The ESI Corporation — Labour Law II Notes

The ESI Corporation

Who actually holds the crores of contribution money, builds the ESI hospitals and signs off the schemes? Not a government department, but a statutory body designed so that the people who pay in — employers and workers — sit on the board that spends it.

What the Corporation is, and what it does

The Employees’ State Insurance Corporation is the statutory body that administers the whole scheme, constituted under Section 5 of the Code. Its defining feature is a tripartite-plus composition — members representing the Central Government, State Governments, employers, employees, the medical profession, and Parliament — so no single interest controls it. A Standing Committee acts as its executive between meetings, and the Medical Benefit Council advises on medical matters.

Its powers and duties:

to administer the ESI scheme and pay the benefits;
to collect and hold contributions in the ESI Fund (Section 25) and to invest the fund and hold property;
to build and run hospitals and dispensaries and promote measures for the health and welfare of insured persons (Section 33);
to appoint its principal officers and staff (Section 24); and
to frame regulations for the working of the scheme.

Section 5, Code on Social Security 2020 (in brief): the Central Government “shall … constitute … the Employees’ State Insurance Corporation” consisting of members representing the Government, employers, employees, the medical profession and Parliament.

In Simple Terms: The Corporation is the management company of ESI — it collects the money, keeps the fund, runs the hospitals and pays the claims, with a board on which employers and workers are represented and a Standing Committee doing the day-to-day work.

flowchart TD
    ROOT["ESI Corporation (s.5)"]:::root
    ROOT --> COMP["Composition: Govt, States, employers, employees, medical profession, Parliament"]:::leaf
    ROOT --> SC["Standing Committee (executive)"]:::leaf
    ROOT --> MBC["Medical Benefit Council (advisory)"]:::leaf
    ROOT --> FUNC["Functions: administer scheme, hold ESI Fund (s.25), run hospitals (s.33), frame regulations"]:::leaf
    classDef root fill:#FFF8DC,stroke:#000,stroke-width:1px,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

Case Laws

ESI Corporation v Hotel Kalpaka International (1993) — the Corporation’s power to determine and recover contributions is to be exercised consistently with the beneficial object of the scheme.

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