ESI Corporation

The Employees’ State Insurance Act, 1948 is beneficial and social legislation. Its main aim is to provide for compensation to certain employees and their dependents for employment injuries. The ESI Corporation under this Act plays a very important role in this regard. It is responsible for regulating employers’ contribution, paying compensation, ensuring compliances, etc.

ESI Corporation

According to Section 2(6), the term “Corporation” under the Act refers to the Employees’ State Insurance Corporation.

Section 3 of the Act further states that the Central Government has to establish the Corporation as per given provisions.

The Corporation is basically a body corporate that has features like perpetual succession. It also has a common seal like other commercial body corporates in India. Hence, the Corporation functions as a regular body corporate.

The main function of this Corporation is to implement provisions of the ESI Act and carry out its duties.

Furthermore, it has to pay compensation to employees, regulate employers, frame rules and budgets for contribution, etc.

In order to achieve these tasks, the Act allows the Corporation to exercise various powers through its members and officers.

Learn Important Definitions under Employees State Insurance Act, 1948 here in detail

Constitution of ESI Corporation

The ESI Corporation is an apex body under the Employees’ State Insurance Act. Thus, many important functionaries and experts play a role in its functioning.

The Corporation is headed by a Chairman and a Vice-Chairman that the Central Government appoints. Apart from these, the Central Government gets to appoint five other persons of its choice.

Each State Government also gets to appoint one representative for itself in the Corporation. Another person that the Central Government appoints collectively represents all Union Territories.

In order to represent the views of employers and employees, the Central Government appoints ten persons. The government generally consults with employers’ organizations for this purpose. Even the medical profession gets representation in the Corporation through two members.

Finally, the Corporation also has a Director General whose post is ex-officio. Three Members of Parliament (2 from Lok Sabha and 1 from Rajya Sabha) also become members.

The Term of Office Members

Members who represent employers, employees and the medical profession, as well as the MPs, have a fixed duration.

Their appointment lasts for four years from the date of notification of their appointment. All other members of the Corporation may not have such a fixed tenure.

Powers of the Corporation

The ESI Corporation has extensive powers to carry out its functions and duties under the Act.

Firstly, Section 17 allows the Corporation to appoint staff members and officers for carrying out its business effectively. It may bestow provident fund, gratuity and other similar benefits on its staff.

Secondly, the Corporation has powers to purchase and sell movable as well as immovable properties. It can even raise loans and invest its money with the Central Government’s sanction.

In order to ensure compliance with provisions of the Act, the Corporation can appoint Social Security Officers. These officers function in their local limits and exercise jurisdiction over factories and establishments therein.

All employers to whom this Act applies have to pay some contribution for the benefit of employees. The Corporation has powers to determine how much this contribution should be.

The Director-General of the Corporation has to sign on every decision it takes. He may appoint some other officer on his behalf to carry out this task.

Duties of the Corporation

The Corporation performs many important duties under this Act. Most of these duties are in the nature of compliances relating to its functioning and decisions.

For example, every year the Corporation has to make a budget of its probable income and expenditure. It has to submit this report to the Central Government for its approval.

Furthermore, it has to maintain accounts of its incomes and expenses in the format that the Central Government prescribes. None other than the Comptroller & Auditor General (CAG) of India audits these accounts every year.

Other compliances of the Corporation include submission of annual reports of its activities to the Central Government. Apart from these, it has to appoint a valuer to value its assets and liabilities every three years.

Solved Example for You

Question: Find the missing word(s) in these following sentences.

(a) Section 3 mandates the __________ to establish the ESI Corporation under this Act.

(b) The __________ is the ex-officio member of the Corporation.

(c) Members of Parliament have a fixed tenure of __________ as members of the Corporation.

(d) The Corporation can appoint __________ at local levels to regulate factories and establishments.

Answers:     (a) Central Government     (b) Director-General     (c) 4 years     (d) Social Security Officers