ESI Registration Online in India

ESI, or Employees' State Insurance, is a self-funded health insurance and social security plan for workers in India. It began with the Employees' State Insurance Act, 1948. Its main purpose is to give complete medical care and financial benefits to insured people and their families.

It acts as a safety net, protecting workers and their families from financial hardship caused by sickness, maternity, or work-related injuries. The scheme provides a range of medical and financial benefits. The Employees' State Insurance Corporation (ESIC) manages this entire system.

Why was ESI Started?

Before the ESI Act of 1948, Indian workers had little protection against financial hardship from sickness, injury, or maternity leave. There was very little organized support available to help them during such difficult times, leaving many vulnerable and unprotected.

To address these challenges, the ESI Act was enacted in 1948 to provide a system of financial assistance and medical care for workers during unexpected events. The scheme was officially launched on February 24, 1952, in Kanpur, marking a major step towards ensuring social security and a safer working environment for employees across India.

What does ESIC do?

The Employees' State Insurance Corporation (ESIC) is the government organization responsible for managing the ESI scheme. Its key functions include:

• Collecting contributions from both employers and employees
• Managing and maintaining the ESI fund
• Providing medical services through its network of hospitals and dispensaries
• Distributing cash benefits such as sickness, maternity, and disability allowances to eligible insured persons

ESIC plays a vital role in ensuring social security and healthcare support for workers covered under the scheme.

Registering under the Employees’ State Insurance (ESI) scheme brings many benefits for both employers and workers, providing social security and support.

• Medical Care: Employees and their families get free medical treatment, including doctor visits, hospital care, and medicines.
• Cash Benefits During Illness: Workers receive money to cover their wages when they cannot work due to sickness or injury.
• Maternity Support: Women workers get paid leave and medical care before and after childbirth.
• Disability Support: If a worker is injured or becomes disabled at work, they receive financial help.
• Help for Families: If a worker dies because of a workplace injury, their family gets financial support and a pension.
• Funeral Expenses: The scheme provides money to help cover funeral costs for deceased insured workers.
• Unemployment Help: In some cases, workers who lose their jobs can get temporary financial support.
• Employer Benefits: Employers follow the law, avoid fines, and show they care for their workers, which helps improve loyalty and productivity.
• Links to Other Welfare Schemes: Registration connects workers to other government benefits and support programs.
• Low Cost: The contribution rates are reasonable, making it affordable for employers while protecting employees.

ESI registration is mandatory for:

• Factories using electricity or mechanical power and employing 10 or more workers
• Non-factory establishments like shops, hotels, restaurants, movie theatres, road transport companies, newspaper agencies, private medical institutions, and educational institutions, with 10 or more employees (in most states)
• State-specific thresholds may vary; for example, Maharashtra and Chandigarh require ESI registration for non-factory establishments only if they have 20 or more employees

It’s important to check your state’s specific rules, as the minimum employee requirement typically ranges between 10 to 20.

Wage Limit for ESI Coverage

To qualify for ESI benefits, an employee’s monthly wages must fall within a specific limit set by the scheme. Here's how it works:

• Employees earning up to Rs. 21,000 per month are generally covered by the ESI scheme.
• For employees with disabilities, the wage limit is higher, at Rs. 25,000 per month.
• If an employee’s wages exceed these limits, they will no longer be covered under the scheme from the next contribution period.
• However, employees will continue to receive benefits for the current six-month benefit period they are already enrolled in.

Tip: ESI has two main cycles. The Contribution Period is when payments are made (April–Sept and Oct–March). The corresponding Benefit Period, when employees can claim benefits, starts three months later (Jan–June and July–Dec, respectively).

The ESI scheme covers many different types of businesses and organizations, providing a broad safety net for workers across various sectors. These include:

• Factories (with 10 or more employees and using power)
• Shops
• Hotels and Restaurants (specifically those involved in sales)
• Cinemas, including preview theaters
• Road Motor Transport Establishments
• Newspaper Establishments (those not already covered under the Factories Act)
• Private Medical Institutions (like private hospitals and clinics)
• Private Educational Institutions (like private schools and colleges)
• Workers on contract or temporary staff for Municipal Corporations or other Municipal Bodies.
• Businesses involved in the insurance industry, Non-Banking Financial Companies (NBFCs), Port trusts, Airport authorities, and Warehousing facilities. For these specific types of businesses, the coverage rule is usually 20 or more people.

To complete your ESI registration online, you'll need to provide documents that verify your business identity, location, financials, and employee details.

Documents for Business Identification & Registration

• Company Incorporation Certificate
• Partnership Deed, if your business is a partnership firm
• GST Registration Certificate
• Memorandum of Association (MOA) and Articles of Association (AOA) for details of their goals and internal rules.
• PAN Card of the Business Entity

Address Proof of Establishment

You only need to provide one of these:

• A recent utility bill (electricity, gas, or telephone) that is not older than 3 months.
• The rental agreement for your business premises.
• Property tax receipts for the business location.

