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Welcome to the Training session.

Overview of the ESI Scheme

30 October 2013

Note: The presentation is uploaded in public interest. It does not contain all the details, pertaining to every issue, which are explained during the lecture. Presentation-slides are prepared only to aid and supplement the delivery of lecture by highlighting certain aspects for clarity and understanding. There need not be continuity between the contents of the slides, as Presentation is different from Write-up. The clips used in the presentation were from free sources of the internet and it is acknowledged with gratitude that these clips helped make the presentation effective.

ESIC
The protective umbrella for the employers Provides means for the economic growth of the nation

The safety net for the employees Provides proper living conditions for the work-force

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The scheme was conceived originally by some employers. They took concerted action for formal legislative protection by nations.

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Is the ESI Act, 1948 a compulsory provision?

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The ESI Act, 1948 is not a compulsory provision for any factory or establishment
There are provisions for exemption.

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AN EMPLOYER CAN RIGHTLY DEMAND EXEMPTION, IF the benefits provided by him to his employees are substantially similar or superior to those provided for in the ESI Act, 1948.

This condition must be really fulfilled.

The assertion will be verified with reference to the past records, in spite of the exemption already given.
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What was the position when there was no social security system and no ESI Corporation?

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Industrial Revolution

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One side

In the 1820s, income levels for most workers began to improve, and people adjusted to the different circumstances and conditions. By that time, Britain had changed forever. The economy was expanding at a rate that was more than twice the pace at which it had grown before the Industrial Revolution. Although vast differences existed between the rich and the poor, most of the population enjoyed some of the fruits of economic growth. The widespread poverty and constant threat of mass starvation that had haunted the preindustrial age lessened in industrial Britain.

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The other side


Employment Many parents were willing to allow their children to work in these new textile factories because they needed the extra money for their farm life. However, more workers were still needed. One solution to the problem was to obtain children from orphanages and workhouses. These children became known as pauper apprentices. This involved those signing contracts that virtually made them the property of the factory and the factory owner. Children were expected to work from as young as four years old. Most child factory workers were orphans and had no other choice. Children usually weren't paid as much as grown men were. Their salaries usually came out to be one-third of the typical wage. There are some accounts of children being paid $0.25 per day for delivering newspapers. Also, some of these children died from the hard work. Punishments Children were sometimes hit with a strap to make them work faster. In some factories children were dipped head first into the water cistern if they became drowsy. Children were also punished for arriving late for work and for talking to the other children. Apprentices who ran away from the factory were in danger of being sent to prison. Children who were considered potential runaways were placed in irons. They would also have weights tied to their necks if they weren't working quick or well enough. Accidents One of the main concerns about the number of textile workers was the safety of the factories. Unguarded machinery was a major problem for children working in factories. There were reports that every year there were nearly a thousand people treated for wounds and mutilations caused by machines in factories. Many of the workers were often abandoned from the moment the accident occurs.

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Robert Owen Philanthrophist businessman Welsh pleaded for international agreement on social security. Jerome Blanqui 1838 Villerme 1839 France Pleaded for international agreement. Daniel Legrand 1847 Switzerland Men are men; not producing machines. Karl Marx and Engels - 1848

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George Cadbury 1860 Louis Wollowiski -1873- France introduced the first bill on labour legislation before the French parliament. Ottowan Bismark Germany - Accident Insurance, 1883, Maternity, 1884, Sickness and Oldage Pension, 1889 German Emperor 1890 convened the first International Labour Conference in Berlin.

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Another conference at Brussels 1897 International Association for Labour Legislation by a voluntary organisation 1900 Two more conferences at the instance of the same Association at Berne, Switzerland 1905 and 1906. National Insurance Act, 1911 passed in the UK. Another International Conference at Berne recommends action programme 1913

