It depends on the number of employees you have and the type of employees you are engaging in your business. Following table gives you a fair idea of conditions for applicability of both the legislations:

sr. #e.s.i. conditionsw.c. conditions
1.organisation is a non-seasonal organization/factoryany organisation employing persons in menial jobs (other than clerical capacity)
2.the organization employs more than 20employeesany number of such workers employed
3.monthly wage for the employees is not more than rs. 21,000 (w.e.f. 1st jan 2017)minimum monthly wage considered for benefits calculation is rs. 8000
4.applicable to Indian workforce only applicable to workers employed in foreign countries by Indian employers
5.currently not applicable to manipur, sikkim, arunachal pradesh, and mizoramapplies across india

! Has been reduced to 10 by some states and Union Territories

In most cases, if you do not have a group health policy, or your workforce is not eligible for the same, Employee State Insurance might apply. However, you should be aware of the challenges and advantages of ESI.

To know more about the compensation in worker compensation act see How to Calculate a Settlement in a Workman’s Comp Injury?

Case on Workmen Compensation and ESI Applicability

Source Mobile Pvt. Ltd. is an automobile parts manufacturing firm. It employs a total of 50 workers in a different capacity. Out of this 50, 20 are contract workers, 10 are involved only in clerical jobs or sales functions and do not participate in manufacturing or goods delivery.

Source Mobile has to cover these employees in the following manner:


job role# of employeesto be covered under…
sales & finance with salary less than rs. 21,000 p.m.8esi@
sales & finance with salary more than rs. 21,000 p.m.2group health policy
permanent employees involved in the manufacturing process, delivery, loading/unloading of goods, ith monthly wages less than rs. 21,00015esi@
permanent employees involved in the manufacturing process, delivery, loading/unloading of goods, ith monthly wages more than rs. 21,0005group health & personal accident policies
contract workers# involved in manufacturing process, delivery, loading/unloading of goods20workmen compensation insurance

@ Health & disability benefits

# Any level of wage. The employer is liable to pay benefits only as per the maximum salary of Rs. 8000 per month, however, may pay a higher compensation, as suitable.

Therefore, it can be said that any medium size or large firm could be eligible for both ESI and WC. However, the major difference is that ESI is an insurance itself, where the employer only needs to pay the premium along with the employee.

Whereas, the WC is pure liability which can be insured under workmen compensation insurance, for which premium is payable by the employer only.

Additionally, the benefits under ESI include healthcare and maternity benefits, which are not part of Workmen Compensation. Workmen compensation only takes care of the income lost due to disability and injury at the workplace, but ESI will take care of health and hospitalization for even unrelated illnesses.

For better clarity see “What does workman’s compensation cover?

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