by a medical board and the benefit is paid till the death
of an insured person. There is also the facility to commute and receive the
benefit in total the maximum benefit should not exceed Rs. 30000/-.
6. Dependents Benefits: Recommendation concerning Invalidity, Old age and Survivors
Benefit, 1967 extended towards the protection of persons whose employment is of
a casual nature. The Convention also covers invalid and dependant widower for
survivors benefit. This benefit is for the dependent members of the insured
person who died during the course of his employment. Such benefits are
available to widows of the insured persons, dependent’s widow mother and
children’s up to 18 years of age are the first categories of dependants, this
also includes infirm children who were infirm at the time of death of the
insured person and such benefit will last till the infirmity lasts. Such the
case may be when the insured person is not survived by the dependents in the
first category the benefits then can be given out to others such as parents,
grandparents, minor brothers, sisters of dependents. The calculation of the
temporary disablement benefit is 80% of the average daily wages of an insured
person.
7. Funeral Expenses:
Under the ESI scheme, a payment is made as funeral expenses up to a maximum of
Rs. 10000/- in case of death of an insured person. In the year 2012 -13 a sum
of Rs. 1398.50 lakh was paid as cash benefit under the head of funeral expense.
8. Unemployment Allowance under: Rajiv Gandhi Shramik Kalyan Yojana (RGSKY) was in force to
formulate unemployment allowance to the insured persons who has been termed as
involuntarily unemployed due to closure of factory or any other establishment,
retrenchment, or permanent invalidity, which arises from non-employment injury.
The scheme is available to an insured person who has been in insurable
employment for a minimum of three years which can be paid maximum for a period
of twelve months and the benefit seizes when the person is re-employed. The
rate of unemployment allowance shall be the “standard benefit rate” as
stipulated under Standard Benefit Rates under Rule-54, corresponding to the
average daily wage drawn by insured persons during the last four completed
contribution periods, which immediately precedes the date of unemployment.
ISSUES IN THE IMPLEMENTATION AS SOCIAL SECURITY
1.
Defaulters on rise- lack of contribution: There has been a major concern about the depositing the
contribution by the employer which they deduct from the employees are often not
credited in the ESIC in their designated accounts which creates huge over dues
and disturbance in disbursement of benefits. This accumulation of funds
sometimes also leads to fraud and mal practice and poor employees have to
suffer for the delay caused.[15]
2.
Establishment with less than 10 workmen: As ESI Act is only applicable to establishment which employs
10 workmen or more drawing a maximum salary of Rs. 15000/- there comes up an
issue regarding the establishment which has employees of less than 10 as ESI
will not be a mandate for the employer to adopt. This makes thousands of people
working in smaller organisations vulnerable as they do not receive any kind of
social security.
3.
Construction workers: ESI does not apply to construction workers which has been an
issue lately. Construction workers and seasonally employed workers often change
jobs as and when they find work which again involves the question of change of
employers at every job location and also the question of legal mandate which
requires 10 employees at an establishment to adopt ESI. Construction workers
have a casual nature of work and they do not hold identity cards nor can they
give a one month notice which is a requisite in any regular firm or
establishments, thus excludes them to enjoy medical benefits and dependent
benefits. Construction workers are getting benefits under Building and Other
Construction Workers (BOCW) but which comes to a less contribution of Rs. 5/-
per day to be entitled for receiving the benefits and even if the ESI scope is
being extended to the construction workers one should be aware of the duplicity
of the scheme and thus make it into a single one scheme designed for only
construction workers rather extending the scope.[16]
4.
New schemes and training programmes: There is a need for increasing training programmes across
the state which can come handy to gain expertise for example training courses
for the nurses, compounders, attendants and other people. The government along
with NGOs to adopt policies where the youth can get training by applying the
Apprentice Act - it includes an apprentice who is appointed under the standing
orders as an employee for the purpose of this Act. Section 59B of the Amendment
Act of 2009 enables the ESIC to establish medical colleges, nursing colleges
and training institutes for its para-medical staff and other employees which
will improve the quality of services provided under the ESI Scheme.[17]
5.
Un-organised Sector: The workers engaged in agriculture sector and that of similar
activities, household industry, building and construction, small
factories/establishments, home workers, domestic servants, artisans,
self-employed persons such as fishermen, hawkers, auto-rickshaw drivers, etc,
all constitute the informal or unorganised sector. Workers in the unorganised
sector face problems are under employment due to scattered nature of work
places, high incidence of home- based or, low collective bargaining power and
the absence of an employer-employee relationship. Medical benefit under the
scheme can be extended to other beneficiaries on payment of user charges
subject to the framing of schemes by the Central Government. Further the Govt.
of India, Ministry of Labour & Employment has introduced a Scheme called
"Rashtriya Swasthya Bima Yojana" for providing social security to
Below Poverty Line workers in the unorganised sector.[18]
6.
