Corporation, Standing Committee & Medical Benefits Council | Labour and Industrial Law - CLAT PG PDF Download

Establishment of Employees' State Insurance Corporation (ESIC)

The ESI Act operates through the Employees' State Insurance Corporation (ESIC), a body established under Section 3 of the Act to ensure social security. The ESIC was set up on February 24, 1952, to provide relief to employees in cases of medical emergencies.

Constitution of Corporation

The composition of the Employees' State Insurance Corporation (ESIC) is outlined in Section 4 of the ESI Act, and it consists of the following members:

• The Director-General of the ESIC.
• Chairman appointed by the Central Government.
• Vice-Chairman appointed by the Central Government.
• Not more than five persons nominated by the Central Government.
• One person to represent each state.
• One person representing the Union Territories.
• Ten persons representing employers.
• Ten persons representing employees.
• Two persons representing the medical profession.
• Three members of Parliament(two from Lok Sabha and one from Rajya Sabha).

Term of Office of Members of the Corporation

• The following members are appointed for a term of up to four years:
• Director-General.
• Chairman.
• Vice-Chairman.
• The five persons nominated by the Central Government.
• The members representing each state.
• The members representing each Union Territory.

Eligibility for Re-appointment or Re-election

• An outgoing member of the ESIC, the Standing Committee of the ESIC, or the Medical Benefit Council is automatically eligible for re-appointment or re-election at the discretion of the appointing Central Government.

Authentication of Orders, Decisions, etc.

• The signature of the Director-General of the ESIC is the sole requirement to authenticate an outgoing order or decision. The Director-General can also delegate this authority temporarily to another officer, whose signature will suffice for authentication.

Constitution of Standing Committee

• The Standing Committee of the ESIC is composed of:
• A chairman appointed by the Central Government.
• Three members representing state governments.
• Three members representing employers.
• Three members representing employees.
• One member representing the medical profession.
• One Member of Parliament (MP) belonging to the corporation.
• The Director-General of the ESIC.

Terms of Office of Members of Standing Committee

The following members of the Standing Committee are appointed for a term of two years:

• The Chairman.
• The three members representing the states.

Medical Benefit Council

The Medical Benefit Council is an advisory body responsible for matters related to the administration of medical benefits under the Employees' State Insurance (ESI) scheme. Its composition includes:

• The Director-General of ESIC as Chairman.
• The Director-General of Health Services as co-Chairman.
• The Medical Commissioner of ESIC.
• One member from each state, appointed by the respective State Government.
• Three members representing employers.
• Three members representing employees.
• Three members representing the medical profession, including at least one woman.

Tenure of the Members of the Medical Benefit Council

The following members of the Medical Benefit Council are appointed for a period of four years:

• The Director-General of ESIC as Chairman.
• The Director-General of Health Services as co-Chairman.
• The Medical Commissioner of ESIC.
• One member from each state, appointed by the respective State Government.

Resignation of Membership

A member of the Corporation can resign by delivering a written notice of resignation to the Central Government. The seat will be considered vacant upon acceptance of the resignation.

Cessation of Membership

• A member of the ESIC will cease to be a member if they fail to attend three consecutive meetings. However, they can be restored by the concerned body according to the rules set by the Central Government. If the Central Government determines that any employer, employee, or medical representative fails to meet their qualifications, they will also cease to be a member of the ESIC.

Disqualification

• A person can be disqualified as a member of the ESIC if:
• He is declared of unsound mind by a competent court.
• He is an undischarged insolvent.
• He has been convicted of an offence involving moral turpitude.

Filling of Vacancies

• Any vacancy in the ESIC shall be filled by appointment or election, as applicable. A new member can only occupy the position of an ex-member if the original holder was eligible for the same position; otherwise, the position remains vacant.

