FREQUENTLY ASKED QUESTIONS ON ESI SCHEME

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1.What is ESI Scheme?

Employees’ State Insurance Scheme of India is a multi-dimensional Social Security Scheme tailored to provide Socio-economic protection to the 'employees' in the organized sector against the events of sickness, maternity, disablement and death due to employment injury and to provide medical care to the insured employees and their families.

2.How does the scheme help the employees?

The scheme provides full medical care to the employee registered under the ESI Act, 1948 during the period of his incapacity, restoration of his health and working capacity. It provides financial assistance to compensate the loss of his/ her wages during the period of his abstention from work due to sickness, maternity and employment injury. The scheme provides medical care to his/her family members also.

3.What are the establishments that attract coverage under ESI? In an area notified u/s 1(3) by Central Govt.?

In an area notified u/s 1(3) by Central Govt. all factories where 10 or more persons are employed attract coverage under Section2(12) of ESI Act. Further, according to the notification issued by the appropriate Government (Central/State) under Section 1(5) of the Act, the following establishments employing 10 or more persons attract ESI coverage.

a. Shops

b. Hotels or restaurants not having any manufacturing activity, but only engaged in 'sales'.

c. Cinemas including preview theaters;

d. Road Motor Transport Establishments;

e. News paper establishments.(that is not covered as factory under Sec.2(12));

f. Private Educational Institutions (those run by individuals, trustees, societies or other organizations and Medical Institutions (including Corporate, Joint Sector, trust, charitable, and private ownership hospitals, nursing homes, diagnostic centers, pathological labs).

In some states coverage is still for 20 or more persons employed under sec 1(5). A few State Governments have not extended scheme to Medical & Educational Institutions.

4. What is registration of Factory/ Establishment?

Registration is the process, by which every factory/ establishment, to which the Act applies, gets itself registered online for compliance. Otherwise when a factory/ establishment is identified by ESIC, it is asked to get itself registered under the Act.

5. Is it mandatory for the Employer to register under the scheme?

Yes, it is the statutory responsibility of the employer under Section 2A of the Act read with Regulation 10-B, to register their Factory/ Establishment under the ESI Act within 15 days from the date of its applicability to them.

6. What is the procedure for Registration of an employer?

The Factory or Establishment to which the Act applies is to be registered by logging into ESIC Portal i.e. www.esic.in within 15 days from the date of its applicability to them The employer is supposed to sign up, providing factory/Establishment name, Address Principal employer’s name, Bank Account, PAN, use of power in case of of factory ,State and region as well as e mail address. The employer trying to register would get a user ID and a password through his mail ID. The employer can log in to www.esic.in . His mail ID can also be used as user ID and the password received has to be accessed from the mail box can be used to register his unit by providing information in the Portal. Automatically a 17 digit code number is generated after successful registration.

7. Can a factory or establishment once covered go out of coverage if the number of persons employed therein goes down to the minimum limit prescribed?

Once a factory or an Establishment is covered under the Act, it continues to be covered notwithstanding the fact that the number of persons/ coverable employees employed therein at any time falls below the required limit or there is a change in the manufacturing activity.

8. Is there any provision for 'exemption of a factory or establishment' from ESI coverage?

Yes, of course the exemption is permissible from operation of provisions of the Act subject to the condition that the employees in a covered factory or establishment are other-wise in receipt of benefits substantially similar or superior to those provided under the ESI Act. The appropriate Government may grant exemption to such factory or establishment for a period of one year at a time prospectively in consultation with ESI Corporation. An exempted application unit has to apply for renewal three months before the date of expiry of the prior exemption.

9. If the wages of an employee exceeds Rs. 21,000 in a month, can he be treated as not covered and deduction of contribution from his wages is stopped?

If the wages of an employee (excluding remuneration for overtime work) exceeds the wage limit prescribed by the Central Government after start of contribution period, he continues to be an employee till the end of that contribution period and the contribution is to be deducted and paid on the total wages earned by him.

10. What is the effect of increase in wages from a retrospective date?

In case the wages of an employee is increased from a retrospective date resulting in crossing the wage limit prescribed, its effect on coverage of that employee is only after expiry of the Contribution period during the currency of which such increase is announced or declared. The contribution on enhanced wages is also payable from the month in which such increase is announced. There is no need to pay the contribution on the arrears for the period prior to the month of declaration/ announcement/ agreement.

11. What is the time limit for contribution?

Contribution shall be paid in respect of an employee in a bank duly authorized by the Corporation within 15 days of the last day of the calender month in which the contribution falls due for any wage period (Reg. 29 & 31).

