Employeesâ State Insurance Act, 1948*
[34 OF 1948]1
An Act to provide for certain benefits to employees in case of sickness, maternity and âemployment injuryâ and to make provision for certain other matters in relation thereto.
WHEREAS it is expedient to provide for certain benefits to employees in case of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto:
It is hereby enacted as follows :â
CHAPTER I PRELIMINARY
Short title, extent, commencement and application.
1. (1) This Act may be called the Employeesâ State Insurance Act, 1948.
(2)It extends to 2[the whole of India] 3[***].
(3)It shall come into force on such date or dates as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act and 4[for different States or for different parts thereof].
(4)It shall apply, in the first instance, to all factories (including factories belonging to the 5[Government] other than seasonal factories :
6[Provided that nothing contained in this sub-section shall apply to a factory or establishment belonging to or under the control of the Government whose
*Shall be repealed by the Code on Social Security 2020, with effect from a date yet to be notified.
1. Dated 19-4-1948.
2. Substituted for âall the provinces of Indiaâ by the Adaptation of Laws Order, 1950.
3. Words âexcept the State of Jammu and Kashmirâ omitted by the Central Labour Laws (Extension to Jammu and Kashmir) Act, 1970, w.e.f. 1-9-1971. Earlier the quoted words were substituted by the Employeesâ State Insurance (Amendment) Act, 1951, w.e.f. 6-10-1951.
4. Substituted for âfor different Statesâ by the Employeesâ State Insurance (Amendment) Act, 1951, w.e.f. 6-10-1951.
5. Substituted for âcrownâ by the Adaptation of Laws Order, 1950.
6. Inserted by the Employeesâ State Insurance (Amendment) Act, 1989, w.e.f. 20-10-1989.
employees are otherwise in receipt of benefits substantially similar or superior to the benefits provided under this Act.]
(5) The appropriate Government may, in consultation with the Corporation and 7[where the appropriate Government is a State Government, with the approval of the Central Government], after giving8[one monthâs] notice of its intention of so doing by notification in the Official Gazette, extend the provision of this Act or any of them, to any other establishment or class of establishments, industrial, commercial, agriculture or otherwise:
9[Provided that where the provisions of this Act have been brought into force in any part of a State, the said provisions shall stand extended to any such establishment or class of establishments within that part if the provisions have already been extended to similar establishment or class of establishments in another part of that State.]
10[(6) A factory or an establishment to which this Act applies shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time falls below the limit specified by or under this Act or the manufacturing process therein ceases to be carried on with the aid of power.]
COMMENTS
CASE LAWS
u Applicability to Pathological Laboratories - The Supreme Court held that pathological laboratories were not covered under the ESI Act until the notification issued by the Government of Kerala on September 6, 2007. This notification, made under section 1(5), explicitly included medical institutions such as diagnostic and pathological laboratories employing 20 or more persons. The Court rejected the Corporationâs claim that such establishments were already covered as âshopsâ under a 1976 notification, emphasizing that a subsequent specific notification confirmed their exclusion prior to 2007. - E.S.I. Corporation v. Endocrinology and Immunology Lab AIR 2023 SC (CIVIL) 2296.
u Extension of Act to Medical Institutions - The Supreme Court ruled that pathological laboratories and similar establishments were brought under the ESI Actâs provisions only through a notification issued by the Kerala Government on September 6, 2007, under section 1(5). It rejected the Employeesâ State Insurance Corporationâs claim that such establishments were covered earlier as âshops,â clarifying that the lack of definition for âshopâ in the Act precluded such interpretation. This decision confirmed the Actâs applicability from 2007 onward for these establishments. - E.S.I. Corporation v. Endocrinology and Immunology Lab AIR 2023 SC 3686.
u Applicability to Turf Clubs as Shops - The Supreme Court questioned whether turf clubs fall within the meaning of âshopsâ under section 1(5) of the ESI Act. It held that the term âshop,â undefined in the Act, should be interpreted as understood in common parlance, which does not align with the activities of a racing club. The Court observed that the earlier ruling in Hyderabad Race Club improperly presumed all establishments were covered by the Act. Concluding that turf clubs do not constitute shops, it referred
7. Substituted for âwith the approval of the Central Governmentâ by the Employeesâ State Insurance (Amendment) Act, 1951, w.e.f. 6-10-1951.