Principal Officers

• The Principal Officers of the ESIC include the Director-General and/or Financial Commissioner, who act as the Chief Executive Officer (CEO) of the corporation.
• These officers serve on a whole-time basis and are not allowed to engage in any work outside their official duties without the permission of the Central Government.
• The maximum term for any principal officer is five years.
• The rules regarding their fees, disqualification, and cessation of office are similar to those of their subordinates.

Staff

• The ESIC has the authority to employ staff as necessary for its efficient operation. However, according to Section 17, approval from the Central Government is required to create any staff position.
• The salaries of the staff will be determined by the Central Government within a specified range, which cannot be exceeded.
• The scale of pay will be based on factors such as educational qualifications, method of recruitment, duties, and responsibilities.

Powers of the Standing Committee

The Standing Committee of the ESIC, as defined in Section 18, has the authority to administer the affairs of the Corporation and exercise any powers and perform any functions of the Corporation while being authorized and under its jurisdiction. The Standing Committee is also responsible for submitting cases and matters for the consideration and decision of the Corporation as specified in the regulations.

• Corporation's Power to Promote Health Measures: The ESIC has the authority to initiate measures promoting health and welfare among its employees, as well as rehabilitation and re-employment for past employees who were injured or disabled during their employment. The funding and expenditure for such initiatives are at the discretion of the Central Government.
• Meetings: The ESIC, its Standing Committee, and its Medical Council are required to hold meetings periodically to ensure the efficient functioning of the corporation. The rules and procedures for these meetings are specified in the regulations.

Supersession of the Corporation and Standing Committee

• The Supersession of the Corporation and the Standing Committee occurs when there is a persistent failure to perform their prescribed duties. In such cases, the Central Government can replace the Corporation or, in consultation with the Corporation, replace the Standing Committee by issuing a notification in the Official Gazette.
• The supersession of the Corporation involves making all occupied seats vacant, while a new Standing Committee will be constituted immediately as per Section 8 of the ESI Act.

Duties of the Medical Benefit Council

• The Medical Benefit Council advises the other two ESIC bodies on matters related to the implementation of medical benefits. It also investigates complaints against medical practitioners concerning the medical relief provided.
• The Council's role includes acquiring certification for the grant of medical benefits and ensuring the effectiveness of medical relief measures.

Duties of the Director General and the Financial Commissioner

• The Director-General and Financial Commissioner have duties prescribed by the ESI Act in accordance with the Central Government. These duties cover various areas, including management and other responsibilities as outlined by the government.

Validity of the Act of the Corporation

• No act of any ESIC body shall be considered invalid concerning its own rules and regulations. Invalidity cannot be claimed based on the eligibility or ineligibility of a particular member of that office.

Regional Boards, Local Committees, Regional and Local Medical Benefit Council

• The Corporation has the authority to appoint Regional Boards,Local Committees, and Regional and Local Medical Benefit Councils in specific areas and delegate powers and functions to them as needed.

Finance and Audit

Employees' State Insurance Fund

• The Employees' State Insurance Fund is the main financial resource for the ESIC to carry out its functions. All contributions made under this Act, along with any other money received on behalf of the Corporation, are paid into this fund, which is managed by the Corporation. This can include grants, donations, or gifts from the government.

Expenses of the Fund

The ESI Fund covers the following expenses:

• Payment of benefits and provision of medical treatment and attendance to insured persons and their families.
• Payment of fees and allowances to members of the Corporation, Standing Committee, Medical Benefit Council, Regional Boards, Local Committees, and Regional and Local Medical Benefit Councils.
• Payment of salaries, allowances, gratuities, pensions, etc.
• Establishment and maintenance of hospitals, dispensaries, and other institutions, along with medical and ancillary services for insured persons and their families.
• Payment of contributions towards medical treatment and attendance costs for insured persons and their families.

Administrative Expenses
Administrative expenses cover the costs of administering the ESIC, as prescribed by the Central Government.

Holding of Property

• The ESIC can acquire, hold, sell, or transfer property, both movable and immovable, under conditions set by the Central Government. It can also invest in property as needed and delegate property for the benefit of its staff.