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Upton Sinclair

In 1904 Sinclair spent seven weeks in disguise, working undercover in Chicago's meatpacking plants to research his fictional expos, The Jungle. When it appeared in 1906, it became a best-seller. The Jungle is a 1906 novel written by author and journalist Upton Sinclair. Sinclair wrote this novel to highlight the plight of the working class and to remove from obscurity the corruption of the American meatpacking industry during the early-20th century. The novel depicts in harsh tones the poverty, absence of social programs, unpleasant living and working conditions, and hopelessness prevalent among the working class, which is contrasted with the deeply-rooted corruption on the part of those in power. The sad state of turn-of-the-century labor is placed front and center for the American public to see, suggesting that something needed to be changed to get rid of American wage slavery. The pressure and the public outcry, led to the passage of the Meat Inspection Act and the Pure Food and Drug Act of 1906, Upton Sinclair originally intended to expose "the inferno of exploitation [of the typical American factory worker at the turn of the 20th Century]," but the reading public instead fixated on food safety as the novel's most pressing issue. In fact, Sinclair bitterly admitted his celebrity rose, "not because the public cared anything about the workers, but simply because the public did not want to eat tubercular beef Sinclair rejected the legislation, as he viewed it as an unjustified boon to large meat packers partially because the U.S., rather than the packers, was to bear the costs of inspection at $30,000,000 a year. He famously noted the limited effect of his book by stating, "I aimed at the public's heart, and by accident I hit it in the stomach." 30 October 2013

Sweatshops of 1845 30 October 2013

Punch

Courtesy: wikipedia

National Insurance Act, 1911 passed in the UK. Another International Conference at Berne recommends action programme 1913

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Chronology of events
1918 First World War is over 1919 International Labour Organisation is formed Treaty of Versailes on 28.6.1919 1920 Ratification of ILO convention by various nations followed by implementation.

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Preamble of the Constitution of the International Labour Organisation

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Whereas universal and lasting peace can be established only if it is based upon social justice; And whereas conditions of labour exist involving such injustice hardship and privation to large numbers of people as to produce unrest so great that the peace and harmony of the world are imperilled;
and an improvement of those conditions is urgently required; as, for example, by the regulation of the hours of work including the establishment of a maximum working day and week, the regulation of the labour supply, the prevention of unemployment, the provision of an adequate living wage, the protection of the worker against sickness, disease and injury arising out of his employment the protection of children, young persons and women, provision for old age and injury, protection of the interests of workers when employed in countries other than their own, recognition of the principle of equal remuneration for work of equal value, recognition of the principle of freedom of association, the organization of vocational and technical education and other measures;

Whereas also the failure of any nation to adopt humane conditions of labour is an obstacle in the way of other nations which desire to improve the conditions in their own countries; The High Contracting Parties, moved by sentiments of justice and humanity as well as by the desire to secure the permanent peace of the world, and with a view to attaining the objectives set forth in this Preamble, agree to the following Constitution of the International Labour Organization:

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1920 As per the ILO Conventions, Labour welfare legislations are enacted the world over. But, India hesitates

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1922 Indian reluctance is criticised in the ILO. One member went on record saying that among the civilised countries, India is the only country where no social security measures is in existence. Immediately, the embarrassed Indian representatives gave an assurance that steps would be taken to enact legislation for insurance in respect of accidents.
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The earlier enactments like the Fatal Accidents Act, 1885 or The Workers Breach of Contract Act, 1859 or the Employer and the Workmens (Disputes) Act, 1860 did not significantly help the working population in India as they did in England.
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At the last session of the Indian Legislative Assembly, a resolution, tabled by Mr. Joshi, helps to illustrate the condition of servitude in which Indian workers still are, despite the attempt at organisation begun by the Trades Union Congress. This resolution contained the demand for the repeal of the Workmens Breach of Contract Act, and the removal from the Indian Penal Code of sections 490 and 492, which permit imprisonment for certain breaches of contract. Under the Breach of Contract Act a worker who fails to fulfil his contract of service, having received an advance of money from his employer, is liable to be called on to repay the advance or fulfil his contract, failing which he can be imprisoned. This law was passed shortly after the Indian Mutiny, and embodies in fact the chief feature of indentured labour. The Assembly, after much debate, agreed that there was a strong case for the repeal of these laws, and consented to introduce legislation to that effect if, after consulting the Local Governments, the majority favoured repeal.

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State intervention in labour matter can be traced back to the enactment of the Employers and Workmens Disputes Act 1860 which provided for the speedy disposal of the dispute relating to the wages of workmen engaged in railways, canals and other public works, by Magistrates. After World War-1 however, State intervention in Dispute Resolution became more systematic and effective.
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Fatal Accidents Act, 1855 The Workers Breach of Contract Act, 1859 the Employer and the Workmens (Disputes) Act, 1860

Are they social security enactments?