8. Substituted for âsix monthsâ by the Employeesâ State Insurance (Amendment) Act, 2010, w.e.f. 1-6-2010.
9. Inserted by the Employeesâ State Insurance (Amendment) Act, 1989, w.e.f. 16-5-1990. 10. Inserted, ibid, w.e.f. 20-10-1989.
the issue to a larger bench for reconsideration. - Bangalore Turf Club Limited v. Regional Director, ESI Corporation AIR 2009 SC 2965.
u Pathological Laboratories Covered Post-2007 Notification - The Supreme Court ruled that pathological laboratories were brought under the ESI Actâs purview by the Kerala Governmentâs notification dated September 6, 2007, issued under section 1(5). It rejected claims that these establishments were previously included as âshops,â noting that the notification explicitly extended the Actâs applicability to medical institutions, including laboratories employing 20 or more persons. This clarified the scope of the Actâs application to such entities only from the date of the notification. E.S.I. Corporation v. Endocrinology and Immunology Lab AIRONLINE 2023 SC 594.
u Definition of Shop and Applicability to Administrative Offices - The Supreme Court held that premises used for supervising and controlling branch sales activities qualify as a âshopâ under section 1(5) of the ESI Act. In this case, the administrative office of a firm engaged in retail sales was deemed a shop despite no direct transactions occurring there, as it facilitated economic activity leading to sales. The Court emphasized that the term âshopâ includes any premises where commercial or economic activity with a nexus to the sale or purchase of goods takes place, broadening its scope under the Act. - Southern Agencies, Rajamundry v. A.P. Employees State Insurance Corporation AIR 2000 SC 3718.
u Applicability of ESI Act to Clubs as Establishments - The Supreme Court upheld that the Hyderabad Race Club qualifies as an âestablishmentâ under the ESI Act. It rejected the clubâs contention that it does not fall within the definition of an establishment or shop as per the Andhra Pradesh Shops and Establishments Act, 1988. However, recognizing the ambiguity of the law before the 1987 Supreme Court decision in Hindu Jea Band, it limited the clubâs liability for ESI contributions to the period post-1986. The Court emphasized that statutory liability applies only after clarity in legal interpretation emerges. - Employeesâ State Insurance Corporation v. Hyderabad Race Club AIR 2004 SC 3972.
u Consultancy Firms as Shops - The Supreme Court held that consultancy firms providing industrial, technical, marketing, and management advice to clients for a price are âshopsâ under section 1(5) of the ESI Act. It ruled that the term âshopâ encompasses premises engaged in commercial or economic activities that involve offering services at a price. The Court emphasized that activities akin to trading or commerce fall within the Actâs scope, even if the services offered involve intellectual expertise rather than tangible goods. - Kirloskar Consultants Ltd. v. Employeesâ State Insurance Corporation AIR 2000 SC 3720.
Definitions.
2. In this Act, unless there is anything repugnant in the subject or context,â
(1) âappropriate Governmentâ means, in respect of establishment under the control of the Central Government or 11[a railway administration] or a major port or a mine or oilfield, the Central Government, and in all other cases, the 12[State] Government;
(2) 13[***]
11. Substituted for âa federal railwayâ by the Adaptation of Laws Order 1950.
12. Substituted for âProvincialâ, ibid
13. Omitted by the Employeesâ State Insurance (Amendment) Act, 1989, w.e.f. 1-2-1991. Earlier, clause (2) was substituted by the Employeesâ State Insurance (Amendment) Act, 1951, w.e.f. 6-10-1951 and later on amended by the Employeesâ State Insurance (Amendment) Act, 1984, w.e.f. 27-1-1985.