Budget Estimates

Each year, the ESIC prepares a budget estimate outlining its proposed expenditures and how it plans to meet its liabilities for the upcoming year. This budget is submitted to the Central Government for approval.

Accounts

• The Corporation is required to maintain accurate accounts of its income and expenditure in a manner prescribed by the Central Government.

Audit
The accounts of the Corporation are audited annually by the Comptroller and Auditor-General of India. Any audit leading to an expenditure is payable to the mentioned parties. The Comptroller and Auditor-General or their appointed representatives have the authority to demand the production of books, accounts, vouchers, and other documents, as well as inspect any ESIC offices.

Annual Report

• The Corporation must submit an annual report of its activities and work to the Central Government.

Budget, etc. to be Placed Before Parliament

• The annual report, audited accounts of the Corporation along with the Comptroller and Auditor-General's report, comments of the Corporation, and the budget adopted by the Corporation

Method of Payment of Contributions

The Act outlines specific regulations regarding the method of payment of contributions, which are elaborated under the following conditions:

1. The nature and timing of the contribution being paid.
2. Payments involving the use of stamps or other adhesives affixed to books of accounts or other documents.
3. The evidence of contributions received by the Corporation must be dated.
4. Various entries in the books of accounts along with details of the insured individuals.
5. The replacement of documents that have been lost, destroyed, or damaged.

Employers' Obligation to Submit Returns and Maintain Registers

• As per the provisions of the ESI Act, both principal and immediate employers are required to furnish all investment profits and details related to their employees in any factory under their purview.
•  In the event of a failure to submit a return that the corporation believes should have been submitted, the corporation has the authority to demand that employers present all relevant details.

Functions of Social Security Officers

1. Appointment of Social Security Officers: ESIC has the authority to appoint individuals as Social Security Officers, whose primary role involves inspecting the operations of the corporation.
2. Information Gathering:Social Security Officers can request information from employers as deemed necessary.
3. Access to Records:Social Security Officers have the right to enter any corporation at any time and demand the presentation of accounts, books, and other employment-related documents without prior notice. This includes information such as wages, expenses, and other relevant details.
4. Inspection Powers:Social Security Officers can investigate matters concerning employers and employees as required by law.
5. Document Copies:Social Security Officers can make copies or extracts from any register or account at their discretion.

• Determination of Contribution in Specific Cases: A Social Security Officer is prohibited from carrying out their functions and duties if the accounting records of a factory or establishment are not submitted or maintained in accordance with Section 44 of the ESI Act. In such cases, the Corporation may determine the contribution amount payable to employees based on the available information. However, this determination will only occur after giving the responsible party a reasonable opportunity to explain the absence of such records.
• Appellate Authority: In situations described in Section 45A, if the employer in charge is dissatisfied with the decision made by the corporation after being heard, they have the right to appeal to an appellate authority as specified by regulation. This appeal must be filed within sixty days of the corporation's decision. To initiate the appeal, the employer must also pay 25% of the calculated contribution. If the employer succeeds in the appeal, the corporation will refund the contribution paid by them.
• Recovery of Contributions: Any contributions that are due under the provisions of the ESI Act can be recovered as 'arrears of land revenue.'

Issuance of Certificate to Recovery Officer

As per Section 45B, when the recovery of contributions is necessary, an authorized officer of the corporation issues a certificate signed by them, indicating the amount to be recovered. This certificate is then forwarded to a Recovery Officer, who is responsible for recovering the specified amount from the factory where the default occurred. The Recovery Officer can carry out the recovery through various means, including:

• Attachment or sale of the property belonging to the factory or the employer, depending on the circumstances.
• Arresting the employer and detaining them in prison.
• Appointing a receiver to manage the property acquired, whether from the factory or the employer.

