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How, In Times Of Lockdown, Employees Who Become Jobless Extract Money From E.S.I.?

Author: Jay Kumar Gupta Student, NMIMS School Of Law, Bengaluru


RECENT ISSUES WITH THIS Employees State Insurance ACT,1948

According to the article published in the Times of India, ESIC will pay 70% of the 4.2 million employees who lost their job in the lockdown. This comes after a lot of industry lobbying. Informants in the ministry of labor believed that if executed, then many employees would have benefited from it.[2] However, after some time, the Business Standard reported that the Labour Secretary has ruled out utilizing ESIC funds to pay workers’ wages.[3] According to my opinion, the government changed its stance because of the inadequate public pressure to implement previous commitment to reimburse those employees who lost their job in the lockdown.

Whom to approach for legal remedy?

For any employment-related injury, one can file a case with the ESI Court or the Consumer Court. The key responsibilities of these tribunals include regulating employer contributions, collecting compensation, verifying compliance, and so on. Before filing any complaint in any of these courts, firstly one has to understand their rights fully.

Benefits of ESI

Section 46 of the ESI Act talks about the benefits of (EMPLOYEES STATE INSURANCE) POLICY[4]

 All benefits available to an injured employee are described in Section 46 of the Act. It’s vital to realize that these perks are only available to employees while they’re working. The benefits available are divided into two categories: monetary benefits and non-cash benefits, such as medical care[5].

Cash benefits consist of certain benefits.

Sickness benefit is one among them. Sickness Benefit is one of the most significant benefits in these difficult times of covid 19 when nearly everyone in the globe is suffering from health problems or in the apprehension of getting ill.

  1. Sickness benefit — For insured workers throughout phases of certified sickness, a rate of 70% of salaries will be granted to them for a maximum of 91 days in a year. It can be availed in two consecutive periods[6]

Definition of sickness in ESI Act?

SECTION 2(20) of the ESI Act[7] says

“Sickness” refers to a medical condition that demands medical treatment and attendance, as well as time away from work for medical reasons. Treatment can be curative or cited[8].


In an article titled “Profiteering?  ESI contributions add up to a wasted reserve of Rs 84,000 crore.” [9], Financial Express posed several questions about the usage of the ESI cash accumulation. Such reserve can be brought into use for the employees in need, especially in times of natural calamity.

The Objectives whereby the Fund could be used are listed in Section 28 of the ESI Act: According to the provisions of this Act as well as any regulations sanctioned by the Central Government in this regard, the ESI Fund may just be used for the following reasons.[10]:

(i) Remuneration of entitlements and provision of medical diagnosis and enrolment to policyholders, and, in which the medical benefit is stretched to their family members, the clause of these medical benefits to their families, and covering costs of the expenses and costs in connection with the services, in conformity with the terms of this Act.[11];

Pre-requisites for availing sickness benefits?

The International Labour Organization’s general conference, which met in Geneva for its 53rd session on June 4, 1969, adopted a resolution named medical care and sickness benefits[12]

 4 grounds of sickness benefits were suggested in clause 8 of this resolution[13]:

(a) he is undergoing curative or preventive medical treatment;

(b) he is quarantined;

(c) he is kept under medical monitoring for the goal of rehabilitation; or

(d) he is on convalescent leave.

The International Labour Organization (ILO), which was established in 1919, includes India as a member. As a result, these declarations have a persuasive effect on India.

The World Health Organization’s Constitution defines health as “a complete condition of physiological, intellectual, and societal well-being, rather than just the exclusion of sickness or incapacity.”

Other Benefits:

Rajiv Gandhi Shramik Kalyan Yojana[14]

The ESI Corporation initiated a new scheme called “Rajiv Gandhi Shramik Kalyan Yojana” on April 1, 2005, to offer a Social Safety Net for Insured Persons who are made jobless as a result of a layoff, factory/establishment shutdown, or permanent disablement of at least 40% caused by non-employment damage…[15] Changes to this plan have been made in response to stakeholder feedback, to provide greater benefits to covered people and streamline procedures so that benefits are delivered quickly.[16]

This system, as of 1-02-2009, after enhancements and technique simplification, is as follows:

An Unemployment Allowance Scheme that began on April 1, 2005, and is also applicable to an ESI Insured Person. Unemployment Allowance, for a maximum of two years, at a rate of 50% of income. Furthermore, if an employee has had insurance for at least three years and subsequently becomes unemployed, he will receive an unemployment benefit equivalent to 50% of his pay for a term of two years.

