The ESI scheme is implemented area-wise in a phased manner. New geographical areas are notified for implementation, from time to time, by the State/Central Government, taking into consideration the density of coverable industrial population within a given geographical area called a ‘Centre’.

The Act, in the first instance, applies to all non-seasonal factories employing ten or more persons, and, to establishments employing 20 or more employees for wages and falling within the scope of animplemented geographical area.  As of now, employees of establishments, that fall within the ambit of coverage, and earning wages not exceeding Rs. 15,000/- per month are covered under the ESI Scheme. This revised wage ceiling for purpose of coverage came into effect from 1.05.2010.

A factory, or establishment once covered under the ESI Act, remains covered even if the number of employees at any later stage falls short of the stipulated number of 10/20 employees or the manufacturing process therein ceases to be carried on with the aid of power.

The Act, however, does not apply to workers engaged in mining operations, railway running sheds and seasonal factories as defined under the Act.

The provisions of the ESI Act, have also been extended gradually to the following classes of establishments under Section 1(5) of the Act, by most of the State Governments :

a)Shops’
b)Hotels & Restaurants;
c)Road Motor Transport Undertakings;
d)Cinemas, including preview theatres;
e)Newspaper establishments

Under Section 1(5) of the ESI Act, the Appropriate Govt. is empowered to extend the Scheme to any other establishment or class of establishments, industrial, commercial, agricultural or otherwise.  Thus, a State Government may extend the provisions of the Actin consultation with the ESI Corporation, and with the approval of the Central Government, after giving one months notice of its intention in the official gazette; provided that where the provisions of this Act have been brought into force in any part of 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 establishments or class of establishments in another part of that State.
 The provisions of the ESI Act, however, are not applicable to factories or establishments, run by the State Governments / Central Government, whose employees are, otherwise, in receipt of social security benefits substantially similar or superior to the benefits provided under the ESI Act.   The case of each such Public Sector Undertaking is decided on merit by comparing the quality and quantity of benefits being provided to the employees by the concerned managements, with those admissible under the ESI Act.