Q.

WHY ALL ALLOWANCES ARE TO BE INCLUDED?


Ans.


The cash benefits payable to an employee are always percentage of wages he could have earned. An employee, who loses his wages due to sickness, disablement etc. is expected to get cash compensation proportionate to the total wages and allowances he would have received had he worked during this period. It is, therefore, necessary to include all the allowances for the purpose of wages. If the contribution is confined only to basic wages, the cash benefits would be too low, to subsist the employee himself. It also tempts the employers to keep the basic wages to barest minimum and show the balance as package of various allowances, to avoid their share of contribution, but the employee is put to loss when he receives the cash benefit at a low rate from ESI.

 

Q.

WHY OVERTIME SHOULD BE INCLUDED IN WAGES FOR PAYMENT OF CONTRIBUTION AND NOT FOR DECIDING COVERATEOF AN EMPLOYEE?


Ans.


An employee who is covered under ESI is protected from the attendant risks of his works during his normal hours but again he is exposed to the attendant risk of his work during O.T. In order to give protection to him from such risks, the insurance cover is extended to him for the period of overtime work also. If the overtime is also taken into consideration for deciding the wage limit for coverage under ESI, it may so happen that he may go out of coverage. Overtime is not a regular payment, but of an occasional nature. When overtime is not there, again he comes into the ambit of the ESI scheme. This frequent interruption of his coverage from the scheme may deprive of insurance coverage and the benefits admissible there under. To ensure continuous security and protection to him, the overtime has been excluded from counting his wages for coverage ceiling limit, but at the same time by virtue of his payment of contribution on overtime, he gets a better benefit as he gets fitted in the higher wage slab.

 

Q.

WHY CONTRIBUTION SHOULD BE PAID ON TOTAL WAGES BEYOND RS.10000 P.M. WHEN EMPLOYEE CROSSES THE CEILING LIMIT DURING THE CURRENCY OF A CONTRIBUTION PERIOD?


Ans.


An employee whose wages crosses the prescribed ceiling limit in any month at any time after the beginning of the contribution period shall continue to be an employee till the end of that contribution period. Hence contribution is payable on the wages paid/payable to him during the currency of the contribution period. Though there is ceiling limit of wages for coverage of an employee, there is no ceiling limit in the definition of the wages. Hence contribution is payable on the total wage without any ceiling limit. The maximum daily rate of standard benefits i.e. Rs.190/- per day has been worked out taking his average daily wages @ Rs.380/- per day which works to Rs.11900/- p.m. in order to protect the employee for the higher contribution paid by him for the wages beyond Rs.10000/- p.m. as explained above.

 

Q.

What is E.S.I. Scheme?


Ans.


In addition to necessities of food, clothing, housing etc., man needs security in times of physical and economic distress consequent upon sickness, disablement etc. The Employees’ state Insurance Scheme is an integrated measure of Social Insurance embodied in the task of protecting ‘employees’ as defined in the Employees’ State Insurance Act against the hazards of sickness, maternity, disablement and death due to employment injury and to provide medical care insured persons and their families. The Scheme covers employees of non-seasonal power-using factories employing 10 or more persons. There is, however, a built-in provision for its extension to other establishments or classes of establishments, industrial, commercial, agricultural or otherwise. The Scheme has been progressively extended to cover employees in non-power using factories employing 20 or persons and to commercial establishments.