A complete guide of documents required for ESI registration

The Employee’s State Insurance aims at providing employees with health insurance and financial assistance. It is a social security scheme which is self-financing in nature. The Employee State Insurance Corporation, which falls under the aegis of Ministry of Labour and Employment, Government of India administers this scheme. Under this scheme, the employee and his family get numerous benefits like medical, maternity and disablement benefits. It also entitles to few other benefits like funeral expenses, free supply of physical aids and other related benefits. It is important to collect ESI documents timely in order to ease down the registration process. ESI registration is mandatory for any company/corporation which has more than 10 employees with a minimum salary of Rs, 15,000 (20 employees in some states).

Contribution under ESI

The employer and the employee both have to contribute under the ESI act. While the covered employers contribute 4.75% of the wages payable to their employees, the employees have to contribute 1.75% of their wages. The state government makes a contribution of 1/8^th share the cost of allocated medical benefit. An employee who gets a salary less than Rs. 100 per day is exempted from his share of contribution. An employer must apply within 15 days from the day on which the act becomes applicable on the employer. Section 1 (5) of the ESI act gives a list of entities on which this act is applicable. It includes-

●       Shops, restaurants and hotels that are engaged in sales and have more than 10 employees.

●       Newspaper establishments that are not covered under the Factories Act

●       Private institutions in the field of education and the medical sector.

●       Cinemas and establishments on-road motor with more than 10 employees

●       Factories and other entities employing more than 10 employees

Benefits of ESI Registration

ESI registration provides a sense of security to the employee. It acts as a respite from the low-income levels. It is self-financing in which both the employer and the employee contributes. It provides several benefits including-

●       Medical benefits to the employee along with his family

●       Maternity benefits to pregnant women (include paid holidays)

●       If the employee dies during the course of employment, then the employer has to give 90% of the wages every month to the dependents of that employee

●       Sickness benefits at the rate of 70%, if the employee suffers from a certified illness which lasts for a maximum of 91 days in any year.

●       Disability Benefits

●       Funeral expenses

●       Old age benefits

Legal Burden on the Employer

Any sum which has been contributed by the employee to the employer will be deemed to have been paid for paying towards the contribution to the ESI account.  Non-payment or delayed payment by the employer after the wage deduction of the employee amounts to ‘Breach of Trust’ which is a criminal offense punishable under S406 of the Indian Penal Code.

Documents Required for ESI Registration

The registration process under the ESI Act can be quickly completed with the help of a lawyer. Registration under the ESI act requires a number of documents. These include-

1. The registration certificate obtained by the employer after registering the entity under the:

a. Factories Act

b. Shops and Establishment Act, are the primary documents required.

2. If the registering entity is a company then the certificate of registration is required, if it is a partnership firm then partnership deed is required.

3.MOA and AOA, the partnership deed or trust deed depending upon the ownership are required as well to complete the process.

4. A complete and updated list of all employees working in the establishment is required. Complete details like name, address, etc are required from each employee.

5. PAN Card of the Business Entity along with the PAN Card details of all the Employees working under the entity is required.

6. the details of the compensation of all the employees

7. A canceled cheque or complete bank statement of the company from the bank in which it holds a permanent account

8. A complete list of names of Directors or Partners of the Company

9. A complete and updated list of the total number of Shareholders of the Company

10. Muster roll and attendance details of the employees

11. Proof of date of commencement of business

12. Address proof of the establishment

After collecting all these documents, the following procedure needs to be followed-

⮚     Establishments must get themselves registered within 15 days from the date when the act becomes applicable to them. Employer’s registration form needs to be submitted to the relevant regional office. 

⮚     On submission, a 17- digit code number will be provided which must be used for the future correspondence.

⮚    The employees on joining the insured employment, need to submit a declaration along with two family photos.

⮚     The employee on submission will be provided with an insurance number.

⮚    The employee will first get a temporary identity card which will be valid for 3 months and then later will get a permanent identity card. A person once registered need not register again as his registration will get transferred from one employment to another.

A firm must register itself under the ESI act to protect itself from legal punishment. This process of registration can be eased down with the help of a lawyer. This scheme aims to protect the employees from the ill-treatment of the employers and is social security legislation.