Cash compensation for the unemployed under Employees' State Insurance Act

A benevolent measure has been introduced by the Government to support the unemployed for certain periods.

The Employees’ State Insurance Corporation (“ESIC”) in furtherance of the Employees’ State Insurance Act, 1948 (“Act”), has provided a welfare measure for qualified employees under section 2(9) the Act to seek cash compensation for being rendered unemployed. This compensation can be sought by the employees after the passage of 3 (three) months from the date of being rendered unemployed upto a maximum period of 90 (ninety) days in a lifetime. The employees can seek this compensation in one or more periods provided that the following conditions are met:

  1. the employee should have competed two years of insurable employment,
  2. the employee should have contributed not less than 78 (seventy-eight) days in each of the four consecutive contribution periods immediately preceding to the claim of relief,
  3. the relief does not exceed 25% of the average earning per day,
  4. unemployment should not have been as a result of any punishment for misconduct or superannuation or voluntary retirement,
  5. the identity of the employee would be determined from the ESIC database subject to the employee having a verified Aadhar Number,
  6. The employee furnishes his/ her claim in Form AB-1 provided with the notification duly forwarded by his last employer to his/her allotted Branch Office.

For the purpose of determining the average earning per day, the same shall be equivalent to the total amount of wages received during the four consecutive contribution periods divided by seven hundred and thirty (730) days.

The welfare measure would be deemed to be effective from 1 July 2018 and shall become due for payment after three months. Moreover, the welfare measure is introduced by the ESIC for a term of 2 (two) years on a pilot basis.





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