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The Fatal Accidents Act, 1855

An Act to provide compensation to families for loss occasioned by the death of a person caused by actionable wrong. Preamble. Whereas no action or suit is now maintainable in any court against a person who, by his wrongful act, neglect, or default, may have caused the death of another person, and it is often-times right and expedient that the wrong-doer in such case should be answerable in damages for the injury so caused by him; It is enacted as follows:
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1-A. SUIT FOR COMPENSATION TO THE FAMILY OF A PERSON FOR LOSS OCCASIONED TO IT BY HIS DEATH BY ACTIONABLE WRONG. 1[1A.] Suit for compensation to the family of a person for loss occasioned to it by his death by actionable wrong.Whenever the death of a person shall be caused by wrongful act, neglect or default, and the act, neglect or default is such as would (if death had not ensued) have entitled the party injured to maintain an action and recover damages in respect thereof, the party who would have been liable if death had not ensued, shall be liable to an action or suit for damages, notwithstanding the death of the person injured, and although the death shall have been caused under such circumstances as amount in law to felony or other crime. 2[***] Every such action or suit shall be for the benefit of the wife, husband, parent and child, if any, of the person whose death shall have been so caused, and shall be brought by and in the name of the executor, administrator, or representative of the person deceased; and in every such action the Court may give such damages as it may think proportioned to the loss resulting from such death to the parties respectively, for whom and for whose benefit such action shall be brought; and the amount so recovered, after deducting all costs and expenses, including the costs not recovered from the defendant, shall be divided amongst the before-mentioned parties, or any of them, in such shares as the Court by its judgment or decree shall direct.

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Workmens Breach of Contract Act, 1859 At the last session of the Indian Legislative Assembly, a resolution, tabled by Mr. Joshi, helps to illustrate the condition of servitude in which Indian workers still are, despite the attempt at organisation begun by the Trades Union Congress. This resolution contained the demand for the repeal of the Workmens Breach of Contract Act, and the removal from the Indian Penal Code of sections 490 and 492, which permit imprisonment for certain breaches of contract. Under the Breach of Contract Act a worker who fails to fulfil his contract of service, having received an advance of money from his employer, is liable to be called on to repay the advance or fulfil his contract, failing which he can be imprisoned. This law was passed shortly after the Indian Mutiny, and embodies in fact the chief feature of indentured labour. The Assembly, after much debate, agreed that there was a strong case for the repeal of these laws, and consented to introduce legislation to that effect if, after consulting the Local Governments, the majority favoured repeal.
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Employers and Workmens Disputes Act 1860 State intervention in labour matter can be traced back to the enactment of the Employers and Workmens Disputes Act 1860 which provided for the speedy disposal of the dispute relating to the wages of workmen engaged in railways, canals and other public works, by Magistrates. After World War-1 however, State intervention in Dispute Resolution became more systematic and effective.
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Factory Acts were introduced to protect working people from employers who permitted dangerous practices in workplaces. The first Acts of 1809 and 1823 failed to include effective enforcement clauses. In 1833 Lord Ashley (later earl of Shaftesbury) introduced the first effective law, establishing an inspectorate with powers to enter premises and require compliance with restrictions on the employment of women and children. A coherent law relating to safety at work was not achieved until 1969 when the Health and Safety Executive was set up.

ENGLAND

The factory reform movement spurred the passage of laws to limit the hours that could be worked in factories and mills. The first aim of the movement was for a "ten hours bill" to limit to ten hours the working day of children. Richard Oastler was one of the movement's most prominent leaders.

Factories Act 1802


The Factories Act 1802 (sometimes also called the "Health and Morals of Apprentices Act") was an Act of the Parliament of the United Kingdom which regulated factory conditions, especially in regard to child workers in cotton and woollen mills. It was the culmination of a movement originating in the 18th century, where reformers had tried to push several acts through Parliament to improve the health of the workers and apprentices.
The act had the following provisions: Factory owners must obey the law.

All factory rooms must be well ventilated and limewashed twice a year. Children must be supplied with two complete outfits of clothing. Children between the ages of 9 and 13 can work maximum 8 hours. Adolescents between 14 and 18 years old can work maximum 12 hours. Children under 9 years old are not allowed to work but they must be enrolled in the elementary schools that factory owners are required to establish. The work hours of children must begin after 6 a.m., end before 9 p.m., and not exceed 12 hours a day.

Children must be instructed in reading, writing and arithmetic for the first four years of work. Male and female children must be housed in different sleeping quarters. Children may not sleep more than two per bed. Factory owners are also required to tend to any infectious diseases. Fines of between 2 and 5 could be imposed on factory owners, but the Act established no inspection regime to enforce conditions. The act failed to provide a clear law of the hours one is permitted to work and failed to include supervision to make sure the law was being followed.

