The Employees' State Insurance Act, 1948 is a landmark social security legislation and a compulsory state insurance scheme in India, enacted on April 19, 1948. Its origin lies in the 1943 report by Professor B.P. Adarkar, which laid the foundation for a scheme to provide health insurance for industrial workers. The Act was created to shield employees from financial distress caused by contingencies like sickness, maternity, and employment injury, which could take away their earning capacity.
The Act works by establishing a self-financing social security fund. This fund is built through contributions, currently 0.75% of wages from the employee and 3.25% from the employer, totaling 4%. It applies to establishments with 10 or more employees and covers workers earning up to ₹21,000 per month. Key provisions include Medical Benefit, Maternity Benefit (up to 26 weeks of paid leave), and Sickness Benefit, which provides cash compensation up to 70% of wages for up to 91 days as per Section 46(1)(a).
The Act connects directly to the Employees' State Insurance Corporation (ESIC), a statutory body established via Section 3 under the Ministry of Labour and Employment to administer the scheme. Disputes are adjudicated by the Employee Insurance Court under Section 75. Recently, the Act saw significant changes: the wage ceiling for coverage was raised to ₹21,000 from ₹15,000 on January 1, 2017, and the total contribution rate was lowered to 4% effective July 1, 2019. The Act is now set to be subsumed and expanded by the Code on Social Security, 2020, which aims to extend social security to unorganised, gig, and platform workers.