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Setting Up of Business, Industrial and Labour Laws · The Code on Social Security, 2020

Employees' State Insurance and Its Benefits under the Social Security Code

Updated 11 October 2026 · Fact-checked

Employees' State Insurance is a social insurance scheme under the Code on Social Security, 2020. The Corporation gives insured persons medical, sickness, maternity, disablement, dependants' and funeral benefits. To answer a question, state the benefit, the section, the conditions, the bar on overlapping claims, and which forum decides disputes.

Understand Employees' State Insurance and Its Benefits

Employees' State Insurance (ESI) is insurance against events that stop a worker earning: sickness, childbirth, injury at work and death. Employer and employee pay contributions. In return, the Insured Person gets benefits from the Corporation, the body that runs the scheme.

Section 32 lists the benefits. These are sickness benefit, maternity benefit, disablement benefit, dependants' benefit, medical benefit and funeral expenses. The first four are periodical (regular) cash payments. Medical benefit is treatment and attendance. Funeral expenses are a payment to the eldest surviving member of the family, or to the person who actually paid for the funeral if there is no family or the deceased was not living with it.

Section 32 also sets out who decides the details. The Central Government prescribes who qualifies for sickness, maternity, disablement and dependants' benefit, the conditions, and the rate and period. The Corporation may extend medical benefit to the family of an Insured Person, under its regulations. It also makes regulations on how benefits accrue and are paid.

Section 41 gives the general rules. There is no lump-sum commutation of disablement benefit unless regulations allow it. A person who is receiving sickness or temporary disablement benefit must follow medical instructions, must not do anything that delays recovery, must not leave the treatment area without permission, and must allow medical examination.

Section 49 deals with disputes. The Employees' Insurance Court decides questions on who is an employee, wages, contribution rates, who the employer is, and the right to benefit. Civil Courts cannot decide these matters.

This page covers benefits and disputes. Coverage thresholds and contribution rates are not in the sections supplied, so learn them from your ICSI study material.

Key rules to remember

Six benefits (Section 32(1))
Sickness + Maternity + Disablement + Dependants' + Medical + Funeral expenses
The first four are periodical payments. Medical benefit is treatment. Funeral expenses go to the eldest surviving family member, or to the person who actually incurs the cost.
Funeral expenses claim
Claim within 3 months of death, or within the extended period allowed
The amount cannot exceed what the Central Government prescribes. The Corporation or its authorised officer may extend the time.
No double benefit for the same period (Section 41(4))
Not both: sickness + maternity; sickness + temporary disablement; maternity + temporary disablement
If entitled to more than one, the person chooses which to receive (Section 41(5)).
No benefit on days of work, paid leave or strike (Section 41(2))
No sickness or temporary disablement benefit on a day of work, paid leave or holiday, or strike
Applies save as regulations provide. Paid leave or holiday means a day on which wages are received.
Bar on parallel claims (Section 41(7))
Eligible for dependants'/disablement benefit: no Employees' Compensation claim. Eligible for ESI maternity benefit: no employer maternity benefit claim
Employees' Compensation is under Chapter VII. Employer maternity benefit is under Chapter VI.
Employer's deposit before dispute (Section 49(2))
Deposit 50% of the amount claimed by the Corporation
For disputes about contributions or other dues. The Court may, for reasons recorded in writing, waive or reduce it.
Recovery of wrongly received benefit (Section 41(8))
Repay the value of the benefit or the payment
On death, the legal representative repays from the deceased's assets that devolved on him.

How to solve Employees' State Insurance and Its Benefits questions

Use this method for any question on ESI benefits or disputes. Write the answer in provision, facts, conclusion order.

  1. 1Identify the benefit or issue: sickness, maternity, disablement, dependants', medical, funeral expenses, or a dispute.
  2. 2State the provision: Section 32 for entitlement, Section 41 for general conditions, Section 49 for disputes.
  3. 3Check who sets the detail. Qualification, rate and period are prescribed by the Central Government under Section 32(3).
  4. 4Apply the Section 41 conditions: working or paid-leave days, strike, medical compliance, overlapping benefits, parallel claims.
  5. 5For a dispute, name the forum (Employees' Insurance Court), check the 50% deposit for employer disputes, and note the Civil Court bar.
  6. 6Write a clear conclusion that answers the exact question asked.

Quickest way: Three-check shortcut: Benefit, Bar, Forum

When to use it: Use it for short problem-type questions in the last hour of preparation or when time is tight in the hall.

  1. Benefit: name the benefit and cite Section 32.
  2. Bar: check Section 41 for overlap, working days, strike, parallel claim or medical non-compliance.
  3. Forum: if there is a dispute, say Employees' Insurance Court under Section 49, and add the 50% deposit if the employer is the disputing party.
  4. Close with one line of conclusion.

Common mistakes in Employees' State Insurance and Its Benefits

  • Saying a person can receive sickness and maternity benefit together for the same period.