India has not done enough in social security space: ILO report: 2010
GENEVA: India has performed poorly in providing social security protection to its people until recently with "very high vulnerability" to poverty and informal labour practices in the world, according to a report released by the International Labour Office (ILO) today, 16.11.2010, Times of India.
In its first comprehensive 'World Social Security Report', the ILO has suggested that India has not done enough in the arena of social security protection, which is reckoned as the "human face of globalisation, in line with its fiscal status".

INDIA

PENSIONS' ACT, 1871 FACTORIES ACT, 1881 PROVIDENT FUNDS ACT, 1925 PAYMENT OF WAGES ACT, 1936 INSURANCE ACT, 1938 EMPLOYMENT OF CHILDREN ACT, 1938

Insurance Act, 1938


Law relating to the business of insurance.

3*[(4) "auditor" means a person qualified under the Chartered Accountants Act, 1949 (38 of 1949), to act as an auditor of companies;]

1923 Workmens Compensation Act,1923 comes into existence. 1927 ILO Convention for Sickness Insurance. 1928 Government of India refuses to ratify the ILO convention of 1927.

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Reasons given by the Government in 1928.


1.

2.

3. 4.

5.

Migratory nature of Indian labour; Preference to Indigenous system of medicines; Want of qualified doctors; Resistance of workers to any compulsory deduction; Lack of financial resources with the Government.

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Centre, then, asked for the comments of the States.

Punjab: Recommended Sickness Insurance, but no administrative machinery was recommended. West Bengal: Did not say anything, as the Royal Commission of Labour was to visit India soon. Chennai: Suggested PF for all contingencies. All the States were against the Governments financing of the Scheme. The Royal Commission of Labour has also recorded these details extensively in Page 266 of its report (Chapter XIV). 30 October 2013

Royal Commission of Labour


1929-31 The question of making provision for workers during sickness, even if it had not been previously raised by Government, would have been forced on us by what we found in every industrial centre.

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Royal Commission of Labour


1929-31
Of the great need of the workers for something of this kind, there can be no doubt. By common consent the incidence of sickness is substantially higher than in Western countries; the medical facilities are much less adequate and the wages generally paid make it impossible for most workers to get through more than a very short period of illness without borrowing. Indeed, sickness is an important contributory cause of indebtedness, with all that debt entails under existing conditions; for often, at his time of greatest need, the worker may find himself destitute of resources, unable to take proper measures to restore his health and in difficulties regarding even the means of subsistence. The situation calls for the exploration of all methods that may lead to the alleviation of the existing hardships.

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Of the great need of the workers for something of this kind, there can be no doubt. By common consent the incidence of sickness is substantially higher than in Western countries; the medical facilities are much less adequate and the wages generally paid make it impossible for most workers to get through more than a very short period of illness without borrowing. Indeed, sickness is an important contributory cause of indebtedness, with all that debt entails under existing conditions; for often, at his time of greatest need, the worker may find himself destitute of resources, unable to take proper measures to restore his health and in difficulties regarding even the means of subsistence. The situation calls for the exploration of all methods that may lead to the alleviation of the existing hardships.

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Royal Commission of Labour

Its recommendations were considered by the Government of India In consultation with The Standing Advisory Committee of the Labour and Industries Department And The Government Actuarial Department in London. It was, then, decided to

Drop the matter for the time-being.

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But

Labour movements pressed for the insurance scheme; The Textile Labour Enquiry committee set up by Mumbai Government, The Kanpur Textile Labour Enquiry committee set up by the UP Government and The Bihar Labour Enquiry Committee Recommended introduction of a contributory sickness insurance scheme.

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U.S. New

Social Security Act, 1935 Zealand Social Security Act, 1938

1939-1945 - The Second World War.

1945- Germany is apportioned among four powers. The German economy gets reduced to ashes.

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1971 The Hindu headline reads, German DM attains full value. The economic miracle of West Germany has been attributed to the splendid social security system of that country.

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1941- Second World War was on. Winston Churchill entrusts the work of formulating a comprehensive labour welfare legislation for the post war Britain.

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Ernest Bevin, Minister of Labour, asked Beveridge to look into existing schemes of social security, which had grown up haphazardly, and make recommendations. The Report to the Parliament on Social Insurance and Allied Services was published in 1942. It proposed that all people of working age should pay a weekly national insurance contribution. In return, benefits would be paid to people who were sick, unemployed, retired or widowed. Beveridge argued that this system would provide a minimum standard of living "below which no one should be allowed to fall".