(3) âconfinementâ means labour resulting in the issue of a living child, or labour after twenty six weeks of pregnancy resulting in the issue of a child whether alive or dead;
(4) âcontributionâ means the sum of money payable to the Corporation by the principal employer in respect of an employee and includes any amount payable by or on behalf of the employee in accordance with the provisions of this Act;
(5) 14[***]
(6) âCorporationâ means the Employees State Insurance Corporation set up under this Act;
15[(6A) âdependantâ means any of the following relatives of a deceased insured person, namely :â
16[(i) a widow, a legitimate or adopted son who has not attained the age of twenty-five years, an unmarried legitimate or adopted daughter;]
17[(ia) a widowed mother;]
(ii) if wholly dependent on the earnings of the insured person at the time of his death, a legitimate or adopted son or daughter who has attained the age of 18[twenty-five] years and is infirm;
(iii) if wholly or in part dependent on the earnings of the insured person at the time of his death,â
(a) a parent other than a widowed mother,
(b) a minor illegitimate son, an unmarried illegitimate daughter or a daughter legitimate or adopted or illegitimate if married and a minor or if widowed and a minor,
(c) a minor brother or an unmarried sister or a widowed sister if a minor,
(d) a widowed daughter-in-law,
(e) a minor child of a pre-deceased son,
(f) a minor child of a pre-deceased daughter where no parent of the child is alive, or
14. Omitted by the Employeesâ State Insurance (Amendment) Act, 1989, w.e.f. 1-2-1991. Earlier, clause (5) was substituted by the Employeesâ State Insurance (Amendment) Act, 1951, w.e.f. 6-10-1951 and later on amended by the Employeesâ State Insurance (Amendment) Act, 1984, w.e.f. 27-1-1985.
15. Inserted by the Employeesâ State Insurance (Amendment) Act, 1966, w.e.f. 28-1-1968.
16. Substituted by the Employeesâ State Insurance (Amendment) Act, 2010, w.e.f. 1-6-2010. Prior to its substitution, sub-clause (i), as amended by the Employeesâ State Insurance (Amendment) Act, 1989, w.e.f. 20-10-1989, read as under:
â(i) a widow, a minor legitimate or adopted son, an unmarried legitimate or adopted daughter;â
17. Inserted by the Employeesâ State Insurance (Amendment) Act, 1989, w.e.f. 20-10-1989.
18. Substituted for âeighteenâ by the Employeesâ State Insurance (Amendment) Act, 2010, w.e.f. 1-6-2010.
(g) a paternal grand-parent if no parent of the insured person is alive;]
(7) âduly appointedâ means appointed in accordance with the provisions of this Act or with the rules or regulations made thereunder;
19[(8) âemployment injuryâ means a personal injury to an employee caused by accident or an occupational disease arising out of and in the course of his employment, being an insurable employment, whether the accident occurs or the occupational disease is contracted within or outside the territorial limits of India;]
(9) âemployeeâ means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies andâ
(i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or
(ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or
(iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service,
20[and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment] 21[or any person engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), 22[and includes such person engaged as apprentice whose training period is extended to any length of time] but does not include]â
(a) any member of 23[the Indian] naval, military or air force; or
19. Substituted by the Employeesâ State Insurance (Amendment) Act, 1966, w.e.f. 28-1-1968.
20. Substituted for âbut does not includeââ by the Employeesâ State Insurance (Amendment) Act, 1966, w.e.f. 28-1-1968.
21. Substituted for â; but does not includeâ by the Employeesâ State Insurance (Amendment) Act, 1989, w.e.f. 20-10-1989.
22. Substituted for âor under the standing orders of the establishment;â by the Employeesâ State Insurance (Amendment) Act, 2010, w.e.f. 1-6-2010.
23. Substituted for âHis Majestyâsâ by the Adaptation of Laws Order, 1950.
24[(b) any person so employed whose wages (excluding remuneration for overtime work) exceed 25[such wages as may be prescribed* by the Central Government]:
Provided that an employee whose wages (excluding remuneration for overtime work) exceed 25[such wages as may be prescribed by the Central Government] at any time after (and not before) the beginning of the contribution period, shall continue to be an employee until the end of that period;]
(10) âexempted employeeâ means an employee who is not liable under this Act to pay the employeesâ contribution.