    Students think each benefit is independent.

    Fix: Remember Section 41(4): no two of sickness, maternity and temporary disablement for the same period. The person chooses one.

  • Claiming both ESI disablement or dependants' benefit and Employees' Compensation.

    Both relate to employment injury, so students assume both apply.

    Fix: Under Section 41(7)(a), a person eligible for ESI dependants' or disablement benefit cannot claim Employees' Compensation from the employer.

  • Treating the funeral expenses claim as open-ended.

    The time limit is a proviso and is easily missed.

    Fix: Claim within three months of death or the extended period the Corporation allows. The amount cannot exceed the prescribed cap.

  • Saying the Civil Court can decide whether a person is an employee for ESI.

    Students default to the general civil jurisdiction.

    Fix: Section 49(3) bars Civil Courts. The Employees' Insurance Court decides.

  • Forgetting the 50% deposit in an employer's dispute with the Corporation.

    Section 49(2) is in a separate sub-section from the list of matters.

    Fix: State that the employer must deposit 50% of the amount claimed unless the Court waives or reduces it for recorded reasons.

  • Quoting contribution rates or wage ceilings as if they appear in the sections given.

    Students mix memorised figures with the statutory text.

    Fix: Quote only figures you are sure of from your study material. Otherwise say the rate or limit is as prescribed.

Worked examples

Example 1

Meera, an Insured Person, is receiving sickness benefit for a period. During the same period she also claims maternity benefit. Advise whether she can receive both.

Show the solution
  1. Provision: Section 41(4)(a) says an Insured Person cannot receive both sickness benefit and maternity benefit for the same period.
  2. Facts: Meera claims both for the same period.
  3. Section 41(5) says that where a person is entitled to more than one of these benefits, she chooses which one to receive.
  4. Application: Meera must choose one benefit for that period.

Answer: Meera cannot receive both for the same period. Under Section 41(4)(a) and (5), she may choose either sickness benefit or maternity benefit.

Example 2

Rohan, an employee, dies from an employment injury. His widow claims ESI dependants' benefit and also claims Employees' Compensation from his employer. A dispute arises over her right to the benefit. Where is it decided, and can she claim both?

Show the solution
  1. Provision: Section 32(1)(d) gives dependants' benefit to the dependants of an Insured Person who dies from an employment injury, as entitled under the Chapter.
  2. Section 41(7)(a): a person eligible for dependants' or disablement benefit under this Chapter cannot claim Employees' Compensation from the employer under Chapter VII.
  3. Forum: Section 49(1)(e) says a dispute on the right to any benefit, its amount and duration is decided by the Employees' Insurance Court.
  4. Section 49(3): a Civil Court has no jurisdiction over it.
  5. Application: if she is eligible for the ESI benefit, she cannot also claim Employees' Compensation.

Answer: If she is eligible for ESI dependants' benefit, she cannot claim Employees' Compensation as well (Section 41(7)(a)). A dispute about her right to the benefit is decided by the Employees' Insurance Court, not a Civil Court (Section 49).

Exam tips

  • Learn the six benefits in Section 32(1) as a list. Examiners often ask you to name and describe them.
  • In problem questions, check Section 41 first for overlaps and parallel claims. This is where the marks usually are.
  • Cite the section with every conclusion, and never invent a rate, ceiling or section you are unsure of. Say 'as prescribed' instead.
  • For dispute questions, give the forum, the Civil Court bar and the 50% deposit rule.
  • Prefer the Code on Social Security, 2020 over the old ESI Act in answers, and mention the old Act only to contrast.

Practice questions from The Code on Social Security, 2020

Employees' State Insurance and Its Benefits 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 and Its Benefits: frequently asked questions

What benefits does ESI give under the Code on Social Security, 2020?

Section 32(1) gives sickness, maternity, disablement, dependants', medical and funeral expense benefits. The Corporation may extend medical benefit to the family of an Insured Person, under its regulations.

Can an insured woman get both ESI maternity benefit and maternity benefit from her employer?

No. Under Section 41(7)(b), a woman eligible for maternity benefit under the ESI Chapter cannot claim maternity benefit from her employer under Chapter VI.

How do I claim funeral expenses under ESI?

The payment goes to the eldest surviving member of the family, or to the person who actually bore the cost if there is no family or the deceased was not living with it. The claim must be made within three months of death or within an extended period the Corporation allows.

Which authority decides ESI disputes?

The Employees' Insurance Court decides the matters listed in Section 49(1), such as who is an employee or employer, contribution rates, and the right to benefit. Civil Courts have no jurisdiction over them.

Must an employer pay anything before disputing the Corporation's claim?

Yes. Under Section 49(2), the employer must deposit 50% of the amount the Corporation claims before raising a dispute on contributions or other dues. The Court may waive or reduce it for reasons recorded in writing.