Determination of Recovery Officer's Jurisdiction

For the contribution certificate to be forwarded to a Recovery Officer, the factory employer must fall under the jurisdiction of the Officer in the following ways:

1. The location where the employer conducts their business and where the factory is situated.
2. The location where the employer resides or where they have any personal property within the Officer's jurisdiction.
3. The inability to recover the amount solely through the sale of property.

Discretionary Power of Recovery Officer
The Recovery Officer, within the framework of the ESI Act, has the discretion to halt legal proceedings if the time allocated for the recovery of an amount has expired. The Recovery Officer is also entitled to receive regular updates on the status of payment for any due amount. If, as a result of an appeal, the amount due is reduced, the Recovery Officer temporarily suspends the recovery of the newly decreased amount.

Alternative Modes of Recovery

Alternative modes of recovery are detailed in Section 45G. These modes are less common compared to primary recovery methods:

1. The defaulting employer may be required to pay a sum deducted from the arrears after the sale of property.
2. While no penalty is imposed, the defaulting employer must pay the entire outstanding amount directly to the Director-General of the Corporation.
3. Joint shareholders who held money with the defaulting employer may be compelled to relinquish their shares to the Corporation until they equal the defaulting employer's shares as compensation.

Application of Certain Provisions of the Income-tax Act
The arrears of contributions, which are subject to sale to cover remaining costs, can be influenced by decisions made by the Assessing Tax Officer or Tax Recovery Officer. These officers can make alterations that apply to all interests and damages.

Benefits Available Under the Act

Section 46 of the ESI Act provides various benefits to employees as social security in the event of injury during the course of employment. There are six types of benefits that employees can avail:

• Medical Benefit: Coverage for all treatment expenses related to medical issues faced by the employee, extending to their family members as well.
• Sickness Benefit: Periodical payments for sickness, approximately 70% of wages, with a maximum of 91 days in a year. Employees must have worked for a minimum of 78 days in the past six months to qualify.
• Maternity Benefit: Financial support for female employees during maternity leave.
• Dependants' Benefits: Financial assistance to dependants of deceased employees.
• Disablement Benefits: Support for employees who become disabled due to work-related injuries.
• Other Benefits: Additional benefits as specified under the Act.

Medical Benefits

Medical benefits are guaranteed to employees as soon as they are hired, covering treatment expenses for medical issues faced by the employee and extending to their family members as well.

Sickness Benefits: Employees covered by the ESI Act are entitled to periodical payments in case of sickness, as long as the medical condition is verified by the appointed medical practitioner. The compensation amounts to approximately 70% of their wages, with a maximum duration of 91 days in a year. To qualify for this benefit, employees must have worked a minimum of 78 days within a 6-month period of employment; otherwise, the benefit cannot be claimed.

Maternity Benefits

• Eligibility: An insured woman can claim periodical payments under the ESI Act in cases of:
• Confinement (labor leading to birth or birth after 26 weeks).
• Miscarriage.
• Sickness arising out of pregnancy.
• Premature birth of a child.

Duration and Extension: The benefit is payable for three months, with the possibility of extending it by one month if required.
Minimum Work Duration: To qualify for the benefit, the minimum work duration must be 70 days in the year preceding the year of pregnancy.

Dependants' Benefits

• Eligibility: Dependants/family members of a person who dies during the course of employment due to an employment injury or occupational hazard.
• Compensation: Periodical payments (often monthly) amounting to 90% of the deceased employee's wages.

Disablement Benefits

• Eligibility: Employees who suffer an injury during the course of employment resulting in disablement, either temporary or permanent.
• Minimum Work Contribution: Unlike other benefits, there is no minimum work contribution required to avail disablement benefits.
• Determination: Eligibility and compensation amounts are determined by the Medical Board.
• Compensation: Generally, around 90% of the employee's wages.

Other Benefits

• Funeral Expenses: Compensation of Rs. 10,000 granted to the eldest surviving family member for performing the last rites of the deceased employee.
• Vocational Rehabilitation: Benefit payable to disabled employees undergoing rehabilitation.
• Old Age Medical Care: Available for retired employees or those who left employment after suffering an injury, with general compensation of Rs. 120 per month.

