What it means
ESI covers establishments with 10 or more employees in areas where the scheme is in force. Employees whose gross wages are up to ₹21,000 a month (₹25,000 for persons with a disability) are covered. They get medical care for themselves and their family, sickness and maternity cash benefits, and more. Contributions are worked out on gross wages and paid within 15 days of the end of the month, so by the 15th of the next month. ESIC works in six-month contribution periods (April–September and October–March). Under the old ESI Act, someone covered at the start of a period stayed covered to its end even after a raise; check ESIC’s current rules under the Code on Social Security before you stop deducting mid-period.
Example
Anil works as a packer at Kaveri Agencies with gross wages of ₹18,000.
| Part | Rate | Amount |
|---|---|---|
| Employee share | 0.75% | ₹135 |
| Employer share | 3.25% | ₹585 |
| Total paid to ESIC | ₹720 |
If he gets a raise to ₹22,000 in December, check with ESIC or your CA whether ESI runs on until 31 March, as it did under the old Act.
Common mistakes
- Stopping ESI the month an employee crosses ₹21,000, without checking the contribution-period rule.
- Leaving overtime out of gross wages for ESI.
- Not registering new joiners within their first days, so a claim finds them uncovered.
In MyRecords
The pay run works out employee and employer ESI on gross wages, and the monthly ESI file downloads in the Excel 97-2003 (.xls) layout the ESIC portal accepts.