The Six ESI Benefits

The proviso to clause (f) does two things and both get asked. The amount shall not exceed such amount as may be prescribed by the Central Government. And the claim shall be made within three months of the death, or within such extended period as the Corporation or an authorised officer or authority may allow.

Notice the drafting of clause (f). The primary recipient is the eldest surviving member of the family, not the person who paid. Only where there is no family, or the deceased was not living with it, does the money follow the person who actually spent it.

Section 32(2), the family. The Corporation may, subject to conditions laid down in the regulations, extend the medical benefits to the family of an Insured Person. Note that only the medical benefit is extendable in this way; the cash benefits are not.

Section 32(3), delegation. The qualification of a person to claim sickness, maternity, disablement and dependants' benefit, the conditions subject to which it may be given, and the rate and period of it, are prescribed by the Central Government.

Section 32(4). The Corporation may make regulations for any matter relating or incidental to the accrual and payment of benefits.

Section 33: welfare and rehabilitation

The Corporation may, in addition to the benefits specified in the Chapter, promote measures for the improvement of the health and welfare of Insured Persons and for the rehabilitation and re-employment of Insured Persons who have been disabled or injured, and may incur expenditure on those measures from the Employees' State Insurance Fund within limits prescribed by the Central Government.

The words "in addition to" matter. Section 33 is not a seventh benefit an individual can claim; it is a power to spend on collective measures, and the money for it is expressly authorised by clause (k) of section 26.

Section 38: dependants' benefit

Section 38(1). If an Insured Person dies as a result of an employment injury sustained as an employee under the Chapter, whether or not he was receiving temporary disablement payments for that injury, dependants' benefit is payable to his dependants specified in sub-clause (a) and sub-clause (b) of clause (24) of section 2, at such rates, for such periods and subject to such conditions as the Central Government prescribes.

Section 38(2). If he dies without leaving those dependants, the benefit is paid to the other dependants of the deceased, on the same delegated terms.

So the Code creates a two tier scheme. The first tier is the dependants in section 2(24)(a) and (b). The second tier, reached only if the first is empty, is the remaining dependants in that definition.

Section 38(3), review. A decision awarding dependants' benefit may be reviewed at any time by the Corporation if it is satisfied by fresh evidence that the decision was given in consequence of non-disclosure or misrepresentation of a material fact by the claimant or anyone else, whether or not fraudulent; or that the decision is no longer in accordance with the Chapter because of a birth, a death, a marriage, a re-marriage, the ceasing of an infirmity, or a claimant attaining the age of twenty-five years.

Section 38(4). On such a review the Corporation may direct that the benefit be continued, increased, reduced or discontinued.

The list in section 38(3) is worth learning because it explains what a dependants' pension really is: a payment tied to a continuing state of dependence, which the Corporation may revisit when that state changes. Note especially that non-disclosure need not be fraudulent.

Section 39: medical benefit

Section 39(1) and (2). An Insured Person, or a member of his family where medical benefit is extended to the family, whose condition requires medical treatment and attendance, is entitled to receive medical benefit. It may be given as out-patient treatment in a hospital, dispensary, clinic or other institution, by visits to the home of the Insured Person, or as in-patient treatment.

Section 39(3) leaves qualification, conditions, scale and period to the Central Government, and then adds four provisos which are the examinable part:

1. a person in respect of whom contribution ceases to be payable may be allowed medical benefit for such period and of such nature as the regulations provide;
2. an Insured Person who has attained the age of superannuation, a person who retires under a Voluntary Retirement Scheme or takes premature retirement, and his spouse, are eligible for medical benefits subject to payment of contribution and other conditions specified in the regulations;
3. an Insured Person who ceases to be in insurable employment because of permanent disablement caused by employment injury shall continue to receive medical benefits, subject to payment of contribution and other prescribed conditions;
4. the conditions for granting medical benefits during employment injury are as specified in the regulations.