26[(11) âfamilyâ means all or any of the following relatives of an insured person, namely:â
(i) a spouse;
(ii) a minor legitimate or adopted child dependent upon the insured person;
(iii) a child who is wholly dependent on the earnings of the insured person and who isâ
(a) receiving education, till he or she attains the age of twentyone years,
(b) an unmarried daughter;
(iv) a child who is infirm by reason of any physical or mental abnormality or injury and is wholly dependent on the earnings of the insured person, so long as the infirmity continues;
27[(v) dependant parents, whose income from all sources does not exceed such income as may be prescribed by the Central Government;
(vi) in case the insured person is unmarried and his or her parents are not alive, a minor brother or sister wholly dependant upon the earnings of the insured person;]]
24. Substituted by the Employeesâ State Insurance (Amendment) Act, 1966, w.e.f. 28-1-1968.
25. Substituted for âone thousand and six hundred rupees a monthâ by the Employeesâ State Insurance (Amendment) Act, 1989, w.e.f. 1-2-1991. Earlier these words were substituted by the Employeesâ State Insurance (Amendment) Act, 1984, w.e.f. 27-1-1985 and amended by the Employeesâ State Insurance (Amendment) Act, 1975, w.e.f. 30-11-1975.
*Notified Wage Ceiling : Wages (excluding remuneration for overtime) do not exceed Rs. 3000 p.m.
26. Substituted by the Employeesâ State Insurance (Amendment) Act, 1989, w.e.f. 20-10-1989. Earlier existing clause (11) was amended by the Employeesâ State Insurance (Amendment) Act, 1966, w.e.f. 17-6-1967.
27. Clauses (v) and (vi) substituted for clause (v) by the Employeesâ State Insurance (Amendment) Act, 2010, w.e.f. 1-6-2010. Prior to its substitution, sub-clause (v) read as under : â(v) Dependant parents;â
EMPLOYEES' STATE INSURANCE ACT 1948 WITH RULES â BARE ACT WITH SECTION NOTES
AUTHOR : Taxmann's Editorial Board
PUBLISHER : Taxmann
DATE OF PUBLICATION : December 2025
EDITION : 2026 Edition
ISBN NO : 9789371261784
NO. OF PAGES : 264
BINDING TYPE : Paperback
Rs. 345
DESCRIPTION
Employees' State Insurance (ESI) Act 1948 with Rules [Bare Act with Section Notes] by Taxmann oďŹers a concise, updated, and authoritative reference to the Act & Rules. This Edition provides the full amended statutory text, allied rules, and detailed section-wise notes, combining clear legal provisions with practical interpretation and key judicial insightsâmaking it a vital resource for anyone dealing with social security or labour law in India. This book is intended for the following audience:
⢠Legal Practitioners, Advocates & Judges
⢠HR Managers, Compliance OďŹcers & Employers
⢠Government OďŹcials & ESI Corporation Personnel
⢠Academicians, Researchers & Students
⢠Trade Unions & Employee Welfare Representatives
The Present Publication is the 2026 Edition, covering the amended and updated text of the Employees' State Insurance Act [Act No. 34 of 1948] and Rules, with the following noteworthy features:
⢠[Comprehensive Coverage] Includes the complete, amended text of the ESI Act
⢠[Section-wise Notes] Clear explanations and judicial precedents for each provision
⢠[Allied Rules & Regulations] Covers Central Rules 1950, Provident Fund Rules 1995, General Regulations 1950, and Medical Facilities Scheme 2010
⢠[Pre-amendment References] Footnotes detail pre-amendment provisions for historical clarity
⢠[Judicial Commentary] Summaries of Supreme Court and High Court decisions
⢠[User-friendly Structure] Logical arrangement, statutory forms, schedules, and subject index for easy navigation
