Unemployment Benefit under ESIC Act.

Have you ever felt the pain of losing a job or the fear of not knowing what will happen next? You don’t need to rush to find a new job anymore. In this Blog we will discuss the unemployment scheme introduced by the ESIC department to provide the financial benefits to the employees covered under ESI.

Schemes Offered by Employees’ State Insurance Corporation (ESIC)

There are two major schemes under the ESIC that offer unemployment benefits: –

  • Rajiv Gandhi Shramik Kalyan Yojana
  • Atal Beemit Vyakti Kalyan Yojana

Rajiv Gandhi Shramik Kalyan Yojana

This scheme provides an unemployment allowance for the employees under ESI scheme who are rendered unemployed involuntarily due to retrenchment/closure of factory etc. after fulfilling certain eligibility conditions.  The scheme of the “Rajiv Gandhi Shramik Kalyan Yojna” came into effect from 1st of April 2005.

Under this Scheme, the eligible workers receive a daily rate of allowance and medical care for self and family during the period of unemployment up to two years.

Eligibility to Receive Unemployment Allowance
  1. The Employee must be unemployed after April 2005.
  2. Employees have to wait a one month after the loss of job to avail this scheme.
  3. The establishment has been covering under the ESI Act, and employee had paid at least 2 years’ worth of ESI contribution.
  4. Employee must file the UA(Un-employment Allowance) claim within 12 months of unemployment.
  5. The UA is available for a maximum of 24 months in an employee’s lifetime, up until the age of 60.
  6. You cannot avail any other cash benefits (apart from medical).
  7. Once you start a new job, your UA will terminate, unless you lose your job again.

Unemployment benefits under this scheme can be availed in one period or different periods of unemployment provided that each period shall not be less than one month. In other words, benefits can be sought for numerous spells of unemployment, but they must be a minimum of one month. The unemployment benefit is not combined with other benefits under the act such as sickness benefit, maternity benefit, or disablement benefit during the period where the insured person is without a job

The payment of unemployment benefit is subject to Section-61 of the ESI Act which states that entitlement to any of the benefits under the Act results in disentitlement of similar benefits under other enactments. Payment of unemployment benefit shall continue for a maximum period of twelve months and is equivalent to the Standard Benefit rate that corresponds to the average daily wages drawn by the insured person in the last four completed contribution periods, immediately preceding the date of unemployment.

To avail of unemployment benefits under this scheme the applicant must submit an application to the concerned Branch Office in Form US-1 attached with documentary proof in Form UA-2. The letter is the certificate of closure that may be accepted from an employer if he submits return contributions under Regulation 26(b) on permanent closure of the factory/establishment.

Reasons for Disqualification

  1. You lose your job due to a strike.
  2. You opt for voluntary retirement.
  3. If you are 60 or older.
  4. You opt for premature retirement.
  5. You lose your job due to a dispute or a conviction.
  6. If you get a new job.

2. Atal Beemit Vyakti Kalyan Yojana

On 18th September 2018, the ESIC decided to provide unemployment benefits in the form of cash compensation to insured persons who have been rendered unemployed. The above scheme was launched with the intention of achieving the same is a welfare measure for employees as defined under Section-2(9) of the ESI Act. The scheme was launched vide the Corporation’s powers under Section-19 of the Act that provides that the Corporation may promote measures for the re-employment of insured persons in addition to the framework of benefits specified under the Act.

To be eligible for unemployment benefit under this scheme the insured person:-

Should have been rendered unemployed during the period where relief is claimed Atal Bimit Vyakti Kalyan Yojana is a welfare measure being implemented by the Employee’s State Insurance (ESI) Corporation. It offers cash compensation to insured persons when they are rendered unemployed.

The Scheme was introduced w.e.f. 01-07-2018. The scheme is implemented on pilot basis for a period of two years initially.

