ESIC Notification: Aadhaar Authentication Voluntary, Alternate ID Documents Accepted for Beneficiaries

On 19th August 2025, the Ministry of Labour and Employment issued a crucial notification (S.O. 3792(E)) clarifying that Aadhaar authentication for Employees’ State Insurance (ESI) beneficiaries is voluntary. The notification also directs the Employees’ State Insurance Corporation (ESIC) to accept alternate identity documents if Aadhaar is not provided.

This change ensures wider inclusion of insured persons and dependents under ESIC, while protecting their right to access benefits without facing service denial.

Background

The Employees’ State Insurance Act, 1948 provides medical care, sickness benefits, maternity benefits, disablement benefits, and other welfare measures to insured persons.

In recent years, Aadhaar authentication has been promoted to improve transparency and efficiency. However, mandatory Aadhaar linkage raised concerns, particularly where beneficiaries did not have Aadhaar or faced authentication failures.

To address this, the Ministry has now reaffirmed that Aadhaar use is voluntary, with safeguards in place.

Key Highlights of the Notification

1. Aadhaar Authentication – Voluntary Basis

• ESIC may use Aadhaar authentication for identifying beneficiaries.
• Authentication must be done only with the consent of the Aadhaar holder.
• No insured person or dependent can be denied ESIC benefits for refusing Aadhaar authentication.

2. Alternate Documents Allowed

If Aadhaar is not available or authentication fails, ESIC must accept the following as valid proof of identity:

• Passport
• PAN Card
• Driving Licence

This ensures beneficiaries can continue accessing benefits without disruption.

3. Supersession of Earlier Notification

• The new notification supersedes the earlier order (S.O. 230(E), dated 3rd January 2023).
• The updated rules align with the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 and the Aadhaar Authentication for Good Governance Rules, 2020.

4. Effective Date

• The notification took effect from 19th August 2025, the date of publication in the Official Gazette.

Why This Matters

• For Employers: Companies covered under ESIC should inform their employees that Aadhaar is not mandatory for availing ESIC benefits. HR teams should be ready to guide workers on alternate document options.
• For Employees: Insured persons who do not have Aadhaar, or who face difficulties with biometric authentication, can now rely on alternate IDs without fear of being denied benefits.
• For ESIC Administration: The Corporation must update its internal processes, ensure field offices are trained, and prevent wrongful denial of benefits.

Compliance Action Points for Employers

1. Communicate to Employees: Issue internal circulars clarifying that Aadhaar is voluntary for ESIC benefits.
2. Update Records: Ensure employee records include at least one of the valid identity documents (Aadhaar, Passport, PAN, or Driving Licence).
3. Assist in Claims: Where Aadhaar authentication fails, guide employees to use alternate documents so benefits are not delayed.
4. Monitor ESIC Updates: Keep track of further clarifications and system changes issued by ESIC.

Conclusion

The notification is a positive step towards inclusivity and beneficiary protection under the ESIC framework. It balances the benefits of Aadhaar-based transparency with the need to ensure no worker or dependent is excluded due to documentation issues.

Employers should update their compliance practices immediately and ensure employees are aware of their rights under this new rule.