Financial Details

• A canceled cheque from your company's bank account. This is used to confirm your banking details.

Employee & Management Details

• A complete list of all employees working in your business.
• PAN Card of all employees.
• Employee Compensation Details
• A list of Directors and Shareholders (for companies).

Compliance Records

• Registration Certificate under the Shops and Establishments Act
• Factories Act License – If applicable to your industry.

The employer needs to provide the following documents for ESI registration:

• Proof of employer’s identity (such as PAN Card or Aadhaar Card)
• Employer’s bank account details (cancelled cheque or bank statement)
• Proof of business address (utility bills, rent agreement, or property tax receipt)
• Registration certificates related to the employer’s business (Company Incorporation Certificate, Partnership Deed, GST Certificate)
• Details of the employer’s authorized signatory (ID proof and authorization letter, if applicable)
• Proof of compliance with other statutory requirements (such as Shops & Establishment Registration or Factories License)

The process of ESI registration is entirely online, making it simpler for employers.

Step 1: Sign up on the ESIC Portal

• Visit the official ESIC website (esic.gov.in).
• Look for 'Employer Login' and then click on 'Sign Up' under New Employer Registration.
• Fill in basic information like your employer name, your organization's details, email ID, and mobile number.
• Once you have filled everything in, click 'Submit'.

Step 2: Email and SMS Verification

• After submitting the sign-up form, you will receive a confirmation email and an SMS.
• These messages will contain your username and password, which you will use to log in to the ESIC portal. These credentials are temporary, so make sure to change your password right after logging in for the first time.

Step 3: Fill Employer Registration Form-1

• Go back to the 'Employer Login' section of the ESIC website and sign in with the username and password you received.
• Find and click on 'New Employer Registration'.
• You will then need to choose the 'Type of Unit' (for example, if it's a factory or a shop) that describes your business and click 'Submit'.
• This will open the 'Employer Registration Form 1'.
• Carefully fill in all the required information in the different sections:

• • Unit Details: Your company's name, full address, what kind of business you do, and its PAN.
  • Employer Details: Your name, your role within the company, and your contact information.
  • Factory/Establishment Details: Information about any other relevant registrations (like under the Factories Act) and the total number of employees.
  • Employee Details: The exact number of employees you have and their wage information.

• Check all details carefully and then click 'Submit'.

Step 4: Make Payment of Initial Contribution

• After you submit Form-1, a message will appear asking you to pay an initial contribution, which usually covers six months in advance.
• Click on 'Pay Initial Contribution'. The portal will automatically calculate and display the required amount.
• Select 'Online' as your payment method and click 'Submit'.
• A unique Challan Number will be generated. Make sure to write this number down for your records, then click 'Continue'.
• You will be redirected to a payment page where you can complete the transaction using net banking, a debit/credit card, or UPI.

Receive Registration Letter (C-11)

• Once your payment is successfully processed, the ESIC system will automatically create and send a Registration Letter (Form C-11) to your registered email address.
• This letter serves as your official proof of ESI registration. It will contain your unique 17-digit ESIC Registration Number. It is crucial to keep this letter safe for all future needs and compliance checks.

It’s important to regularly log in to the ESIC portal to update employee details, file returns, and ensure continued compliance with ESI regulations.

After an employer completes the ESI registration, the next step is to enroll all eligible employees under the scheme. This step is important because it allows employees to receive medical and other benefits under the ESI program.

Employee Enrollment Process

Employers must share details of employees who qualify for ESI coverage. These generally include workers whose gross salary is Rs. 21,000 or less per month (or Rs. 25,000 for persons with disabilities). The information required includes:

• Employee’s full name
• Date of joining the organization
• Address and contact details
• Family member details (for dependent coverage)
• PAN or Aadhaar number (if available)
• Designation and salary structure

This data is uploaded by the employer through the ESIC employer login portal.

ESI Card or Pehchan Card

Employees undergo biometric verification at the local ESIC office and then get their ESI card, called the Pehchan Card. This card lets them access medical care at ESIC hospitals and dispensaries.

The Pehchan Card contains:

• Employee’s name and photo
• Unique insurance number
• Information about covered family members

This card allows the insured person and their family to receive treatment and other benefits at ESIC-approved centers across India.

Employer's Responsibility

The employer must ensure all employee details are correct and complete. They are also responsible for:

• Uploading employee data on time
• Coordinating with ESIC for biometric and photo verification
• Informing employees about how to collect and use their ESI card

If details are incomplete or incorrect, it may delay the card issuance or access to benefits.

