Know how ESI is protecting crores of employees in India. What is the eligibility and contribution rate for ESI and what are the benefits of ESI?

ESI or Employee State Insurance is the insurance provided to employees by their employers. ESI’s provisions are taken care of by the Employee State Insurance Corporation, which is the apex regulatory body of the ESI contributions in India. You may think of ESI as the company benefits for the employees that involve insurance protection in the organized sectors. The ESI scheme extends insured protection to the employees in the event of pregnancy/maternity, disability, sickness, death, or any work-related injuries. It also extends medical care to the employees as well as their families.

ESI Eligibility

The government has been emphasizing the importance of employee benefits and thereby taking up measures to execute the same. Employee State Insurance has been made mandatory for certain employees. The ESI scheme applies to all the establishments and factories employing 10 or more persons where the beneficiary’s wages do not exceed Rs. 21,000. These form part of the company benefits for the employees.

Features of The ESI Scheme

The following are the benefits of the ESI scheme for the employees:

  • The benefits under the ESI scheme can be bifurcated into two categories, i.e.,
    • Cash benefits normally include maternity, sickness, temporary or permanent disablement, rehabilitation allowance, funeral expenses, etc. 
  • Non-cash benefits like medical care, etc.
    • Employees are provided with complete medical care.
    • In case of absenteeism from work due to factory accidents, illness, maternity, etc., resulting in loss of wages, financial assistance is provided to such employees to compensate for the wages.
    • Medical care by the families of the employees can be availed as well through the ESI scheme.

The benefits under the scheme are self-financed in the sense that it is provided from the contributions made by the employees and employers.

ESI Registration Process

The ESIC registration process is simple, and employers who fall under the applicability should get themselves registered under the ESI scheme. The registration process for ESI is entirely online and does not require any physical documentation submission. However, the organization should meet the criteria of the minimum number of employees for obtaining registration under the ESI scheme. Once registered, the employer can use the ESIC employer login to adhere to compliance with ESIC rules. The minimum employee requirement varies from state to state. Following is the list of the employee requirement under ESIC:

Sr. No.StateMinimum Employees to be RegisteredSr. No.StateMinimum Employees to be Registered
1Himachal Pradesh2019Delhi10
2Jammu & Kashmir2020Karnataka10
3Jharkhand1021West Bengal10
4Kerala1022Andhra Pradesh10
5Madhya Pradesh2023Arunachal Pradesh20
14Rajasthan1032Daman and Diu20
15Sikkim2033Dadra and Nagar Haveli20
16Tamil Nadu2034Andaman and Nicobar Island20
18Uttar Pradesh2036Outside India20
State-specific employee requirements under ESIC

ESI Contribution Rates

ESI contribution rates are subject to change from time to time. Both the employers and employees are required to make ESI contributions. Currently, the employees shall contribute 0.75% of their wages to the ESI scheme, whereas the ESIC employer contribution shall be 3.25% of the wages paid or payable to the employees in each wage period.

However, employees whose daily average wage is up to INR 137/- are exempted from making contributions to the ESI scheme. However, the employer shall contribute their share in respect of such employees.

Under the law, the employer shall deduct the contributions to be made by the employees from the wages payable and shall pay the contribution so deducted to the ESIC within 15 days after the end of the calendar month in which the contribution falls due.

How To Manage Payments?

Automating payments is more important than ever as the salary composition includes various statutory dues like provident funds, TDS, professional tax, ESI, etc. 

However, it can be taxing for you to take care of these monthly payments, especially when you have countless duties as an employer. The good news here is—we understand your pain. Therefore, we have the perfect solution for you! With PayU Payouts, you can automate the entire payroll processing. This means that all the statutory dues you have to pay out monthly are automatically deducted from the salary you have to pay to the employees. What’s more, you can also facilitate the periodical filing of returns by employers. It doesn’t only reduce the burden off of your shoulders; it also diminishes the chances of errors that often arise with human filing. All of this with timely statutory compliances! 


Who administers the ESI scheme?

Employee State Insurance Corporation (ESIC) is the administrative and apex body for the ESI scheme. The Director-General of the ESIC is the CEO of the ESIC as well as an ex-officio member of the ESIC.

What is the contribution period and the benefit period?

There are two contribution periods of 6 months. Correspondingly, there are two benefit periods of 6 months as well. Following are the contribution and benefit periods:
1. Contribution period – 1st April to 30th September and 1st October to 31st March
2. Benefit period – 1st January of the following year to 30th June and 1st July to 31st December

What are the benefits of the ESIC scheme?

A: The benefits of the ESI scheme can be divided into six categories:
Medical Benefits: This includes the invoice of medical care to the employees and their families.
Dependent Benefits: In case of occupational hazard or job injury, the dependents of the deceased insured person shall be eligible to receive a monthly payment at the determined rates.
Sickness Benefits: Insured workers are eligible for sickness benefits for a maximum period of 91 days per year. Sickness benefits are provided in the form of cash compensation.
Disablement Benefits: This covers both temporary disablement benefits and permanent disablement benefits for compensating the employees for their disablement and consequent loss of earning capacity.
Maternity Benefits: It is provided during the confinement or pregnancy period for 26 weeks.
Other Benefits: These include confinement expenses, funeral expenses, etc.
The ESI claim process for availing of the above benefits is relatively simple.