12. What are the records to be maintained for ESI purpose?

For ESI compliance the employer has to maintain following records: Muster roll, wage record and books of Account maintained under other laws. Accident Register in new Form-11 and An inspection book. The immediate employer is also required to maintain the Employees’ Register for the employees deployed to the principal employer.

13. What are the returns/ reports to be submitted by the employer?

The Employer has to submit following records: Accident Report: Notice of Accident to the concerned Branch office in Form -12 should be submitted on-line within 24 hours. Abstention verification Report: It is required to be submitted to the Branch office as and when it is sought by the Branch Manager in respect of any IP. 3. Records including attendance, wages and books of accounts etc. in respect of principal employer and records of immediate employer as required by the Labour Laws.

14. What is Registration of an Insured Person?

Registration is the process of obtaining and recording information about the entry of an employee into 'insurable employment', for the purpose of his identification under the Act. The Employer before taking into employment shall register the insurable employee on-line. The employer will generate Temporary Identification Certificate (TIC).The TIC is valid only for 30 days. If Aadhar number is seeded in TIC, it will become e-pehchan (Permanent Identification Certificate).

15. Why Registration of an Insured Person is necessary?

Registration of employee is the process of his entry in the insurable employment for identification to provide the benefits under the Act which are related to the contributions paid by the employer on behalf of each of the insured persons.

16. How are the employees registered under the Scheme?

At the time of joining the insurable employment, an employee is required to provide his and his family details to the employer along with a family photo so that the employer can register the employee on- line. This exercise of registering an employee is a one time exercise for entire insurable employment of an employee. The insurance number generated On-line on the first occasion of registration is to be used throughout his life time irrespective of change of employment including change of place.

17. What is Medical Benefit?

Medical benefit means the medical attendance and treatment to the insured persons covered under the Act and their families as and when needed. This is the only benefit provided in kind through the State Governments including Model Hospitals run by ESI Corporation (except in Delhi), and uniformly to all as per their requirement without linking it to their wages and contributions.

18. What is the scale of Medical Benefit?

Full range of Medical, surgical & obstetric treatment consisting of out-door treatment, in-patient treatment, supply of all drugs and dressings, pathological and radiological investigations, prenatal and post-natal care, super specialty consultation & treatment, ambulance services, provision of artificial appliances etc.

19 How long is Medical benefit available?

The insured person and his family are entitled to the Medical Benefit from the very first day of his/her joining the insurable employment. A person who is just covered under the scheme for the first time is eligible for primary and secondary medical care for self and family for three months. If he/she continues in insurable employment for three months or more, the benefit is admissible till the beginning of the corresponding benefit period. If the insured person is in ESI coverage for at least 2 years from the date of Online Registration, contributed for not less than 156 days and IP is eligible for Sickness Benefit in any one of the contribution period and is suffering from any of the 34 specified long term diseases, the medical benefit is admissible till the incapacity lasts or up to 730 days during a period of 3 years for self and family. Further, If the insured person is in ESI coverage for at least 2 years from the date of Online Registration, contributed for not less than 156 days before the date of diagnosis and IP/IW is eligible for Sickness Benefit in at least two contribution period then he along with his family members will be eligible for getting super specialty treatment. In case of an Accident in respect of IP/IW himself or his/her family member this contributory condition shall not be applicable for SST treatment.

20 What is the benefit admissible to the family members?

Family members are also entitled to full medical care as and when needed

i. The Family members are also entitled to artificial limbs, artificial appliances as a part of Medical treatment.

ii. The medical benefit is also admissible to the family during the period the insured person is in receipt of unemployment allowance. In case he/she dies during the period, his/her family continues to receive the medical benefit till receipt of unemployment allowance.

iii.In case of the death of the insured employee due to employment injury, the widow, widowed mother and children are entitled to Dependants' benefit.

iv.The Funeral Expenses upto Rs. 10000/- are defrayed to any family member or person who actually incurs the above expenditure on funeral.

21. What is the definition of a Factory for coverage under ESI Act?

Factory is defined under section 2(12) as “any premises including the precincts thereof whereon ten or more persons are employed or were employed on any day of the preceding twelve months, and in any part of which, a manufacturing process is being carried on or is ordinarily so carried on, but does not include a mine subject to the operation of Mines Act 1952 (35 of 1952), or a railway running shed.”

22.Whether the persons employed who are not coverable under the Act are also counted for the purpose of coverage of factory/ establishment?

Yes. All persons employed in the premises including the precincts thereof irrespective of their wages including trainees, casual and contract employees are counted for the purpose of coverage of the factory / establishment. Even the Directors rendering service and receiving remuneration are to be counted.

