Employees State Insurance Act, 1948 covers factors like 1. Factories and establishments with 10 or more employees. 2. Provision of comprehensive medical care to employees and their families. 3. Provision of cash benefits during sickness and maternity. 4. Monthly payments in case of death or disablement. Which of the above statements are correct ?

Correct — D, (d) 1, 2, 3 and 4.

All four statements describe the Employees' State Insurance scheme accurately. This is the harder shape of statement-list question, because there is no falsehood to hunt for and a candidate has to be confident enough to accept the whole list.

STATEMENT 1 — "Factories and establishments with 10 or more employees." TRUE as the law stood when this paper was set. Section 1(4) applies the Act in the first instance to all factories other than seasonal factories, and section 1(5) allows the appropriate Government to extend it to other establishments — shops, hotels and restaurants, cinemas, road motor transport undertakings, newspaper establishments, and educational and medical institutions. The threshold of TEN comes from the definition of "factory" in section 2(12). It is worth knowing that this figure changed: before the amending Act of 2010 the definition drew a distinction between premises using power, where the threshold was ten, and premises not using power, where it was twenty. The 2010 amendment removed the distinction and set the threshold at ten across the board. Coverage is also limited by a WAGE CEILING — ₹ 15,000 a month when this paper was set, raised to ₹ 21,000 from the beginning of 2017 — so an employee drawing more than the ceiling is outside the scheme even in a covered factory.

STATEMENT 2 — "Provision of comprehensive medical care to employees and their families." TRUE, and it is the feature that most distinguishes this scheme from the provident fund. Medical benefit under section 56 is provided to the insured person AND to the members of his family, and it is full medical care rather than a reimbursement of expenses — out-patient treatment, specialist consultation, hospitalisation, drugs and dressings, delivered through the scheme's own network of dispensaries and hospitals and through arrangements with State Governments. It is a benefit in KIND, which is why the paper separates it from the cash benefits named in the next two statements.

STATEMENT 3 — "Provision of cash benefits during sickness and maternity." TRUE. Section 46 lists the benefits, and two of them answer this statement. SICKNESS BENEFIT is a periodical payment during a certified spell of sickness, payable for a maximum of 91 days in any two consecutive benefit periods; extended sickness benefit runs longer for specified long-term diseases. MATERNITY BENEFIT is a periodical payment for confinement, miscarriage or sickness arising out of pregnancy, and its duration was raised from twelve weeks to twenty-six in step with the amendment to the maternity legislation. Both are cash, and both replace lost wages.

STATEMENT 4 — "Monthly payments in case of death or disablement." TRUE, and the word MONTHLY is exactly right rather than loose. Two benefits under section 46 are paid as periodical monthly sums rather than as lump sums. DEPENDANTS' BENEFIT is payable to the widow, children and other dependants where the insured person dies as a result of an employment injury; it is a monthly pension, not a single payment. PERMANENT DISABLEMENT BENEFIT is likewise a monthly payment, for life, proportioned to the extent of the loss of earning capacity; temporary disablement benefit is paid periodically for as long as the disablement lasts. That is precisely what distinguishes a social-insurance scheme from a provident fund, which can only pay out what has accumulated.

So all four stand, and the answer is option (d).

TWO NOTES ON THE PRINTING. The Act's title is set as "Employees State Insurance Act, 1948" with no apostrophe on Employees and no leading article; the enactment's own title carries the apostrophe. And the stem introduces the list with the words "covers factors like", after which the question sentence asks which of the "statements" are correct — the items themselves are a mixture of a coverage rule and three benefits, which is why they do not read as a homogeneous set. Both are as the booklet has them. The question sentence follows the list directly with no codes line, as it does in about a dozen places on this paper.