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Beveridge said that the government should find ways of fighting the five Giant Evils of Want, Disease, Ignorance, Squalor and Idleness. Which one of the five is easier to tackle?

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The most remarkable asset of the Report was the convincing manner of Beveridge's argument which made it so widely acceptable: Beveridge appealed to conservatives and other doubters by arguing that the welfare institutions he proposed would increase the competitiveness of British industry in the post-war period, not only by shifting labour costs like healthcare and pensions out of corporate ledgers and onto the public account, but also by producing healthier, wealthier and thus more motivated and productive workers who would also serve as a great source of demand for British goods.

The report of Sir William Beveridge came to be described as a monumental document on social security.

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From its inception, the ILO has recognized social justice as a prerequisite to world peace. After the Second World War, its aims and purposes were reasserted and strengthened in The Declaration of Philadelphia, adopted on May 19, 1949, which states:

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Money Today
27.11.2008

My boss was candid enough to say that one can stay only as long as one is useful, says Delhi-based A. Gaurav. Product life-cycles are short. Constant innovation and product repositioning are the norm. Its essential to keep moving just to survive, says Dony Kuriakose, director, Edge Executive Search. The product Kuriakose is talking about is youthe employee.

Declaration of Philadelphia
1. Labour

is not a commodity; 2. Freedom of expression and association are essential to sustained progress; 3. Poverty anywhere constitutes a danger to prosperity anywhere; [and] 4. All human beings, irrespective of race, creed or sex, have the right to pursue both their material well-being and their spiritual development in conditions of freedom and dignity, of economic security and equal opportunity.
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A Canadian study suggests that the wealthiest nations do not have the healthiest people; instead, it is countries with the smallest economic gap between the rich and poor. (Mark Bourrie Inter Press Service -23.7.1999).

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The wealthiest nations do not have the healthiest people; instead, it is countries with the smallest economic gap between the rich and poor.
(Mark Bourrie Inter Press Service -23.7.1999).

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While addressing businessmen, in the year 1945, after the Second World War, UK Minister Ernest Bevin stressed on the need for providing basic economic security to create fairer conditions of living for the working population also.

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If profit can be the only motive, the natural corollary is economic disorder, and economic disorder will bring you back to the same position you are in now, ever recurring, and future generations will again pay, in the same form or another, the bitter price we are paying now he said.

Indian

Government asks Prof. B.P. Adharkar to prepare such a report for India. He submits his report Planning on Social Security in India on 15.8.1944.

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Universal Declaration of Human Rights


Everyone, as a member of society, has the right to social security -Article 22

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Consequently, the ESI Act, 1948 is born as part of the first package of labour welfare measures immediately after Indian independence.

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Fundamental Principles
1.

2.

3.

4.

5.

The proposed scheme must not be too ambitious in the beginning; It must be simple, clear and straightforward, It must be financially sound, economical in working and actuarially balanced; It must minimize disputes and litigation; It must be workable in the peculiar circumstances of Indian labour and industry;

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Courtesy: Times of India

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Fundamental Principles (Contd.)


6.

7.

8.

It must be in conformity with international labour conventions; It must not be saddled with financial responsibilities which belong to other measures of social security and finally It must be sufficiently flexible.

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Not to be saddled

For the success of the ESI Scheme, Prof. Adarkar wanted certain extra measures to be taken. His stand was that the ESI Scheme should not be saddled with burdens legitimately belonging to other branches of social insurance. Therefore, while formulating the ESI Scheme, he made four assumptions for its success.

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Four Assumptions
(a) Adoption of a scheme for Unemployment Insurance and creation of new employments in the post war period, (b) Establishment of a scheme of Old Age Pension, (c) Adoption of certain pre-medical measures like education in health and improvement in environment hygiene besides regulation of wages and rigorous enforcement of factory laws and, finally, (d) National Health Drive.

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Art. 41 of the Constitution


The State shall, within the limits of its economic capacity and development, make effective provision for securing public assistance in case of unemployment, old-age, sickness, disablement and other cases of undeserved wants.

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What is Art. 42? Why is it there in the Directive Principles?

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The social security system of a country is

the symbol of civilisation.