23.Who are the persons to be counted for coverage of an establishment?

The words 'premises' and 'precincts' used in the definition of 'factory' have not been used in the notifications issued by the State Governments, while extending the provisions of the Act to the establishments under Sec. 1(5) of the Act. So long as the establishment employs a minimum prescribed number of persons it will stand covered under the Act whether these employees are employed at one place or at places away from each other, as they are engaged in the organized activity of the same establishment. Thus, all the persons including those working in branches, regd. office, and sales office etc. whether situated in implemented area or not, are to be counted.

24.Who is a Principal Employer?

U/S 2(17) Principal Employer means

A. In the case of a factory, any of the following:-

i.Owner;

ii.Occupier;

iii.Managing Agent of the owner or occupier;

iv.Legal representative of a deceased owner or occupier;

v.Manager of the factory under the Factories Act, 1948.

B. In the case of Establishments belonging to or under the control of Government of India:

i. The Specified Authority

ii. The Head of the Department (In the absence of specified Authority).

C. In the case of other establishments: Person responsible for the supervision and control of the establishment.

D. In case of shop – i)(a) Owner II) Proprietor III) Partners IV) Directors Management of the Owner

25. Who is an Immediate Employer?

Under Section 2(13), an Immediate Employer can be any or all of the following:-

One who executes any work inside the premises of the principal employer of a factory or an establishment to which this Act applies or under the supervision of Principal Employer or his agent if the whole or any part of any work which is ordinary part of the work of the factory or Establishment of the Principal Employer or preliminary to the work carried on in or incidental to the purpose of, any such factory or establishment and include a person by whom the services of an employee who has entered into a contract of services with him or let on hire to the Principal Employer (and include a contractor).

One who executes the work of a factory or establishment outside the premises under the supervision of its principal employer or his agent;

One who lets on hire the services of his employees to the principal employer of a factory or establishment; and

A contractor under Section 2(13) of ESI Act.

26. Who are the persons to be covered as “Employees”?

Under Section 2(9) Any person employed for wages in or in connection with the work of a covered factory or establishment, and: Directly employed by the Principal employer, on any work of the Factory or establishment within the premises or elsewhere, or in any part, department or branch dealing with administration, purchase of raw materials, sale or distribution of the products of the factory or establishment. Employees of the immediate employer: Employed in the premises on any work of the factory or establishment; Employed outside the p\remises on any work of the factory or establishment under the supervision of the Principal employer or his agent; Employees lent or let on hire to the principal employer on any work of the factory, or employees/ professional on contract of service. Paid Directors of a company. Exclusions: (1) An Apprentice engaged under the Apprentice Act 1961 and (2) An employee drawing wages above the ceiling for coverage prescribed by the Central Government. Employees/ Professionals rendering services for contract for service.

27.What is 'Average Daily Wages'?

1(A) "Average daily wages means the aggregate amount of wages payable to IP/IW during that period divided by the number of days for which such wages were payable.

28. Who is an 'Exempted Employee'?

An employee who is not required to pay employees' contribution is called an exempted employee. The exemption limit with effect from 14.6.2016 is Rs. 137/- per day. However, employer's contribution is payable on these wages.

29. How wages are computed for payment of contribution?

The following wage components are taken into account for computation of wages for payment of contribution. Basic Pay,/Wages/Salary; D.A/ HRA/ CCA/ Overtime/ officiating allowance/ Night shift allowance/ efficiency allowance/ Heat, Gas, Dust allowance/ Education allowance/ Food & Tea allowance/ conveyance allowance; Overtime wages (but not to be taken into account for determining the coverage). Wages/ salary/ pay for weekly off and public holidays; Commission paid to sales staff; Subsistence allowance paid to an employee during the period of suspension; Attendance Bonus or incentive or exgratia in lieu of Attendance Bonus or production incentive; Regular Honorarium or salary or remuneration paid to a Director; Collection Bhatta paid to running staff. Production incentive, Bonus other than statutory bonus, night shift. Heat, Gas & Dust Allowance, Meal/Food Allowance. Actual payments made towards leave salary, lay off compensation, or wages for strike period. Any other remuneration paid or payable in cash to an employee if the terms of contract of employment, expressed or implied were fulfilled. The above are only indicative.

30. What is the Present Rate of Contribution?

Employer’s contribution: A sum equal to 4.75% of the wages payable to an employee, rounded off to the next higher rupee;

b) Employee’s contribution: A sum equal to 1.75% of the wages payable to an employee, rounded to the next higher rupee;

As per the Notification published in the Gazette of India dated 6.10.2016, in respect of the areas where the Act is implemented for the first time the rates of employer's and employee's contribution for the initial twenty-four months from such date will be under :-

Employer's contribution-A sum (rounded to the next higher rupee) equal to three percent of the wages payable to an employee; and

Employee's contribution- A sum (rounded to the next higher rupee) equal to one percent of the wages payable to an employee.

