Definition
ESI stands for Employee’s State Insurance. This is a self-financing social security and health insurance scheme for Indian workers. It is managed by the Employee’s State Insurance Corporation, established under the Employee’s State Insurance Act of 1948.
Key Takeaways
- ESI stands for Employees’ State Insurance. It’s a self-financing social security and health insurance scheme designed for Indian workers.
- The fund is managed by the Employees’ State Insurance Corporation (ESIC), an autonomous corporation regulated according to rules and regulations stipulated in the ESI Act 1948.
- The ESI scheme aims to protect employees covered under the scheme against financial distress arising from sickness, disablement, or death due to employement injuries.
Importance
The full form of ESI is Employee’s State Insurance.
This is a vital term in finance because it is a self-financing social security and health insurance scheme for Indian workers.
It is managed by the Employees’ State Insurance Corporation (ESIC) according to rules and regulations stipulated in the ESI Act of 1948.
Being important for both employees and employers, it is structured to provide employees with medical, disability, maternity, and other benefits, while also offering financial protection in instances of sickness, injury, or death during employment.
Its importance underlines the essential aspects of employee welfare and protection, showing businesses and workers how financial provisions can aid in times of hardship.
Explanation
The full form of ESI stands for Employee State Insurance. This is a self-financed insurance scheme in India designed to financially protect workers in case they experience illnesses, disabilities, injuries, or other health-related issues that might affect their earning capacity. Administered by the Employee State Insurance Corporation (ESIC), ESI is a legal requirement for Indian employers with a certain minimum number of workers.
Therefore, its main purpose is to provide employees with a safety net of social security when health issues arise. ESI is used to provide a range of medical, cash, maternity, disability, and dependent benefits to insured workers. By paying regular ESI contributions, employers ensure their employees have access to medical care and various other benefits directly through their employment.
It represents a system of social support that promotes the rights and welfare of employees, particularly in sectors or situations where workers might be more vulnerable to health and financial risks. The fund doesn’t only cover the employees, but also their dependents which makes it more comprehensive and worker-friendly. This scheme helps secure the socioeconomic position of the workforce and contributes to overall workplace stability and wellbeing.
Examples of Full Form of ESI
The full form of ESI refers to Employees’ State Insurance. Here are three real-world examples of how ESI is used:
Small Enterprises: A company having 10 or more employees is required by law in India to register under the ESI Act of 1948, contributing a specific proportion of the workers’ compensation to the Employees’ State Insurance Corporation.
Healthcare support: Under ESI, an employee who has fallen sick can avail medical benefits for themselves and their family, paid leave during their sickness, and monetary assistance to compensate for the loss of income during the sickness period.
Maternity Benefits: Female employees are entitled to maternity benefits under ESI act, providing them with fully paid leave of absence from work, to take care of their newborn. The purpose is to protect the interest of women and to ensure that they do not have to leave their job in order to have a baby.
Frequently Asked Questions about ESI
1. What is the full form of ESI?
The full form of ESI is ‘Employees’ State Insurance’. It’s a type of self-financing social security and health insurance scheme for Indian workers.
2. Who administers the ESI scheme?
The ESI scheme is administered by the Employees’ State Insurance Corporation (ESIC) which is an autonomous corporation under Ministry of Labour and Employment, Government of India.
3. Who is eligible for ESI?
ESI is applicable to employees working in factories and other establishments with 10 or more persons employed. The employees whose monthly wages are up to Rs. 21,000 contribute towards the ESI fund.
4. What are the benefits of ESI?
The ESI scheme provides medical, cash, maternity, disability and dependent benefits to the Insured Persons under a Social Security Legislation.
5. What is the rate of contribution to ESI?
The employer’s contribution is 4.75% of the wages payable to employees and the employees’ contribution is 1.75%. The total contribution is thus 6.5% of wages payable to employees.
Related Entrepreneurship Terms
- Employees’ State Insurance Corporation (ESIC): The governing body that manages the ESI Scheme.
- Contribution Period: The specific time period in which employees and employers contribute to the ESI fund.
- Insured Persons (IP): The individuals who are covered under the ESI Scheme.
- Dependent Benefits: The benefits received by the dependents of the insured persons under ESI.
- Medical Benefits: The healthcare services provided under the ESI Scheme to insured persons and their family members.
Sources for More Information
- Employees’ State Insurance Corporation, India Official Website: This is the official government website for the Employees’ State Insurance Corporation (ESIC) in India, where ESI (Employees’ State Insurance) was first implemented.
- Investopedia: This is a reliable source for information on an extensive range of financial and investment terms including ESI.
- The Balance: The Balance provides a variety of articles related to personal finance, including detailed explanations on several financial acronyms and terms.
- GKToday: GKToday is a General Knowledge portal which often provides detailed information about various terms and organizations, including financial terms such as ESI (Employees’ State Insurance).
