What is ESI (Employees' State Insurance)?

Last updated: 27 June 2026

ESI (Employees' State Insurance) is a statutory social security and health insurance scheme administered by ESIC that provides medical care, sickness cash benefits, maternity benefits, and disability/dependent benefits to employees whose gross monthly wages do not exceed ₹21,000.

Governed by the Employees' State Insurance Act, 1948 (now also under the Code on Social Security, 2020), ESI is funded by contributions from both employer and employee as a percentage of gross wages.

Contribution rates

Contributor	Rate	Basis
Employer	3.25%	Gross wages
Employee	0.75%	Gross wages

Employees earning a daily average wage of ₹176 or less are exempt from the employee share — the employer still pays their 3.25%.

Fact box. The ESI wage threshold is ₹21,000/month gross (₹25,000 for employees with disability). If an employee's salary crosses ₹21,000 mid-contribution period (April–September or October–March), they remain covered for the rest of that half-year period.

Coverage and compliance

Applicability: Establishments with 10 or more employees in ESI-notified areas. Most states follow the 10-employee threshold, but a few notify a lower count, so check your state's position.
Due date: Contributions must be deposited by the 15th of the following month.
Returns: Half-yearly ESI returns for each contribution period (April–September and October–March).
ESIC portal: esic.gov.in — online registration, challan payment, IP (Insured Person) registration, and monthly returns.

Benefits available to insured employees

Medical treatment: Full medical care for employee and family at ESIC dispensaries and hospitals.
Sickness benefit: Cash benefit at ~70% of wages for up to 91 days per year.
Maternity benefit: Full wages for 26 weeks (for those with ≥70 days of contributions).
Disablement / Dependent's benefit: Monthly payments in case of work injury or death.

Frequently asked questions

What happens if an employee's salary rises above ₹21,000? Once an employee's salary crosses ₹21,000, they are exempt from ESI from the next contribution period. However, if they are already insured in the current period, coverage continues to that period's end.

Is ESI and EPF registration separate? Yes. EPF (EPFO) and ESI (ESIC) are administered by different statutory bodies. A business may be covered under both, either, or neither depending on employee count and wage levels.

Sources: ESIC — esic.gov.in; Code on Social Security, 2020

General information, not professional advice. Verify on the official portal for your case. Reviewed by a Chartered Accountant; last updated 27 June 2026.