CMA Intermediate · Business Laws and Ethics

Employees State Insurance Act, 1948 for CMA Inter Business Laws

The Employees' State Insurance Act, 1948 sets up a social insurance scheme for employees, run by the Employees' State Insurance Corporation. It is funded by contributions and gives medical, sickness, maternity, disablement and dependants' benefits. To prepare, learn the definitions, the authorities, the Fund, the benefits, dispute rules and penalties in that order, and practise short answers.

What this chapter covers

This chapter covers a social security scheme for employees. The Act creates a Corporation, a Standing Committee and a Medical Benefit Council to run it. Money comes in as contributions and other receipts into the Employees' State Insurance Fund. That money is paid out as benefits to insured persons and, where medical benefit is extended, to their families. The chapter also covers how disputes are settled, and what happens when rules are broken.

The chapter has a fixed structure, so it is easy to learn in a logical flow: who is covered, who runs the scheme, where the money comes from, what is paid out, how disputes are decided, and what the penalties are. Learn each topic as a link in that chain and the details will stick.

It connects to the rest of Paper 5 through other labour and social security laws. You should also know the current position. The Code on Social Security, 2020 repeals the Employees' State Insurance Act, 1948 (section 164 of the Code). It also saves actions taken under the old Act and keeps the old organisations working until the new ones are constituted (sections 153 and 164). Read the Act as per your ICMAI study material and note where the Code now covers the same ground. For example, the Fund is dealt with in section 25 of the Code and its uses in section 26 of the Code.

This chapter is worth the effort because it is factual and rule-based, so careful study turns directly into marks. Section A MCQs can test definitions, the Fund, the authorities and the benefits, where one precise detail decides the answer. Descriptive questions usually ask you to list, explain or distinguish, which rewards structured notes. The Act's logic is simple, so you can master it in less time than many numerical chapters. That leaves you more time for harder parts of the paper.

Employees State Insurance Act, 1948: topics in the order to study them

1ESI Scheme: Objectives, Applicability and Key DefinitionsEvery later topic uses these terms, so learn who is covered and what the key words mean first.
2Employees' State Insurance Corporation and its AuthoritiesOnce you know who is covered, learn who runs the scheme: the Corporation, the Standing Committee and the Medical Benefit Council.
3Contributions and the ESI FundThe authorities manage the Fund, so see how money comes in, where it is kept and what it may be spent on.
4Benefits under the ESI SchemeThis is where the Fund's money goes, and it is the most testable part, so study it once the funding is clear.
5Adjudication of Disputes and AppealsDisputes arise over contributions and benefits, so they make sense only after you know both.
6Penalties, Offences and Transitional ProvisionsFinish with the consequences of breaking the rules and the shift to the Code on Social Security, 2020, which ties the whole chapter together.

How to prepare Employees State Insurance Act, 1948

Plan for several short sessions rather than one long one. The chapter is mostly facts, so repetition and self-testing work better than rereading.

Read the chapter once in the study order above, without memorising, to see how the scheme fits together.
Make a one-page glossary of key definitions in your own words, and check each against your ICMAI study material.
Draw a simple flow: contributions into the Fund, the Fund to benefits, and the authorities that control each step.
Build a list for each benefit type, noting who is eligible and the condition for it, then test yourself from memory.
Note where the Code on Social Security, 2020 replaces the Act: the Fund (section 25 of the Code), its uses (section 26 of the Code), and the repeal and savings (section 164 of the Code).
Practise MCQs, then write two or three short answers in a clear format: heading, the rule in plain words, and the conditions.
Revise with your one-page glossary and flow chart a day before the exam, and recheck the points you got wrong.

Common mistakes in Employees State Insurance Act, 1948

Treating the Act as still fully in force without checking the Code on Social Security, 2020.
Fix: Note the repeal and savings in section 164 of the Code, and read your study material to see how the exam expects you to treat each topic.
Confusing the Corporation, the Standing Committee and the Medical Benefit Council.
Fix: Make a three-row table in your notes with the body, its role and who it reports to, and revise it often.
Mixing up where the Fund's money comes from and what it may be spent on.
Fix: Keep two separate lists: receipts (contributions, grants, donations, gifts) and permitted expenditure.
Writing vague answers on benefits without stating the conditions.
Fix: For every benefit, write the benefit, the person eligible and the condition, and use that three-part format in answers.
Quoting section numbers from memory that may belong to the Act rather than the Code, or the reverse.
Fix: Always state which law you mean. Give a section number only if you are sure of it, and otherwise state the rule in plain words.
Skipping the penalties and transitional topic because it looks minor.
Fix: Spend a fixed slot on it. Transitional rules are short, factual and easy to score on once learned.

Last-day revision: Employees State Insurance Act, 1948

The Act set up the Employees' State Insurance Corporation as a body corporate with perpetual succession, a common seal, and the power to sue and be sued.
The Corporation's powers stand with the Standing Committee and the Medical Benefit Council, each with its own role.
All contributions and other money received for the Corporation go into the Employees' State Insurance Fund, held and administered by the Corporation.
The Corporation may accept grants, donations and gifts from governments, local authorities and individuals or bodies.
Under the Code, the Fund's money is deposited in banks approved by the Central Government and invested as the Central Government prescribes.
Under the Code, the Fund may be spent only on listed purposes, such as benefits, medical treatment, hospitals, audit costs and staff salaries.
Under the Code, user charges from other beneficiaries are treated as contributions.
The Code on Social Security, 2020 repeals the Employees' State Insurance Act, 1948.
Actions taken under the repealed Act are saved and treated as done under the matching provisions of the Code.
Rules, regulations and schemes under the old Act stay in force for one year from the Code's commencement, to the extent they do not conflict with the Code.
Existing bodies like the Corporation and the Standing Committee continue until their Code counterparts are constituted or their term under the old law ends, whichever is earlier.

Employees State Insurance Act, 1948 practice questions

Employees State Insurance Act, 1948 in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Employees State Insurance Act, 1948: frequently asked questions

Is the Employees' State Insurance Act, 1948 still in the CMA Inter syllabus?

Yes, it is a chapter in Paper 5, Business Laws and Ethics. You should also know that the Code on Social Security, 2020 repeals the Act and saves actions taken under it. Follow your ICMAI study material for what is expected.

Where does the ESI Fund get its money?

All contributions and other money received for the Corporation go into the Employees' State Insurance Fund. The Corporation may also accept grants, donations and gifts from governments, local authorities, and individuals or bodies. Under the Code, user charges from other beneficiaries are treated as contributions.

What can the ESI Fund be spent on?

Under the Code, the Fund may be spent only on listed purposes. These include benefits and medical treatment for insured persons, hospitals and dispensaries, allowances to committee members, staff costs, audit costs and the cost of legal proceedings. Other purposes need the Corporation's authorisation with the Central Government's prior approval.

How should I answer ESI questions in the written section?

State the rule in plain words first, then add the conditions and any exceptions. Use short bullet points for lists, and mention whether you are quoting the Act or the Code. This format earns step marks even when you forget a minor detail.

How are MCQs on this chapter usually framed?

They test a single fact, such as who administers the Fund, what the Corporation is, or what is saved on repeal. Read all four options before choosing. There is no negative marking, so always attempt every question.