The extent of its success depends upon the degree of maturity of the society as a whole.
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The political costs of inequality are recognized and accepted as being too high. The economic costs of fighting the effects are also high. Citing some research, the BBC also noted that for each dollar spent on poverty causes, seven dollars were saved on consequences.
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ESI Act, 1948


addresses and provides solution precisely to this problem
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Statement of Objects and Reasons Bill No. 54 of 1946 Workmens State Insurance Bill
1. The scheme of Health Insurance for Industrial Workers has been under the consideration of the Government of India for a long time. The necessity for such a scheme has become more urgent in view of the conditions brought about by war.

introduction of a

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The ESI Corporation runs an important scheme which is the bedrock of society as a whole . The scheme provides the basic structure for the nations economy.

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The World Bank's report in 1994 had identified the existence of the link between the sound social security system of a country and its ability to compete effectively in the world market.

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FRAGILE DEMOCRACIES, INEQUALITY TURN GOOD PEOPLE TO EVIL


In May 2002, the BBC aired a documentary related to inequality, called The Experiment, where they showed in detail how inequality can turn good people to evil.
Inequality is also characterized by a concentration of wealth, which means concentration of political power. Historically, one of the main reasons for continued poverty has been the desire to maintain this power. The ESI Corporation, precisely, provides solution in that context.

Everyone has the right to work, to just and favourable conditions of work and to protection for himself and his family [and] an existence worthy of human dignity Everyone has the right to a standard of living adequate for the health and well being of himself and his family, including food, clothing, housing and medical care.

-Who said this?

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And, in the year 2012

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Sweatshops

The chemicals used in the processing of --------products in the sweatshops in a foreign country, are at 177 times the legal limit. 77 percent of workers in these shops are subject to respiratory, liver, kidney problems.

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"The Human Race has improved everything except the human race."
- Adlai Stevenson
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Experience How to use it?

We must use our experience and not get tied down by experience. -Beveridge

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PROVIDING SOCIAL SECURITY IS THE RESPONSIBILITY OF THE STATE

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ESI Corporation

The scheme is administered by a duly constituted corporate body called the Employees State Insurance Corporation (ESIC). It comprises members representing Central and State Governments, Employers, Employees, Parliament and the medical profession. Union Minister of Labour functions as Chairman of the Corporation whereas the Director General, as chief executive, discharges the duty of running the day-to-day administration.

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ESI Corporation
Constitution

6.10.1948

Standing Committee
A Standing Committee representing all stakeholders is elected from the body corporate for managing the affairs of the scheme and monitoring the progress of implementation of various decisions and policies from time to time.

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Medical Benefit Council


A statutory body advises the Corporation on matters related to administration of medical benefit under the ESI scheme.

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Can the Chairman be authorised to exercise the powers of the ESI Corporation by the ESI Corporation?

ESI Act is applicable to

Non-seasonal factories, using power in the manufacturing process, employing 10 or more persons in receipt of monthly wages not exceeding Rs.15,000/- (excluding overtime allowance) Hotels/Restaurants., Shops, Cinema housess, Newspaper establishments, Road Motor Transport establishments employing 20 or more persons for wages not exceeding Rs.15,000/- per month in Tamil Nadu
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Sec.1(4)

Sec. 1(5)

Sec.1(5) casts the security net wider than Sec. 1 (4).


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SEC. 1(5)
Extension of all or any of the provisions of the Act. To any establishment, To any class of establishments,

Such establishments may be


industrial, commercial, agricultural or otherwise.

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Sec. 1 (5)
96

The types of establishments notified as coverable by

State G0vernments: Hotels, Restaurants, Cinema houses including preview theatres, Road transport establishments (Running staff can be exempted under Sec.88) News paper establishments as defined in the WJ(CS&MP) Act,1955 Shops. Factories employing 20 or more persons without the aid of power in the manufacturing process (upto 1989)

Coverage of Employees

All persons employed for wages in connection with the work of a factory or an establishment to which the Act applies
All employees under Sec. 38 implies coverage of all, whether they are regular or casual or temporary worker or time rated or piece rated worker, part-time workers, trainees, etc.,
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Categories of Employees
Directly employed by the Principal Employer either in factory /establishment or elsewhere Employed by / through immediate employer (contractor) in the premises or outside the premises under the supervision of Principal Employer Those, whose services are temporarily lent or let on hire to the Principal Employer All employees within the wage limit are coverable.

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Employed in connection with the administration, purchase of raw materials, distribution or sale of the product of the factory / establishment. Part time employees on contract of service Outsourced process Element of supervision is essential. Contract of Service Vs. Contract for service.

