How ESI (Employees' State Insurance) works
ESI applies to employees earning up to ₹21,000 a month. The employee contributes 0.75% of wages and the employer 3.25%, a total of 4% that funds medical care and cash benefits. Contributions are deposited monthly, and coverage continues through fixed contribution and benefit periods.
Why ESI (Employees' State Insurance) matters
ESI gives covered workers free medical treatment, sickness and maternity cash benefits and disability cover, and it is mandatory for eligible establishments, so missing a deposit is a compliance breach.
Who is covered and what ESI pays for
ESI applies to establishments with 10 or more employees (20 in a few states) and covers workers earning gross wages up to Rs 21,000 a month (Rs 25,000 for employees with disability). The employee contributes 0.75% of wages and the employer 3.25%, deposited monthly by the 15th. In return the worker and their family get treatment at ESIC hospitals and dispensaries, plus cash benefits: sickness benefit at 70% of wages during certified illness, maternity benefit for 26 weeks, disablement benefit, and a dependants' pension if a worker dies from an employment injury. Because the wage ceiling is fixed, an employee who crosses Rs 21,000 mid-cycle stays covered until the end of the current contribution period, so payroll must track the contribution windows (April to September and October to March), not just the monthly figure.
Frequently asked questions
Who is eligible for ESI?
Employees earning up to ₹21,000 a month in a covered establishment are eligible, and they stay covered for the full benefit period even if their wage later rises.
What does ESI cover?
Free medical care for the worker and dependants, plus cash benefits for sickness, maternity, disability and dependants in case of death.