Employees' State Insurance Act, 1948 and Maternity Benefit Act notes — Unit 4

The ESI Act, 1948 is a comprehensive social security legislation designed to accomplish the task of protecting employees against the hazards of sickness, maternity, disablement, and death due to employment injury.

⇒How does it work?

It works exactly like an insurance policy. A massive fund (the ESI Fund) is created. Both the Employer and the Employee pay a small monthly premium (contribution) into this fund. If the employee falls sick, gets injured, or needs maternity care, the ESI Corporation pays for their medical treatment and gives them cash benefits from this fund.

⇒Applicability

It generally applies to non-seasonal factories employing 10 or more persons. It covers employees earning wages up to a certain statutory ceiling (e.g., ₹21,000/month). It targets lower-income workers who cannot afford private health insurance.

⇒The Contributions (Section 39)

The contribution comprises two parts: Employer's share and Employee's share. It is calculated as a percentage of the wages.

(The employer is responsible for deducting the employee's share from their wages and depositing the total amount into the ESI fund. Workers earning very low daily wages are exempted from paying their share, but the employer must still pay theirs).

⇒The ESI Corporation (ESIC)

To administer this massive scheme, the Act establishes the Employees' State Insurance Corporation (ESIC) (Section 3). It is a statutory body corporate. The ESIC runs its own vast network of hospitals and dispensaries across India exclusively for insured persons.

The insured persons and their dependents are entitled to six main types of benefits:

• 1. Medical Benefit: Full medical care for the insured person and their family from the day they enter employment. Includes hospitalization, drugs, and surgery in ESIC hospitals.
• 2. Sickness Benefit: Cash compensation (usually 70% of wages) paid to an insured person during periods of certified sickness for a maximum of 91 days in a year.
• 3. Maternity Benefit: Periodical cash payments to an insured woman in case of confinement/pregnancy (usually 26 weeks of full wages).
• 4. Disablement Benefit: Cash payments for temporary or permanent disablement caused by an employment injury.
• 5. Dependants' Benefit: Monthly pension paid to dependents of an insured person who dies due to an employment injury.
• 6. Funeral Expenses: A lump sum paid to the eldest surviving member to cover funeral costs.

To ensure that a woman's reproductive role does not result in the loss of her employment or livelihood, the Maternity Benefit Act was enacted to regulate the employment of women before and after childbirth.

⇒Object of the Act

To protect the dignity of motherhood and the health of the child by providing for full and healthy maintenance of the woman and her child when she is not working. (Fulfills Article 42 of the Constitution - just and humane conditions of work and maternity relief).

⇒Applicability & Interplay with ESI

It applies to factories, mines, plantations, and shops with 10+ employees. However, if a woman is covered under the ESI Act, she claims maternity benefits from the ESIC. The Maternity Benefit Act primarily helps women who are NOT covered by ESI (e.g., earning above the ESI wage ceiling).

⇒Eligibility (Section 5(2))

A woman must have actually worked in an establishment of the employer for a period of not less than 80 days in the twelve months immediately preceding the date of her expected delivery.

⇒The 2017 Game-Changer Amendment

The Maternity Benefit (Amendment) Act, 2017 drastically increased the benefits, bringing India on par with top global standards.

• Duration: Paid maternity leave was increased from 12 weeks to 26 weeks for the first two children. (For the third child onwards, it remains 12 weeks).
• Pre-natal leave: Out of the 26 weeks, up to 8 weeks can be taken before the expected date of delivery.
• Adopting Mothers: Mothers adopting a child below 3 months of age, and commissioning mothers (surrogacy), are now entitled to 12 weeks of maternity benefit.

⇒Protection against Dismissal (Section 12)

This is the most critical protection. When a woman absents herself from work in accordance with the provisions of this Act (i.e., she is on maternity leave), it is unlawful for her employer to discharge or dismiss her during or on account of such absence.

The employer also cannot alter her conditions of service to her disadvantage.

⇒Creche Facility (2017 Amendment)

Every establishment having 50 or more employees must have a Creche facility. The employer shall allow four visits a day to the creche by the woman, which shall also include the interval for rest allowed to her.

(Note: This is broader than the Factories Act which requires 30 women workers. Here, it is 50 employees total, regardless of gender).

⇒Summary of Master Concepts

• ESI Act: An insurance scheme funded by employer/employee. ESIC manages hospitals and pays cash benefits (sickness, medical, disablement, dependents).
• Maternity Benefit Act: Protects women not covered by ESI.
• Eligibility: Must work 80 days in the preceding 12 months.
• 2017 Amendments: Leave increased to 26 weeks (for first 2 kids). Adopting/surrogate mothers included (12 weeks). Creche mandatory for 50+ employees.
• Protection: Firing a woman while on maternity leave is strictly illegal.

⇒University Exam Tips for this Unit (Premium Advice)

• The 2017 Amendment: This is the most heavily tested area. Memorize the jump from 12 to 26 weeks, the inclusion of adoptive mothers, and the new 50-employee creche rule.
• ESI vs Maternity Act: Explain that they are mutually exclusive. A woman drawing maternity benefits from the ESI Corporation cannot simultaneously claim wages from her employer under the Maternity Benefit Act.