Social security officers: These officers are appointed and authorised by the ESIC
under section 4578 of ESI Act to carry out investigations for proper
implementation of the Act across West Bengal. Such officers are entitled to
visit any establishment which comes under the purview of this Act, inspect
records, books, makes copies thereof with respect to Section 44 of the Act and
file report if there is any discrepancy with the Corporation.
CONCLUSION
The Employee’s State Insurance Act stands as a pivotal
legislation, encompassing a significant number of organizations and instilling
a sense of security and peace among employees, thereby potentially bolstering
workplace productivity. Crafted in alignment with international laws and
conventions, the Act positions India's social security framework on par with
that of other developing nations. However, to fully realize its intended
benefits, diligent implementation and oversight are imperative. Employers must
adhere to timely fund deposition to ensure the Act's smooth operation. Enhanced
monitoring mechanisms are essential to ascertain the effective disbursement of
medical and cash benefits as mandated by the Act.
Moreover, proactive measures such as awareness programs on
employee rights, blood donation drives, and free legal aid can foster a culture
of compliance and accountability. The 2010 Amendment Act, extending medical
benefits to voluntarily retired individuals, expands the Act's reach, while
empowering the ESIC to collaborate with local bodies enhances medical care
facilities within ESI hospitals, benefiting both employees and society at
large.
Suggestions
1.
Strengthen Implementation: Ensure strict adherence to the Act's provisions by both
employers and employees, with robust monitoring mechanisms in place to address
any lapses promptly.
2.
Enhance Awareness:
Conduct regular awareness programs to educate employees about their rights
under the Act and promote a culture of compliance.
3.
Improve Medical Facilities: Continuously upgrade medical facilities within ESI hospitals
and foster partnerships with local bodies to enhance healthcare delivery.
4.
Streamline Fund Management: Implement transparent and efficient fund management
practices to facilitate seamless disbursement of benefits.
5.
Foster Collaboration: Encourage collaboration between stakeholders, including
employers, employees, government agencies, and civil society, to collectively
ensure the Act's effective implementation and address emerging challenges.
[1] Social Security for
Social Justice in a Fair Globalization Report VI ILO,
https://www.ilo.org/wcmsp5/groups/public/@ed_norm/@relconf/documents/meetingdocument/wcms_884393.pdf
(Accessed: 16 March 2024).
[2] State of Madras v.
Champakam Dorairajan, AIR 1951 SC 226.
[3] International Covenant
on Economic, Social and Cultural Rights (no date) OHCHR. Available at:
http://www.ohchr.org/en/professionalinterest/pages/cescr.aspx (Accessed: 16
March 2024).
[4] [2021] UKSC 5.
[5] Employees State
Insurance Act 1948 (No date) ESIC. Available at:
https://www.esic.nic.in/Tender/ESIAct1948Amendedupto010610.pdf (Accessed: 16
March 2024).
[6] (W.P.(C) 12422/2018)
[7] ILO: Effects Of
Non-Contributory Social Transfers in Developing Countries: A Compendium
(Geneva, 2010)
https://www.research.manchester.ac.uk/portal/files/32800126/FULL_TEXT.PDF
(Accessed: 16 March 2024).
[8] C157 - maintenance of
Social Security Rights Convention, 1982 (no. 157) (no date) Convention
C157 - Maintenance of Social Security Rights Convention, 1982 (No. 157).
Available at: http://www.ilo.org/dyn/normlex/en/f?p=normlexpub%3A12100%3A0%3A%3Ano%3A%3Ap12100_instrument_id%3A312302
(Accessed: 17 March 2024).
[9] Social Protection Floor
(SOCPRO) (no date) Social protection floor (SOCPRO). Available at:
https://www.ilo.org/secsoc/areas-of-work/policy-development-and-applied-research/social-protection-floor/lang--en/index.htm
(Accessed: 17 March 2024).
[10] AIR 1991 SC 1012
[11] (1995) 5 SCC 482
[12] Section 46, Employees State
Insurance Act, 1948.
[13] 2007 (6) SCALE 660 SC.
[14] AIR 1966 SC 1889
[15] Section 39, the Employees State
Insurance Act 1948.
[16] Chief labour commissioner
(central) THE BUILDING AND OTHER CONSTRUCTION WORKERS | Chief Labour
Commissioner. Available at:
https://clc.gov.in/clc/acts-rules/building-and-other-construction-workers
(Accessed: 17 March 2024).
[17] The employees’ state insurance
(amendment) Bill, 2009 (2024) PRS Legislative Research. Available at:
https://prsindia.org/billtrack/the-employees-state-insurance-amendment-bill-2009
(Accessed: 17 March 2024).
[18] Rashtriya Swasthya Bima yojana.
Available at: http://www.rsby.gov.in (Accessed: 16 March 2024).
Article Information
EXAMINING THE EFFICACY OF THE EMPLOYEE’S STATE INSURANCE ACT, 1948 IN ENSURING SOCIAL SECURITY IN INDIA
Authors: VIVEK PANWAR
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/03/30
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
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