Employee Welfare and Benefit Schemes

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The meaning of the term social security variesfrom country to country. In socialist countries,the nations goal is to provide complete citizensecurity. In capitalist countries, a measure of

protection is afforded to a needy in consistencewith resources of the state.


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According to the Social Security adopted bythe ILO in 1952, following are the ninecomponents of social security.

o Medical care

o Sickness benefito Unemployment benefito Old-age benefito Employment injury benefit

o Family benefit


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o Maternity benefito Invalidity benefit

o Survivors benefit


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There are various laws and acts that have beenpassed since independence to govern thefunctioning of a company. These provide socialsecurity to the employees of companies. The

following are some of the important laws andacts.

The Employees State Insurance Act, 1948

The Employees Provident Fund Act, 1952 The Workmens Compensation Act, 1923


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The Maternity Benefit Act, 1961 The Industrial Disputes Act, 1947


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The Employees state insurance Act was passedin1948 to make various social welfare facilitiesavailable to the employees of a companythrough one agency. The Employee State

Insurance Scheme (ESIS) is a compulsory andcausative scheme for the well-being of theemployees. According to this Act, a companyshould provide medical benefits, such asmedical attendance, treatment, drugs andinjections to the insured employees havingsalary less than rs. 6500. the scheme covers


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their family members too. This Act isapplicable only to the companies that employ20 employees or more.

The following are the benefits provided by thisAct;

: are given to employees fora maximum period of 91 days. It is half of the

daily average wage of the employee. Forgetting the sickness benefits the employee


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Should be under medical treatment at ahospital maintained by the company. Extendedsickness benefit is also given to the insuredemployees who suffer from long term diseases.

In this case, the employee can get sicknessbenefit for a maximum period of 309 days andthe payment given to the employee is 63% ofthe wages. Sickness benefit is useful to anemployee who is unable to work due to illness.The employee also gets medical treatment andfinancial support.


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: is a form of free medical

treatment that an employee claims in case ofillness, maternity and accident. The employee

get these benefit at an ESI hospital ordispensary of the doctor who is treating theworker. The family of the insured worker alsoavails this benefit. Workers suffering from the

critical diseases, such as tuberculosis, cancerand mental diseases are provided specialfacilities.


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: is in the form of cashpayment to the insured women forconfinement, miscarriage or illness duringpregnancy. This benefit is calculated at half

of average daily wages. If the insured womendies during the period of confinement, thenominee gets the benefit for the wholeperiod.


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: is given in case anemployee gets permanent disabled. Thebenefit is given when an employee is caughtin an accident with in the factory. The annual

benefits depend on the nature of thedisability. In the case of temporary disabilityfull pay is given to the employee for theperiod of disability. For permanent disabilitythe employee is given cash benefit for life at aa percentage of full rate.


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: is given to the insureddeceased employees dependents. Thebenefit is given if an employee dies in anaccident with in the factory. The family of the

employee is entitled to cash benefit underthis scheme. The widow receives pension forlife.


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: is given in the form of cashup to maximum of Rs. 1000 to the insuredindividual for the funeral. This benefit isgiven to the eldest person or the person who

is actually incurring the expenditure at thetime of funeral.


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The Employees Provident Fund Act, launchedin 1952, provides retirement benefits to theemployee of a company. Retirement benefitsinclude Provident fund, family pension and

deposit-linked insurance. This Act is applicableto companies in India with 20 Employees ormore. It is not applicable to companiesregistered under the Co-operative SocietiesAct,1912 or under any other law related to co-operative societies with less than 50individuals.


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This scheme is applicable to the employeesgetting a salary of Rs. 5000 per month.

The government of India as introduced variousschemes under this Act. These are as follows.

; wasintroduced for individual employees of acompany. Under this scheme, the employees

are provided 50% of the salary as theirpension after retirement or superannuationafter completing 33 years of service.


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; was established by theGovernment in January 1964 in order toprovide financial help to the nominees or thesuccessor member of the family whose salary

does not exceed Rs. 1000 per month.


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; was a scheme introducedunder the payment of Gratuity Act, 1972. it ismeant for factories, mines, oil fields,plantations, railways and other companies.

These act is applicable for employees whoobtain salaries less than or equal to rs. 3500per month.


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was launched for the members of EmployeesProvident Fund and exempted providentFunds on 1 august 1976. according to this

scheme after the expiry of the member of theprovident fund, the individual allowed toobtain the provident fund deposits would begiven an extra payment equal to the averagebalance in the provident fund account of thedeceased person during the last three years.


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This scheme is applicable only when theaverage amount is greater than or equal tors.1000

is a plan that providescoverage for the risk on the lives of a numberof individuals under one contract. However,the insurance on each life is independentfrom the insurance of individuals. This facilityis given to the employees who work with anemployer without evidence of insurability.


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Following are the features of group lifeinsurance.

Insurance is provided to the employeeswithout any evidence of insurability

The insurance contract is signed between theinsurance company and the employer. Thereis no direct interaction of the employee with

the insurance company. It is a yearly insurance plan.

In case of an employees death, the claim


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Received from the insurance company is givento the nominee of the employee.

The premium of the insurance is either paidby the employer or by both the employer andthe employee.


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It was established by the Government in 1923.according to this act , a company needs toprovide compensation to its employees andtheir families on the occurrence of

organizational accident or disease leading tothe death of or any kind of disability to theindividual. The main objective of this act is toensure a commitment on the employers to

offer compensation to the employees againstaccidents that occur during the course of


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Employment. The important features are asfollows;

This act provides social security to theemployees of a company by providing themcompensation against the various risk.

A company is liable to pay the compensationonly if the accident or the injury to the

employee has been caused during the courseof employment.


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This act also provides overtime pay and thevalue of concessions for benefits in the formof food, clothing and accommodation.

The amount of compensation that a companyneeds to pay an employee depends on thetype of injury or disability suffered by theemployee.

The minimum amount of compensation thatmust be paid to an employee on theoccurrence of permanent disability or death is


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Rs. 60,000 and 50,000 respectively. However,the maximum amount of compensation thatmust be paid to an employee on theoccurrence of permanent disability or death is

rs. 2.28 lakh and rs. 2.74 lakh respectively.


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It came into being in1961. this is acompensation given against the loss of salaryto a woman who discontinues work duringpregnancy. Following are the main objectives

of this act. It enables a female employee of a company to

withdraw her services six weeks before herexpected confinement date.

It allows the female employee to discontinueher services after six weeks of confinement.


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It provides free medical treatment to a femaleemployee during her pregnancy.

It provides an expecting female employee thefacility of public funds along with cash

benefits so that she can take good care ofherself and her child.

It disallows the dismissal of a female

employee during her pregnancy period. It allows a female employee to feed her baby

twice a day during working hours.


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It was passed in 1947. This act is related to thetermination and retrenchment of theemployees by a company. It includes sections25-A to 25-S related to employee

termination.amongst these sections ,sections25-c to 25-e are not applicable companiesthat employee less than 50 individuals.sections25-c states that when any permanent

employee who has worked for more than orequal to 1 year is be terminated by the


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Company , the company is liable to provide acompensation equal to the 50% of his/herbasic salary. Section 25-c also states that thecompanies is not responsible to give any

compensation to an employee if he or sherefuses to accept an alternative job equivalentto his or her previous job. A company is alsonot liable to give compensation if he or shedoes not reach the work place at the scheduletime during normal working hours at leastonce a day.


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Employee Welfare and Benefit Schemes

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