The second and third provisos are the socially important ones. Medical cover does not simply stop at retirement, and it does not stop for the worker whose employment ended because of the injury the scheme exists to cover.

Section 39(4) and (5), medical education. The Corporation may establish medical education institutions, including colleges, dental colleges, nursing colleges and training institutes for its own officers and staff, to improve the quality of their services. Those institutions shall require students to furnish a bond to serve the Corporation for such time and in such manner as the regulations specify. They may be run by the Corporation itself, or at its request by the Central Government, a State Government, a public sector undertaking of either, or any other body notified by the Central Government. The Explanation defines "other body" as any organisation of persons the Central Government considers capable of running such colleges and institutes.

Section 39(6), surveys. The Corporation may carry out occupational and epidemiological surveys and studies to assess the health and working conditions of Insured Persons, as a preventive and curative measure.

Section 40: who actually provides the treatment

Section 40(1). The State Government shall provide for Insured Persons in the State, and their families where the benefit is extended to them, reasonable medical, surgical and obstetric treatment. The proviso lets the State Government, with the Corporation's approval, arrange treatment at the clinics of medical practitioners on agreed terms.

Section 40(2), sharing the excess. Where the incidence of sickness benefit payment in a State exceeds the all-India average, the excess is shared between the Corporation and the State Government in such proportion as they agree. The proviso lets the Corporation waive the whole or part of the State's share.

Section 40(3) and (4), agreement and arbitration. The Corporation may agree with a State Government about the nature and scale of treatment, including buildings, equipment, medicines and staff, and the sharing of cost. In default of agreement, the nature and extent of treatment and the sharing proportions are determined by an arbitrator appointed by the Central Government in consultation with the State Government.

Section 40(5) and (6), a State organisation. A State Government may, with the previous approval of the Central Government, establish an organisation, by whatever name called, to provide certain benefits to employees in cases of sickness, maternity and employment injury. The proviso provides that a reference to the State Government in this Chapter includes a reference to that organisation once established. Its structure, functions, powers and activities are prescribed by the Central Government.

Section 40(7). The Corporation may itself establish and maintain hospitals, dispensaries and other medical and surgical services in a State.

Section 41: the general rules about benefits

This section is the one that governs all six, and it contains the rules examiners like because each is a clean proposition.

No commutation, section 41(1). Save as the regulations provide, no person is entitled to commute for a lump sum any disablement benefit.

No benefit for a day you worked, section 41(2). Save as the regulations provide, no person is entitled to sickness benefit or to disablement benefit for temporary disablement on any day on which he works, or remains on leave or on a holiday in respect of which he receives wages, or on any day on which he remains on strike.

Duties of a person on benefit, section 41(3). A person receiving sickness benefit or disablement benefit other than for permanent disablement:

• (a) shall remain under medical treatment at a dispensary, hospital, clinic or other institution provided under the Chapter, and shall carry out the instructions of the medical officer or attendant in charge;
• (b) shall not, while under treatment, do anything which might retard or prejudice his chances of recovery;
• (c) shall not leave the area in which treatment is being given, without permission;
• (d) shall allow himself to be examined by a duly appointed medical officer or other authorised person.

No doubling up, section 41(4) and (5). An Insured Person shall not receive for the same period both sickness benefit and maternity benefit, or both sickness benefit and temporary disablement benefit, or both maternity benefit and temporary disablement benefit. Where he is entitled to more than one, he chooses which to receive.

Death during a benefit period, section 41(6). If a person dies during a period for which he is entitled to a cash benefit, the amount up to and including the day of death is paid to the person he nominated in writing in the form specified in the regulations, or, if there is no nomination, to his heir or legal representative.

Section 41(7), the bar between Chapters. Learn this one.

• (a) A person eligible for dependants' benefit or disablement benefit under this Chapter shall not be entitled to claim Employees' Compensation from his employer under Chapter VII.
• (b) A woman employee eligible for maternity benefit under this Chapter shall not be entitled to claim maternity benefit from her employer under Chapter VI.