Why the others are wrong

• (a)1, 2 and 3 only — This set accepts the coverage rule and the medical and cash benefits but rejects the monthly payments for death and disablement, which is the one statement it should have been easiest to keep. Section 46 lists dependants' benefit and permanent disablement benefit among the benefits of the scheme, and both are periodical monthly payments rather than lump sums — dependants' benefit to the widow, children and other dependants where death results from an employment injury, and permanent disablement benefit for life in proportion to the loss of earning capacity. A candidate may reject the statement because he associates a death benefit with a single insured sum, as under a deposit-linked insurance scheme or a life policy. That is the provident-fund and insurance model, not the social-insurance one. The whole point of pooling contributions is that the benefit can be an income for as long as the need lasts, which is why these two are paid month by month.
• (b)1, 2 and 4 only — This set drops the cash benefits for sickness and maternity, which are among the oldest and best known features of the scheme and are named expressly in section 46. Sickness benefit is a periodical cash payment during a certified spell of illness, payable for up to 91 days in any two consecutive benefit periods, with extended sickness benefit for specified long-term diseases; maternity benefit is a periodical cash payment for confinement and related contingencies. Both are cash and both are distinct from the medical care that the statement above them describes. The likely source of the error is a conflation of the two: a candidate who thinks of the scheme as chiefly a provider of hospitals and dispensaries may treat the sickness contingency as met by treatment alone and forget that wages lost during illness are replaced as well. Medical care in kind and cash benefit during the same contingency are two separate benefits under the same Act.
• (c)3 and 4 only — This set keeps the two benefit statements about cash and about monthly payments but rejects both the coverage rule and the provision of medical care, which discards the two things most characteristic of the scheme. On coverage, the threshold of ten employees is right for the law as it stood when this paper was set: the definition of "factory" was amended in 2010 to remove the earlier distinction between premises using power and premises not using power, and to fix ten as the figure for both. On medical care, section 56 provides medical benefit to the insured person and to the members of his family, and the delivery of full medical care through the scheme's own hospitals and dispensaries is the feature that sets this Act apart from every other social-security statute in India. A candidate arriving here has probably distrusted the statements that contain a number and a sweeping adjective, and has kept the two that sound most like ordinary insurance.

THE EMPLOYEES' STATE INSURANCE ACT, 1948 IS INDIA'S PRINCIPAL SOCIAL-INSURANCE STATUTE, and the word INSURANCE is the key to everything in it. Contributions from employers and employees go into a common fund; the benefit a person receives is determined by the CONTINGENCY he faces and by his wages, not by how much he has personally paid in. Risk is pooled and there is redistribution from those who stay well to those who fall ill. That is the opposite of the provident fund model, where each member has an individual account and receives only what it holds.

COVERAGE. The Act applies in the first instance to non-seasonal factories, with the threshold of ten employees fixed by the definition of "factory", and the appropriate Government may extend it by notification to other classes of establishment. An employee is covered only if his wages are within the prescribed ceiling, which has been revised upward from time to time.

CONTRIBUTIONS. Both the employer and the employee contribute a percentage of wages, the employer's share being the larger of the two, and employees below a specified daily average wage are exempted from their own contribution while the employer's continues. State Governments share the cost of medical care. Contributions are collected for two contribution periods a year, each of which corresponds to a benefit period beginning some months later — the lag being what allows entitlement to be checked before benefit is paid.

THE BENEFITS, from section 46, and worth learning as a list of six:

MEDICAL BENEFIT — full medical care, in kind, for the insured person and his family. SICKNESS BENEFIT — cash during certified illness, up to 91 days in any two consecutive benefit periods, with extended sickness benefit for specified long-term diseases. MATERNITY BENEFIT — cash for confinement, miscarriage or sickness arising out of pregnancy. DISABLEMENT BENEFIT — temporary disablement benefit while the disablement lasts, and permanent disablement benefit as a monthly payment for life proportioned to the loss of earning capacity. DEPENDANTS' BENEFIT — a monthly payment to the widow, children and other dependants where death results from an employment injury. FUNERAL EXPENSES — a lump sum towards the cost of the funeral.

An unemployment allowance is also payable to insured persons who lose employment on closure, retrenchment or permanent invalidity.