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FREQUENTLY ASKED QUESTIONS AND ANSWER FOR EPFO EMPLOYEES

1. Whether an employer can deduct employer’s share of contribution from the wages of employees?

Ans : No. It is not permissible. Any such deduction is a criminal offence.

2. Can the wages be reduced by the employer on account of payment to the EPF?

Ans : No. It is specifically barred under section-12 of the EPF & MP Act, 1952.

3. Whether a daily rated employee or the piece rated employee can become a member of the EPF?

Ans: yes.

4. If an employee is paid wages on daily basis or on piece rate basis how the contribution is determined?

Ans : The wages paid in a calendar month will be taken to determine the contribution due.

5. How the contract employees are protected and given their P.F. when the contractor is not paying the dues to the principal employer?

Ans : It is the duty of the principal employer to ensure that the Contractor discharges his liability. The Principal Employer must allow payment of bills after ensuring that the Contractor has enrolled and complied in respect of all eligible contract employees every month. The Principle Employer can check the remittance and employee name by using the Establishment Search option available in our website www.epfindia.gov.in. The path is OUR SERVICES >> For Employers >> Important Links >> Establishment Search (Also view Remittances and member name). If the Principal Employer ensures that all contract employees activate their Universal Account Number (UAN), then any default by the contractor can be nipped in the bud.

6. Is there any time limit for withdrawal of Provident Fund dues?

Ans : Only in the case of resignation from service (not superannuation) a member has to wait for a period of two months for withdrawal of the PF amount.

7. In case of change in employment whether a member can get his PF account transferred?

Ans : On change in employment, the member should necessarily get his PF account transferred to his present establishment, duly submitting Form 13(R). A member can submit claim for transfer online using member interface at unified portal.

8. If an employee is not given the PF membership, to whom he can approach?

Ans : He can approach his employer failing which he can approach the Regional Provident Fund Commissioner of the nearest PF office.

9. Whether an employee can become a member of the EPF without any restriction to his salary/wages?

 Ans : The employees who are drawing the basic wages and dearness allowance up to Rs.15, 000/- are alone eligible to become a member. He will continue to be a member even when his pay exceeds Rs.15, 000/-. However, his contribution to the Fund will be restricted to Rs.15, 000/-. The employer is also required to pay his matching contribution up to Rs.15, 000/-. Employees drawing more than Rs.15000/- can also become a member of EPF by giving option under para 26(6) of the EPF Scheme. The option has to be submitted to the EPF office within 6 months of joining of such member.

10. If an employee is drawing more than Rs. 15000/- (Basic + DA only) is he required to become a member of the EPF?

Ans : Such employee is not required to become a member, if he is not already holding the PF membership. Otherwise, if both the employer and employee are willing, he can become a member by giving option under Para-26 (6) of the PF Scheme. The option has to be submitted to the EPF office within 6 months of joining of such member.

11. If an employee is transferred from one establishment to another establishment whether he is required to be enrolled as a member once again?

Ans : He is required to be enrolled as a member under the new establishment, for transferring his Provident Fund from his previous account.

12. Whether an employer can also join the PF?

Ans : No.

13. What is the need for giving nomination for pension?

Ans : On the death of a Pension member (before receiving the pension), if there is no eligible family member, pension is payable to the nominee.

14. Can I change my Date of Birth/Age?

Ans : Yes. Date of Birth/Age once given is not normally changed, however it can be changed with proper documentary evidence. You can see the guidelines provided in circular ‘Change of Date of Birth for EPF & EPS members’ dated 03/04/2020, available on our website (https://www.epfindia.gov.in/site_docs/PDFs/Circulars/Y20202021/Circular_on_date_of_Birth_0302020.pdf).  

15. What is the Universal Account Number?

Ans : Universal Account Number (UAN) is a 12 digit number allotted to each subscriber by linking it to the member’s currently active PF account number (from 31/07/2014 to 30/11/2016). From 12/2016 any new member has to be allotted a Universal Account Number linked to the establishment’s code number.

16. Who allots the Universal Accounts Number?

Ans : The number is allotted by EPFO on the request of the Employer and populated in the Employer’s login in the unified portal www.unifiedportal-emp.epfindia.gov.in. The UAN can also be generated by any individual using his/her aadhaar if his UAN is not already generated.