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Contribution Period
From 1.4.2012 to 30.9.2012

Benefit Period

From 1.1.2013 to 30.6.2013

From 1.10.2012 to 31.3.2013

From 1.7.2013 to 31.12.2013

Contribution Payable= Employers share of contribution @ 4.75% of employees wages Employee to pay @ 1.75% of employees wages + Eligibility for Sickness Benefit = on the contribution being payable / paid for 78 days in the corresponding contribution period.
30 October 2013 Benefit Period First Contribution Period and First

The ESIC charges interest , if the employers do not pay the contributions in time. The ESIC imposes damages, if the employers do not pay the contributions in time. The ESIC recovers the arrears through coercive measures, if the employers do not pay the contributions, interest and damages.

The ESIC prosecutes too, in such cases.


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Benefits under the ESI Act, 1948

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Medical Benefit
It is admissible from the first day of insurable employment. To the Insured Person and his family members. Super speciality treatments as per the administrative instructions.

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Sickness Benefit
Wages

Rs. 5000 p.m. Standard Benefit Rate Divide the total wages paid during the contribution period by the number of days for which these wages were paid 30000/ 183=163.93 Sickness Benefit = Rs. 163.93x70% One month sickness Benefit payable is = Rs. 115x30=3450
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What is sickness?
Suffering

from disease Requiring medical treatment Requiring abstention of medical grounds


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Eduardo Doryan
"The debt crisis of the 1980's in Latin America, and then the recent East Asia Crisis, have shown just how quickly people's lives are turned upside down by steep recession, and how the poor suffer the most during these times," says Eduardo Doryan, the World Bank's Vice President for Human Development, and a former Costa Rican Education Minister, 1994-98. "So social safety nets are vital to catch people who lose their jobs, become hungry or sick. But a system that solely concentrates on helping poor people deal with a crisis once it happens runs the risk of keeping them in a poverty trap by not providing any opportunities.

We need to embrace a more holistic approach that makes social protection more like a springboard that lets people jump into more secure lives."
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Extended Sickness Benefit

34 diseases Wages Rs. 5000 p.m. S.B= 115.00x91=10465.00 309 days x Rs. 132 per day (163.93 x 80%) 330 days x Rs. 132 per day Total 730 days Eligibility: On payment of contribution for 183 days in preceding four contribution periods and is eligible for SB in one period at least.
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Enhanced sickness Benefit

to promote family welfare. 7 days for men 14 days for women Benefit paid is equivalent to the wages
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Temporary Disablement Benefit

Wages Rs. 5000 p.m. Any number of days x Rs.148 per day If disabled for 30 days 148x30=4440.
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Permanent Disablement Benefit


Wages Rs. 5000 p.m. If disabled permanently Monthly payment as per the percentage of loss of earning capacity. If it is 50%, then the monthly payment is 50% of Rs. 4440.
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Dependants Benefit
Wages Rs. 5000 p.m. If the employment injury is a fatal one, Monthly payment to his family members Rs. 4440 is apportioned among wife and children.

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Maternity Benefit

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Maternity Benefit
Wages Rs. 5000 p.m. Standard Benefit Rate Rs. 163.93 Maternity Benefit = SBR Cash Benefit for 84 days initially. Can be extended for another 30 days in case of sickness due to pregnancy or confinement. One month MB = 164x30 = 4920
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Maternity Benefit
Maternity Benefit is available for miscarriage also. Cash benefit for 42 days which can be extended to 30 more days in case of sickness due to pregnancy or miscarriage.

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OTHER BENEFITS

Funeral Expenses Old Age Medical Care Vocational Rehabilitation Physical Rehabilitation

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UNEMPLOYMENT ALLOWANCE
Unique scheme for extending cash-assistance to the employees covered under the ESI Act (Insured Persons) while they become unemployed in certain contingencies has been introduced by the ESI Corporation with effect from 1-4-2005. According to this Scheme, cash payment will be given to the affected insured persons to the maximum of one year or till re-employed whichever is earlier. This benefit is called as RAJIV GANDHI SHRAMIK KALYAN YOJANA. See Administrative instructions for more.
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ESIC The benefactor par-excellence

The package (of benefits provided by the ESIC) can rarely be matched by private employers on their own because of the heavy costs involved not to mention the disinclination among employers, with honorable exceptions, to operate health care systems for their workforce The Hindu (1.1.2005).
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Sec. 1 (5)

Sec. 1 (5) specifies that the scheme can be extended to all. The phrase any other

establishment or class of establishments, industrial, commercial, agricultural or otherwise shows that the intention of the
government is to extend the benefits to everybody gradually in the order in which it has been provided there.
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Some milestones in the history of the ESI Corporation

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1948

The ESI Act, 1948 was passed by Dominion Legislature on 19th April 1948.