Importance of the ESI Card

• It is required to receive medical and health benefits
• It identifies the employee as an insured person under the ESI scheme
• It helps in availing benefits for dependents as well

Employees should check the card for any errors once it is issued. If corrections are needed, they can be made through the ESIC portal.

Getting registered with ESI is just the first step. Employers must consistently follow ongoing rules to avoid penalties and ensure the scheme runs smoothly.

Timely Contribution Payments

Employers have two responsibilities: they must deduct the employee's share of the contribution from their wages and then add their contribution. The total amount must then be deposited with ESIC.

• Current ESI Contribution Rates:

• • Employer's Contribution: This is 3.25% of the employee's total wages.
  • Employee's Contribution: This is 0.75% of the employee's total wages.

• Due Date: ESI contributions must be paid by the 15th of the month following the month for which the wages were paid. For example, if you paid wages in June, the ESI contributions for those wages are due by July 15th.

Important Records and Registers to Keep

Employers must keep accurate and updated records for ESI compliance. These records include:

• Attendance and Employee Register: A record of each employee's daily attendance, insurance number, and their joining and leaving dates.
• Wage Register: A detailed record of how much money each employee was paid, including all parts of their salary.
• Form 6 Register: A specific register for keeping track of ESI contributions paid and other related ESI information.
• Accident Register (Form-11): Used to record details of any accidents that happen at the workplace. This is important for reporting and making claims.
• ESI contribution challans and receipts that prove payment.
• Declaration Forms (Form 1) for all new employees who join the business.
• An Inspection Book, which ESIC officials can use during their inspections.
• An employee registers with the exact joining and leaving dates for each employee.
• Bank statements that clearly show the ESI payments made.

Filing ESI Returns

Employers are required to submit regular reports to ESIC. These reports are called ESI returns.

• Return Type and Due Dates:

• • Half-yearly Returns (Form 5 ): This return covers the six-month contribution periods and is due by May 31st for October to March and by November 30th for April to September.

Note: Employers should confirm the exact frequency for filing that applies to their business, as some situations or local rules might require monthly or quarterly filings.

Failing to follow ESI rules can lead to serious consequences, including financial penalties and legal action.

Financial Penalties

• Interest on Late Payment: If ESI contributions are not paid on time, an interest of 12% per year is charged for every month or part of a month the payment is delayed.
• Damages for Delayed Payments: ESIC may charge additional penalties, known as damages, if contributions are paid late. The rate of damages depends on the length of the delay:

• • Up to 2 months delay: 5% per year on the unpaid amount
  • 2 to 4 months delay: 10% per year
  • 4 to 6 months delay: 15% per year
  • More than 6 months delay: 25% per year

Note: These damages are levied in addition to interest and are not refundable under any circumstances.

• Penalty for Not Registering: A business that is supposed to register for ESI but does not do so may face a penalty of up to Rs. 5,000.
• Penalty for Not Filing: Submitting ESI returns late can result in both penalties and interest charges under Section 85 of the ESI Act.. For delays longer than 3 months, penalties can be as much as Rs. 1,000 per day.

Fines and Imprisonment

Here’s what employers need to know about the penalties if they fail to follow the ESI rules.

1. Failure to Pay Contribution:

• Sections 85, 85A, and 85B of the ESI Act, 1948, outline the following punishments:
  • If the employer fails to pay the employee’s deducted share, imprisonment of at least one year and a fine of Rs. 10,000.
  • For other non-payment cases, imprisonment is at least six months with a fine of Rs. 5,000.

2. Other Violations: Other rule breaches, such as:

• • Illegal deduction of the employer’s contribution from wages.
  • Unfair wage reduction.
  • Wrongful termination of employees.
  • Failure to submit required reports.
  • These can result in up to one year imprisonment, a fine of up to Rs. 4,000, or both.

3. Increased Punishment for Repeat Offences: For repeated failures to pay contributions, imprisonment can go up to five years, and it will be at least two years.

The ESI Registration Certificate is an official document given to employers after they register under the Employees’ State Insurance scheme. This certificate proves that your business is registered with the ESIC and follows the ESI rules. It shows that you are responsible for providing social security benefits to your employees.

It is important to keep this certificate safe as it may be needed during government checks or inspections. The certificate also helps you when communicating with ESIC for any future matters.

How to Download the ESI Registration Certificate?

To download your ESI Registration Certificate, follow these steps:

• Go to the official ESIC website (esic.in)
• Log in with your Employer ID and password.
• Find the ‘Employer’ section and click on ‘View/Download Registration Certificate’ or a similar link.
• If you have more than one registered unit, choose the correct establishment.
• Click the download button to save the certificate as a PDF.
• Print the certificate for your records or to show at your workplace.

You can download this certificate at any time once your registration is approved, and there is no fee for doing so.