This is the provision that keeps the Code's benefits from overlapping, and it explains something a student will otherwise find puzzling: why the First Schedule applies Chapter VII only to those to whom Chapter IV does not apply. Where the insurance scheme covers a worker, the insurance scheme pays, and the employer is not separately liable to him.

Wrongly received benefits, section 41(8) to (10). A person who receives a benefit or payment he is not lawfully entitled to is liable to repay the Corporation its value or amount, and on his death his legal representative is liable to repay from the assets that devolved on him. The value of a non-cash benefit is determined by the authority specified in the regulations, whose decision is final. The amount is recoverable in the manner specified in sections 129 to 132.

A worked example

Nitin is an Insured Person. He falls ill with an infection unconnected with work, is off for three weeks, and during that time takes two days of paid leave. In the same month his wife has a baby. Later that year he is permanently disabled in an accident at the factory, and eighteen months after that he dies of the injury, leaving a widow and a son aged twenty-four.

Sickness benefit for the three weeks? Yes, for the days he was neither working nor on paid leave. Section 41(2) bars sickness benefit on a day he works, or remains on leave or a holiday in respect of which he receives wages, so the two paid leave days are excluded.

Maternity benefit for his wife's confinement? No. Section 32(1)(b) gives maternity benefit to an Insured Person being a woman. His wife may receive medical benefit if the Corporation has extended it to the family under section 32(2), but the cash maternity benefit is not his to claim.

Disablement benefit after the factory accident? Yes, under section 32(1)(c), the injury being an employment injury sustained as an employee.

Can he take the disablement benefit as a lump sum? Not as of right. Section 41(1) bars commutation of disablement benefit save as the regulations provide.

He stops being employed because of the disablement. Does his medical cover end? No. The third proviso to section 39(3) provides that an Insured Person who ceases to be in insurable employment on account of permanent disablement caused by employment injury shall continue to receive medical benefits, subject to payment of contribution and prescribed conditions.

Can he also sue the employer for compensation under Chapter VII? No. Section 41(7)(a) bars a person eligible for disablement benefit under Chapter IV from claiming Employees' Compensation from his employer under Chapter VII.

On his death, who gets dependants' benefit? His dependants specified in section 2(24)(a) and (b), under section 38(1), at prescribed rates.

His son turns twenty-five. What happens? The Corporation may review the award under section 38(3), attainment of the age of twenty-five by a claimant being one of the listed grounds, and under section 38(4) may direct that the benefit be continued, increased, reduced or discontinued.

Who receives funeral expenses? The eldest surviving member of his family under section 32(1)(f), and the claim must be made within three months of the death unless extended.

What this does NOT mean

Medical benefit does not automatically extend to the family. Section 32(2) makes it something the Corporation may do, subject to conditions in the regulations. The cash benefits are not extendable to the family in this way at all.

Section 33 is not a seventh benefit. It is a power to spend on collective health, welfare, rehabilitation and re-employment measures.

Funeral expenses do not automatically go to whoever paid. They go to the eldest surviving member of the family, and only where there is no family, or the deceased was not living with it, to the person who actually incurred the expenditure.

A review under section 38(3) does not require fraud. The sub-section says non-disclosure or misrepresentation "whether the non-disclosure or misrepresentation was or was not fraudulent", and a change of circumstances is an independent ground.

Section 41(7) is not a bar on all other remedies. It bars a claim under Chapter VII against the employer where the worker is eligible for dependants' or disablement benefit, and a claim under Chapter VI for maternity benefit. It says nothing about a common law action for negligence against a third party.

Limits and criticism

The amounts are entirely outside the Code. Section 32(3) delegates qualification, conditions, rate and period for four of the six benefits, and the proviso to section 32(1)(f) delegates the ceiling on funeral expenses.

Two provisos to section 39(3) make continued medical cover conditional on paying a contribution, including for the person who was permanently disabled by an employment injury.