THE MACHINERY. The Employees' State Insurance Corporation, established under section 3, is a body corporate with representatives of the Central and State Governments, employers, employees, the medical profession and Parliament, and a Director General as its chief executive. A Standing Committee acts as its executive body and a Medical Benefit Council advises on medical matters. Questions relating to disablement are determined by a MEDICAL BOARD under section 54A, with an appeal to a Medical Appeal Tribunal and thence to the Employees' Insurance Court, which is the forum constituted under section 74 to decide disputes and claims under the Act. The Act also bars a person from receiving compensation under the employees' compensation legislation for the same injury, so that the two systems do not overlap.

Key facts

• The Employees' State Insurance Act, 1948 is a social-INSURANCE statute: contributions are pooled and the benefit follows the contingency and the wage, not the individual's accumulation.
• Section 1(4) applies it to non-seasonal factories, and section 1(5) allows extension to shops, hotels, cinemas, transport undertakings, newspapers and educational and medical institutions.
• The threshold of ten employees comes from the definition of "factory"; the 2010 amendment removed the earlier distinction between premises using power, where it was ten, and premises not using power, where it was twenty.
• Coverage is also limited by a wage ceiling — ₹ 15,000 a month when this paper was set, raised to ₹ 21,000 from the beginning of 2017.
• Medical benefit under section 56 is full medical care in kind for the insured person AND his family, delivered through the scheme's own dispensaries and hospitals.
• Sickness benefit is cash during certified illness, payable for up to 91 days in any two consecutive benefit periods, with extended sickness benefit for specified long-term diseases.
• Maternity benefit is a cash payment for confinement, miscarriage or sickness arising out of pregnancy, and its duration was raised from twelve weeks to twenty-six.
• Dependants' benefit is a MONTHLY payment to the widow, children and other dependants where death results from an employment injury.
• Permanent disablement benefit is likewise a monthly payment for life, proportioned to the loss of earning capacity, and temporary disablement benefit is paid for as long as the disablement lasts.
• Questions relating to disablement are determined by a Medical Board under section 54A, with appeal to a Medical Appeal Tribunal and then to the Employees' Insurance Court under section 74.

Common traps

• Assuming a four-statement list must contain a falsehood. Here all four statements are correct, and the all-inclusive option is the answer.
• Rejecting the word "monthly". Dependants' benefit and permanent disablement benefit are both periodical monthly payments, not lump sums.
• Answering the threshold from the pre-2010 law, when premises not using power were covered only at twenty employees.
• Forgetting the wage ceiling. A factory may be covered while a particular employee within it is outside the scheme because his wages exceed the limit.
• Treating medical care as the whole of the sickness provision. Full medical care in kind and a cash sickness benefit are two separate benefits under the same Act.
• Confusing the forums: a Medical Board decides disablement questions, while the Employees' Insurance Court decides disputes and claims.

• practice — not a real PYQ

  Under the Employees' State Insurance Act, 1948, a question relating to the disablement of an insured person is determined in the first instance by which one of the following ?

  • (a)The Employees' Insurance Court
  • (b)A Medical Board
  • (c)The Regional Director of the Corporation
  • (d)The Standing Committee of the Corporation

  Answer(b) A Medical Board — section 54A refers disablement questions to a Medical Board, from whose decision an appeal lies to a Medical Appeal Tribunal and thereafter to the Employees' Insurance Court. The Court under section 74 decides disputes and claims generally, but not the medical question itself at first instance.

• practice — not a real PYQ

  For how many days in any two consecutive benefit periods is ordinary sickness benefit payable to an insured person under the Employees' State Insurance scheme ?

  • (a)60 days
  • (b)91 days
  • (c)120 days
  • (d)180 days

  Answer(b) 91 days — ordinary sickness benefit is limited to 91 days, that is thirteen weeks, in any two consecutive benefit periods. Extended sickness benefit runs for a much longer period but only for the specified long-term diseases.