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1951

The employers who were brought under coverage of the Act complained that there was rise in the cost of production and their competitive capacity with the industries located in neighbouring centres decreased. The government , therefore, introduced the concept of Employers Special Contribution which necessitated the employers throughout the nation to pay a nominal contribution, ot exceeding 5% of the total wage bill of the employer, to the ESI Corporation, with the intention to spread the incidence of cost of the scheme equitably. That was the primary intention of the amendment of the year 1951. On the 24th November, 1955, Chapter VA became applicable to the whole of India except the State of Jammu and Kashmir. This Chapter provides for Transitory Provisions. During the transitory period every principal employer had to pay to the Corporation a special contribution subject to the other provisions in the Chapter.
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1966

Dependant parents of insured women were included in the definition of the tem family. Dependant parents of insured persons had already been included. Provision for the taking over by the ESI Corporation of the administration of the medical benefit from State Government was made. Sec. 2-A to make it obligatory for the Principal Employer to have his factory or establishment registered under the Act, was inserted. Reg. 10-B came later in the year 1968. Sec. 45-A and Sec. 45-B were introduced. Alternative Evidence of sickness concept was introduced.

Maternity Benefit provisions for miscarriage was introduced.


Maternity Benefit provisions were also extended to sickness arising out of pregnancy, confinement, premature birth of child, miscarriage.

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1970

The words except the State of Jammu and Kashmir were omitted from Sec. 1(2).

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1975
Wage limit increased to Rs. 1000. Provision for compulsory imprisonment under Sec. 85 was introduced. Sec. 85-A, 85-B and 85-C were added. Sec. 405 IPC was amplified to cover nonpayment of contribution recovered by the employers from their employees. Sec. 93-A was added to saddle the liability on the transferee also.

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1984

Wage limit was increased to Rs. 1600. Employers share of contribution was delinked from the employees share to reduce clerical work of the employers.

Week was changed and wage period concept was introduced.


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1989
Children up to the age of 21 years and infirm children without any age restriction were included as family members. Number of employers and employees representatives in the Corporation became ten. Wage ceiling, rate of contributions, period and conditions of grant of benefits and wage limit for exemption were taken to Rules.

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Recovery machinery was set up exclusively for the ESI Corporation duly vested with the powers available under the Income Tax provisions. Retired insured persons and the persons who leave insurable employment due to employment injury on payment of Rs. 120 was introduced. Condition to deposit 50% of the claim in dispute was introduced.

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2010
Amendments were made extensively in various spheres of activities of the Organisation. As they are of recent events, the details are not provided here. Suffice it to say that the definition of the term factory has undergone a significant change with the requirement of power having been removed and the phrase for wages deleted. The opening of medical colleges opens a new chapter in the functioning of the scheme.
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Has to be run only by Governments


The ESI Scheme in India which collects only 1.75% of wages as Employees Contribution is still viable for almost 6 decades without any assistance from Central Government, only because it is compulsory and also because the field of dispersal of benefit load is larger. This is in sharp contrast to the position obtaining in smaller countries where the employees contribution is much more, ranging from 27 to 73%.
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Robert Owen
What ideas individuals may attach to the term
"Millennium" I know not; but I know that society may be formed so as to exist without crime, without poverty, with health greatly improved, with little, if any misery, and with intelligence and happiness increased a hundredfold; and no obstacle whatsoever intervenes at this moment except ignorance to prevent such a state of society from becoming universal.

- Robert Owen, 1.1.1816

when he opened the Institute for the Formation of Character.


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Courtesy: Wikipaedia

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Advantages to Employers

Exemption from
Maternity Benefit Act b) Workmen Compensation Act
a)

Absolved of all liabilities of providing medical facilities to employees and their dependants in kind or cash or as fixed cash allowance
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Is

the role of the State necessary in the scheme of things?

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Assures

proper and corruption-free administration to achieve the purpose of the Scheme.

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Health

is one area in which the public sector consistently does a better job than the private sector at controlling costs
-Paul Krugman Nobel Prize winner (The Hindu 14.6.2011)

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Now

you know
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the essential facts pertaining to the history of social security

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Congrats!

- By R. Nadaraasan 10/30/2013 138