Medical benefits cannot be cut after ESI coverage if they have become a service condition; lawful alteration is required.

An employer cannot withdraw or reduce long-standing medical benefits that have become part of service conditions merely because employees are covered under the Employees' State Insurance scheme. Patna HC held that the ESI Act and its regulations did not authorise unilateral curtailment of superior benefits already enjoyed by workmen, and any change had to follow the lawful industrial process. It also found that the proposed retrenchment would reduce the quality and quantum of medical treatment available to employees and dependants, thereby altering service conditions. The Industrial Tribunal award was quashed and the reference answered for the workmen.

---

---

Issues: (i) Whether the management could retrench medical staff and curtail medical benefits merely because the Employees' State Insurance Scheme had been introduced and some employees were covered by it; (ii) Whether the proposed retrenchment would reduce the quality and quantum of medical benefits so as to affect the workmen's service conditions.

Issue (i): Whether the management could retrench medical staff and curtail medical benefits merely because the Employees' State Insurance Scheme had been introduced and some employees were covered by it.

Analysis: The medical benefits provided by the employer had long become part of the workmen's service conditions by customary concession. The statutory scheme under the Employees State Insurance Act, 1948 did not authorise the employer to withdraw or reduce those benefits merely because contributions were being made to the insurance fund or because some statutory benefits had become available. The restrictions in the Act and the regulations did not justify unilateral curtailment of superior benefits already enjoyed under service conditions. Any alteration of such conditions had to be made in the manner provided by industrial law.

Conclusion: The management had no authority to retrench medical staff or reduce medical benefits on that ground alone, and the issue was answered in favour of the workmen.

Issue (ii): Whether the proposed retrenchment would reduce the quality and quantum of medical benefits so as to affect the workmen's service conditions.

Analysis: The reduction in workload shown by the management did not establish that 15 members of the medical staff had become surplus or that the remaining staff would be sufficient to maintain the level of medical treatment previously provided to the workmen and their dependants. The statutory insurance scheme had not replaced the employer's hospital facilities, nor had it secured equivalent medical provision for all persons who had been receiving such benefits. On the record, the proposed retrenchment would diminish the medical service available to the workmen and thereby alter their service conditions. No valid recourse had been taken under the industrial law mechanism for changing those conditions.

Conclusion: The proposed retrenchment would adversely affect the workmen's service conditions and could not be upheld.

Final Conclusion: The award of the Industrial Tribunal was quashed, and the reference was answered for the workmen on both issues.

Ratio Decidendi: An employer cannot, without statutory or legally prescribed authority, withdraw or reduce medical benefits that have become a condition of service merely because employees have been brought under the Employees' State Insurance scheme; such a change requires lawful alteration of service conditions.

---