The delivery of medical benefit depends on a State Government. Section 40(1) places the duty on the State, with the cost split by agreement and, failing agreement, by an arbitrator. Quality of treatment therefore varies with the State.

Section 41(2) bars benefit on a strike day even where the worker is genuinely sick, unless the regulations provide otherwise.

Quick revision

• Six benefits, section 32(1): sickness (a), maternity (b, to a woman Insured Person), disablement (c, employment injury), dependants' (d, death from employment injury), medical (e), funeral expenses (f, to the eldest surviving member of the family, capped as prescribed, claim within three months).
• Section 32(2): only medical benefit may be extended to the family. Section 32(3): qualification, conditions, rate and period are prescribed.
• Section 33: welfare, rehabilitation and re-employment measures, in addition to the benefits.
• Section 38: dependants' benefit to those in section 2(24)(a) and (b) first, other dependants only if none; reviewable at any time on fresh evidence of non-disclosure or misrepresentation, fraudulent or not, or on birth, death, marriage, re-marriage, ceasing of infirmity or a claimant reaching twenty-five; may be continued, increased, reduced or discontinued.
• Section 39: medical benefit as out-patient, home visits or in-patient; four provisos, of which the key two continue cover for the superannuated or retired employee and his spouse and for one who left employment through permanent disablement from employment injury; the Corporation may run medical colleges with a service bond.
• Section 40: the State Government shall provide treatment; excess sickness benefit over the all-India average is shared; disputes go to an arbitrator appointed by the Central Government.
• Section 41: no commutation of disablement benefit; no benefit on a day worked, on paid leave or holiday, or on strike; four duties of a person on benefit; no doubling up of sickness with maternity, sickness with temporary disablement, or maternity with temporary disablement, and the worker chooses; cash benefit to the day of death goes to the nominee or the heir; section 41(7) bars a Chapter VII claim for one eligible for dependants' or disablement benefit and a Chapter VI claim for one eligible for maternity benefit here; benefits wrongly received are repayable, recoverable under sections 129 to 132.

Test yourself

1. Name the six benefits under section 32 and say which of them is not a cash payment. Sickness benefit, maternity benefit, disablement benefit, dependants' benefit, medical benefit and funeral expenses. Medical benefit is a service, that is treatment and attendance, not a payment.

2. Who is entitled to funeral expenses, and within what time must the claim be made? The eldest surviving member of the family of the deceased Insured Person, or, where he had no family or was not living with it at the time of death, the person who actually incurs the expenditure. The claim must be made within three months of the death, or within such extended period as the Corporation or an authorised officer or authority allows.

3. An Insured Person is sick on a day he is on strike. Is sickness benefit payable? No, save as the regulations may provide. Section 41(2) bars sickness benefit on any day on which he remains on strike.

4. A worker is eligible for disablement benefit under Chapter IV. Can he also claim employees' compensation from his employer? No. Section 41(7)(a) provides that a person eligible for dependants' benefit or disablement benefit under Chapter IV is not entitled to claim Employees' Compensation from his employer under Chapter VII.

5. On what grounds may an award of dependants' benefit be reviewed? Under section 38(3), on fresh evidence that the decision was given in consequence of non-disclosure or misrepresentation of a material fact, whether or not fraudulent; or that the decision is no longer in accordance with the Chapter because of a birth, a death, a marriage, a re-marriage, the ceasing of an infirmity, or a claimant attaining twenty-five years of age.

6. A worker loses his job because of permanent disablement caused by an employment injury. Does his medical benefit stop? No. The third proviso to section 39(3) provides that he shall continue to receive medical benefits, subject to payment of contribution and such other conditions as may be prescribed.

7. An Insured Person is entitled to both sickness benefit and temporary disablement benefit for the same period. What happens? He cannot receive both: section 41(4)(b). Under section 41(5) he is entitled to choose which benefit he will receive.