17. What are the advantages of having a UAN?

Ans : Once the member has activated his/her UAN on the unified portal he can enjoy the following benefits: Download/Print your Updated Passbook anytime. Download/ Print your UAN Card. List all your Member IDs to UAN. File online transfer claim on OTCP Update your KYC information.

18. How can I know the status of my UAN?

Ans : The facility is available in the unified portal at https://unifiedportal-mem.epfindia.gov.in.

19. How can I know the balance in my PF Account?

Ans : Please activate your UAN and check/download your passbook.

20. Whether a PF member can submit claims for settlement without attestation of the employer?

Ans : Currently the member can submit 3 types of claims without attestation of Employer namely, Form-19, 10C and 31. However, the member must ensure that his UAN is activated and at least the bank account and Aadhaar KYC’s in respect of his account are approved by the Employer using his Digital Signature Certificate.

21. Who can be member of EPFO?

Ans: A person who is employed for wages in any kind of work, manual or otherwise, in or in, connection with the work of a establishment covered under the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952, and who gets his wages directly or indirectly from the employer, and includes any person employed by or through a contractor in or in connection with the work of the establishment.

22. What are benefits available to EPF members?

Ans :

1. Advances: A member can take non-refundable advances during service period for various purposes:-
   • Treatment of illnesses of self/family: TB, leprosy, paralysis, cancer, mental derangement heart ailment ,pandemic or major surgical operation
   • Marriage of self, daughter, son, brother & sister.
   • Post-matriculation education of son/daughter
   • Withdrawal for purchase of house, flat, dwelling house, addition/alteration of house and repayment of loan for the purpose.
   • Withdrawal within one year before retirement: Upto 90% of total PF balance.
   • Advance on unemployment: Upto 75% of total PF balance.
   • Other purposes (for details please see table below)
2. Final settlement: On retirement or two months after ceasing to be an employee.
3. Pension after retirement subject to the eligibility
4. Insurance in case of death while in service.

23. How to update Bank account?

Ans : A member can update his bank account through member portal which is then approved by employer.

24. How can I update KYC?

Ans : Member can update KYC details online in EPFO’s UAN Portal.

25. What is UAN?

Ans : UAN (Universal Account Number) is a unique 12 digit number allotted to a member. It is a permanent number and remains valid throughout the life of a member. It does not change with the change of employment. UAN helps in automatic transfer of Funds and PF withdrawals.

26. What are the benefits of Aadhaar, PAN & Bank accounts details seeded with UAN?

Ans :

1. Member can submit claims through online mode
2. Member can file claim directly without employer’s signature.

27. I have two different UANs. The first UAN is linked with one PF member ID and the second UAN is linked with 2 different members IDs. Can I avail COVID advance benefits? How to get maximum benefit in this case?

Ans : Yes. In order to get maximum benefits, you are requested to transfer all the previous services (linked with multiple member IDs) to the latest member ID. This can be done by filing a transfer claim. Once the service is successfully transferred your entire PF corpus will reflect against the latest member ID. Subsequently you can file COVID advance claim to reap maximum benefit.

28. I live in city A and work in city B. However, Head Office of my company is in city C. Which EPF office has to be contacted for any matter?

Ans :

1. You should approach EPF office where your establishment is registered. To find concerned EPF office where your establishment is registered visit https://unifiedportal-epfo.epfindia.gov.in/publicPortal/no-auth/misReport/home/loadEstSearchHome
   • -> Fill in establishment PF code or name
   • -> Enter captcha and click on search.
   • -> Establishment details will appear in tabular format.
   • -> A Pin will be sent to your mobile number registered with EPFO Confirm the establishment Id, Name and Address and in column four EPF office name is provided.

29.  How to change my UAN linked mobile number?

Ans : After login into the Member Interface of Unified Portal, there is a provision in “Member Profile” section to change your mobile number.

30. What to do if I forgot my Password?

Ans : Please click on “Forgot Password” at Member Interface of Unified Portal. Provide your UAN with CAPTCHA. System will send the OTP on your mobile which is seeded with UAN and you can reset the password.

31. What is to be done in case I change the job and join somewhere else?

Ans : You need to simply declare your UAN with your subsequent employer.

32. When a contractor is not paying the dues to EPFO, how the EPF contribution of contract employees are protected? What is the role of principal employer in this case?

Ans : Section 8A of the Act enjoins upon the Principal Employer a statutory duty to ensure that a contractor discharges his liability. The Principal Employer may recover all EPF dues in respect of EPF members of the contractor from any amount payable to the said contractor. Moreover, paragraph 30 of the Scheme prescribes that the employer shall, in the first instance, pay the EPF dues in respect of all employees employed directly or through a contractor.

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