Scheme for Other Beneficiaries

• Section 53: Acts as a deterrent to prevent employees or their families from claiming benefits under the ESI Act while still insured.
• Section 61: Extends the provisions of Section 53 by barring employees from receiving compensation from any other enactment as long as they are insured under the ESI Act.

Power to Frame Scheme

• Authority: The Central Government has the power to frame schemes for other beneficiaries and their family members, primarily to provide medical facilities in ESI hospitals.
• Notification: Schemes must be framed within the framework of the ESI Act and notified in the Official Gazette.

Scheme for Other Beneficiaries

• Coverage: Schemes for beneficiaries may cover various aspects such as:
• Time and nature of usage of medical facilities.
• Presentation of particulars and details about the beneficiary and their family as per Corporation's requirements.
• Miscellaneous matters necessary for the full implementation of the scheme.

Power to Amend Schemes

• The Central Government can add to, amend, introduce variations, or rescind schemes through notifications in the Official Gazette.

Adjudication of Disputes and Claims

Constitution of Employees' Insurance Court

• An Employees' Insurance Court will be constituted by the State Government through a notification in the Official Gazette.
• The number of judges will be decided by the State Government.
• Courts may be appointed for multiple local areas, or multiple courts may be appointed for the same local area.

Power of Employees' Insurance Court

• The Employees' Insurance Court has the same powers as a Civil Court.
• It can enforce provisions of the ESI Act by compelling witness attendance, document and material evidence presentation, administering oaths, and recording evidence.
• All expenses incurred before a proceeding are at the discretion and liability of the court.

Reference to High Court

• An Employees' Insurance Court may submit legal questions to the High Court for decision.
• The High Court's answer holds precedence over any judgment.

Appeal

• No appeal can be made against an order from the Employees' Insurance Court.
• Appeals from the High Court are allowed if they involve substantial questions of law.

Penalties and Punishments

• False Statement: Making a false statement to increase payment or benefit is punishable with up to six months imprisonment and/or a fine not exceeding Rs. 2000. Insured persons convicted lose entitlement to cash benefits.
• Failure to Pay Contribution: Failing to pay contributions, unlawfully deducting wages or benefits, obstructing inspector duties, etc., can lead to punishment of up to three years, with a minimum of one year and a fine up to Rs. 10000.
• Subsequent Punishment: Repeating the same offence can result in imprisonment of up to two years and a fine of Rs. 5000 for each subsequent offence.

Power to Recover Damages

• If an employer fails to pay due contributions, the Corporation can recover the deficit as a penalty.
• Recovery will not occur until the person in charge has been given a reasonable opportunity to be heard regarding the failure to pay.

Power of Court to Make Orders

• The court can recover damages and enforce judicial orders.
• If a defaulting employer fails to meet payment conditions set by the Court, they will be deemed to have committed another offence, subject to imprisonment and/or fines.

Prosecution

• Prosecution under the ESI Act requires prior sanction from the Insurance Commissioner or authorized authority.
• Offences under the Act can only be tried by a First Class Magistrate.
• No cognizance of offences reported under the Act can be taken by any court lower than a First Class Magistrate.

Offences by Companies

• When an offence is committed by a company, all managerial employees responsible at the time will be tried along with the company.
• They will be deemed guilty of the same offence and liable for punishment accordingly.

Comparative Analysis

• Coverage: The ESI Act is more comprehensive and provides wider coverage compared to the Workmen's Compensation Act.
• Compensation: Employees under the ESI Act receive more substantial benefits and compensation compared to those under the Workmen's Compensation Act.
• Payment Method: The ESI Act provides periodical payments, while the Workmen's Compensation Act offers lump sum compensation.
• Intention of Legislature: The ESI Act was designed to offer a different remedy and forum for claiming compensation for workplace injuries, with the discretion to modify rights established under previous acts.