Labour Ministry Announces Additional EPFO and ESIC Benefits

The Ministry for Labour and Employment has announced additional benefits for workers through the social security schemes run by the ESIC (Employees’ State Insurance Corporation) and the EPFO (Employees’ Provident Fund Organisation). It includes pension for the dependents of persons insured under the Employees’ State Insurance Corporation (ESIC) who died due to the COVID-19 pandemic and a hike in the maximum sum assured under the Employees’ Deposit Linked Insurance Scheme (EDLI), which is run by the EPFO, from Rs 6 lakh to Rs 7 lakh. This move could reduce the anxiety of workers who are subscribers to these social security schemes regarding the welfare of their family members if they succumb to the COVID-19 pandemic. 

The government enhances social security for workers

Under current rules, if a person insured under the ESIC dies or is disabled due to an employment injury, the dependent members get a pension equivalent to 90% of the average daily wages drawn by such workers. Moreover, the dependents include the spouse and widowed mother who get this pension life long. You have dependent children eligible for this pension till the age of 25 and a female child till her marriage. 

Under the new rules, all dependent members of insured persons who have been registered on the ESIC online portal before being diagnosed with COVID-19 and subsequent death due to the pandemic would receive the same benefits on the same scale as received by dependents of insured persons who succumb to employment injury subject to the following two eligibility conditions. 

1. The insured person should have been registered on the Employees’ State Insurance Corporation online portal at least three months before being diagnosed with the COVID-19 disease that resulted in death.
2. The insured person should have been employed for wages and contributions for a minimum of 78 days and should have been paid or payable in respect of the deceased insured person during one year immediately before diagnosing the COVID-19 disease resulting in death. Moreover, the scheme is effective from March 24, 2020, for two years.

If the insured person satisfies the eligibility conditions and has succumbed to the COVID-19 disease, the dependents are entitled to a monthly payment of 90% of the average daily wages of the insured person across their life. 

You have the EDLI (Employees’ Deposit Linked Insurance) scheme where the surviving dependent family members of the subscribers of this scheme can avail the benefits on the death of a member who was still working or active (in harness). Under this scheme, the benefits extended on the death of a worker have no requirements for minimum service for the payment of gratuity. Moreover, the family pension would be paid as per the EPF & MP Act provisions, where the sickness benefits of 70% of the wages for 91 days in a year are paid when the worker falls sick and doesn’t attend office. 

You have a notification issued by the ministry where amendments were made to the scheme:

• The maximum benefit has been increased from Rs 6 lakh to Rs 7 lakh for the family members of the deceased employee.
• The Rs 2.5 lakh minimum assurance benefit to the eligible dependent family members of the deceased employee who was a subscriber for a continuous period of twelve months in one or more establishments before his death, in place of the existing provisions for continuous employment the same establishment for twelve months.

These amendments help casual, and contract labourers lose out on the benefits because of the conditions for continuous one-year employment in a single establishment. The ministry has restored the provision for at least Rs 2.5 lakh compensation retrospectively from February 15, 2020. 

How do these measures support workers’ families during COVID-19?

You have estimates on the number of death claims under these schemes of around 50,000 families per year. It includes an increase in claims after considering the estimated death of 10,000 workers, which may happen due to CO-19. The welfare measures under social security schemes could protect families of the workers who have succumbed to the pandemic from a financial crisis. 

For any clarifications/feedback on the topic, please contact the writer at cleyon.dsouza@cleartax.in