Benefits under the scheme

The scheme provides relief to the extent of 25% of the average per day earning during the previous four contribution periods (total earning during the four contribution period/730) to be paid up to maximum 90 days of unemployment once in lifetime of the Insured Person.

Duration of allowance

  1. The maximum duration, for which an IP shall be eligible to draw the Relief under the Atal Beemit Vyakti Kalyan Yojana (ABVKY) will be 90 days once in life time after a minimum of two years of Insurable Employment and subject to the contributory conditions specified above. The claim for relief under the Atal Beemit Kalyaan Yojana will be payable after the three months of his/her clear unemployment. The relief will be paid for clear month of unemployment. No prospective claim will be allowed.
  2. In case the beneficiary gets gainful employment in between the three months of unemployment for which he was eligible for relief under ABVKY, the relief will be payable for clear month of unemployment between the date of unemployment and date of re-employment. The balance of 90 days of relief in this case may be claimed in the same manner as mentioned above based upon the initial contributory conditions by the beneficiary in case he again renders unemployed from Insurable employment within one year from initial unemployment.


  • Employees covered under Section 2(9) of the ESI Act 1948.
  • The Insured Person (IP) should have been rendered unemployed during the period the relief is claimed.
  • The Insured Person should have been in insurable employment for a minimum period of two years.
  • The Insured Person should have contributed not less than 78 days during each of the preceding four contribution periods.
  • The contribution in respect of him should have been paid or payable by the employer.
  • The contingency of the unemployment should not have been as a result of any punishment for misconduct or superannuation or voluntary retirement.
  • Aadhar and Bank Account of the Insured Person should be linked with insured person database.

Other conditions for administration of the scheme

  • In case the IP is working for more than one employer and is covered under the ESI scheme he will be considered unemployed only in case he is rendered unemployed with all employers.
  • As specified in Section 65 of the ESI Act, an IP shall not be entitled to any other cash compensation and the Relief under ABVKY simultaneously for the same period. However, periodical payments of Permanent Disability Benefit (PDB) under ESI Act and Regulations shall continue.
  • As specified under Section 61 of the ESI Act, an IP who is in receipt of Relief under ABVKY shall not be entitled to receive any similar benefit admissible under the provisions of any other enactment.
  • The IP will be eligible for Medical benefit as provided under the Act for the period he is availing this relief.

Disqualification/Termination of relief under ABVKY

Relief under ABVKY shall not be applicable in the following circumstance:

  1. During lock out.
  2. Strike resorted to by the employees declared illegal by the competent authority.
  3. Voluntary abandonment of employment/ voluntary retirement/ premature retirement.
  4. Less than two years contributory service.
  5. On attaining the age of superannuation.
  6. Convicted (i.e. punished for false statement) under the provisions of Section 84 of the ESI Act read with Rule 62 of the ESI (Central) Rule
  7. On being re-employed elsewhere during the period he/she is in receipt of Relief under ABVKY.
  8. Dismissal/termination under disciplinary action.
  9. On death of IP.

Calculation of the relief amount


Date of Unemployment: 01/04/2020

Contributory particulars of the preceding four contribution periods:

Contribution PeriodNo.of DaysWages
Oct 18 to March 1918290000
April 19 to Sep 2018360000
Oct 18 to March 1918260000
April 18 to Sep 181836000

Amount of relief/Benefit available for 90 days: (2,40,000/730) x (25/100) x 90 = Rs.7397/-


Date of Unemployment: 02/10/2018

Contributory particulars of the preceding four contribution periods:

Contribution  PeriodNo.of DaysWages
April 18 to Sep 188026667
Oct 17 to March 1818360000
April 17 to Sep 177826000
Oct 16 to March 177826000

Amount of relief/Benefit available for 90 days:- (1,38,667/730) x (25/100) x 90 =Rs.4274/-

This is important to note that the benefit can be availed by only those employees who have become unemployed after March 24th 2020.

If you have any further questions pertaining to eligibility, mode of application or any other matter related to this post, please drop your queries@ cheshtas92@gmail.com.