Beema Atal Vyakti Kalyan Yojana: Popularly known as “Vyakti Kalyan Yojana”: It is a program for the benefit of the employees who are insured under Section 2(9) of this Act of 1948[17]. It offers monetary assistance through cash compensation at a rate of 25% of typical earnings for a period of up to 90 days. No registration is required for it. Employees under ESI are included in it[18]. Surprisingly, However, according to a recent ESIC decision, the maximum of 25% of average wages has been increased to 50% of average pay because many people lost their jobs in the Covid 19. An individual covered by the scheme can make a claim directly to an ESIC branch office.[19]

In a circular by ESIC,

It was said

  1. The Secretaries of all State Goats. dealing with the ESI Scheme, according to an ESIC notification.

  2. All ESIS Hospital Medical Superintendents

  3. SSMCs/SMCs in general

  4. Jt. Director (I/c) / All Regional Directors

  5. A.R. D/All Jt. Director (Fin.)/Dy. Director (Fin.)/All Jt. Director (Fin)

  6. All Directors, ESI Scheme,

In this circular, ESI urged all the aforesaid authorities to implementation of an Action Plan for providing ESI beneficiaries with preventative and promotional health services.

Consumer Protection Act-AN ALTERNATE REMEDY

Under the C.P. Act of 2019(popularly known as the Consumer Protection Act), one can also file a complaint of his issue to the Consumer Protection Court.[20]

On May 8, 2007, the Supreme Court upheld it in the case of Kishore Lal vs Chairman, Employees State Insurance Corporation[21]…. – Paragraph 20 says that certain claims that come within the sub-section (2) of Section 75 of this Act are decided by an Employees’ Insurance Court. A quick reading of Section 75(2) does not infer that the ESI Court’s findings would cover a claim for negligent damages. Additionally, whatever claims to arise from and fall under the purview of the ESI Act can be viewed.

Subsection (3) expressly prohibits the court from being examined by a civil court. There is no such express bar for the consumer forum to exercise jurisdiction if the subject matter of the claim or dispute falls within clauses (a) to (g) of sub-section (l) of Section 75, or if the Employees’ Insurance Court has jurisdiction to decide the claim under clauses (a) to (l) of sub-section (2) of Section 75 if it is a consumer’s dispute falling under the CP Act. We further conclude that Section 75 of the ESI’s subsections (1), (2), and (3) have no bearing on the consumer forum’s authority.

EMPLOYER is a consumer since

  1. he or she purchased/availed of the ESI insurance policy and paid the premium.

  2. An employee is also a consumer because he or she is a beneficiary of the insurance policy.

In the case of, Shiv Kumar Joshi versus Regional Provident Fund Commissioner[22], the term “consumer” is defined in the Act to encompass not only the person who employs the council for consideration but also the recipient who receives the services.

In the case of, Kesar Lal v. Joint Labor Commissioner and Registering Officer and others[23], the question is, Is a worker who is a beneficiary of a statutory program considered a “consumer”? If there is any deficiency of service by the employer, then the employee is entitled to approach consumer court.


Public pressure is defined as the collective pressure of society objecting to certain viewpoints, government policies, or government acts.

Putting this public pressure on the relevant authorities is one of the most effective ways to obtain a quick legal remedy. Here proper utilization and usage of the ESI Funds are one of the most important issues where the public should put pressure. To achieve the goal of creating a legally compliant and disciplined society, the general public should be thoroughly aware of their legal rights and obligations on the aforementioned topic.

[1] The Employee’s State Insurance Act, 1948, No. 34 of 1948, Acts of Parliament,1948(India).

[2] Shishir Arya, ESIC to pay 70% salary of 4.2cr beneficiaries, Times of India, (April 22,2020 10:42 IST),

[3] Public Trust of India, Labour Secretary rules out using ESIC’s Fund for paying workers’ wages, Business Standard, (April 22,2020 19:30 IST)

[4] The Employee’s State Insurance Act, 1948, § 46, No. 34 of 1948, Acts of Parliament,1948(India).

[5] Ibid

[6] Ibid

[7] The Employee’s State Insurance Act, 1948, § 2(20), No. 34 of 1948, Acts of Parliament,1948(India).

[8] Ibid

[9] Surya Sarathi Ray, Profiteering?  ESI contributions add up to a wasted reserve of Rs 84,000 crore, Financial Express, (June 15,2019)

[10] The Employee’s State Insurance Act, 1948, § 28, No. 34 of 1948, Acts of Parliament,1948(India).

[11] ibid

[12] International Labor Organization,1969, Resolution 134: Medical Care and Sickness Benefits Recommendation (4 June 1969), [Online], [Accessed 3rd February,2022]

[13] ibid


[15] Ibid

[16] Ibid

[17] The Employee’s State Insurance Act, 1948, § 2(9), No. 34 of 1948, Acts of Parliament,1948(India).

[18] Ibid

[19] Indivjal Dhasmana, ESIC members who lost their jobs amid Covid can claim 50% of average wage, Business Standard(August 21,2020)

[20] Consumer Protection Act,2019, No. 35 of 2019, Acts of Parliament,2019(India)

[21] Kishore Lal vs Chairman Employees State Insurance Corporation, AIR 2007 SC 1819

[22] Shiv Kumar Joshi vs Regional Provident Fund Commissioner, AIR 2000 SCC 331

[23] Kesar Lal v. Joint Labor Commissioner and Registering Officer and others, Civil Appeal No 2014 of 2020

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