Employee State Insurance Corporation

What is the Employees’ State Insurance Corporation (ESIC)?

Understand ESIC, its eligibility, benefits, contribution rates, registration process, and how it provides social security to eligible employees

Written by : Knowledge Centre Team

2026-07-08

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15 minutes read

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A medical emergency, workplace injury, or prolonged illness can place an unexpected financial burden on any family. While personal savings and insurance play an important role in managing such situations, India also has government-backed social security schemes that support eligible employees in times of need. One such initiative is the ESIC.

ESIC stands for Employees' State Insurance Corporation (ESIC). It provides access to affordable healthcare and financial assistance through a contributory social security scheme. Whether you're an employee looking to understand ESIC meaning and its benefits or an employer seeking to comply with statutory requirements, knowing how ESIC works can help you make informed decisions.

  • In this blog, we'll explain “what is ESIC”, how it works, who is eligible, the contribution rates, the benefits offered, the registration process, and what options you can consider if you are no longer covered under the scheme.

Key Takeaways

  • ESIC gives medical treatment and cash allowance to employees with monthly wages up to ₹21,000

  • Employers pay 3.25%, and workers pay 0.75% of wages towards ESIC​

  • Benefits include sickness, maternity, disability, and dependent support​

  • ESIC protects workers from day one of employment, providing immediate cover​

  • Employers with 10 or more employees must register under ESIC

What is the Employees’ State Insurance Scheme?

The Employee State Insurance Act laid the foundation for Employee State Insurance (ESI) in India in 1948. It is a self-funded healthcare scheme where the members contribute to build their corpus. The advantage of this scheme is the concessional healthcare facilities provided to members through the ESI hospital network.

ESI forms an important part of India's social security framework, alongside schemes such as the Central Government Health Scheme (CGHS), Atal Pension Yojana (APY), and Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), each designed to provide financial support for healthcare, retirement, employment, and livelihood security.

Under the ESI scheme, insured members are entitled to a range of benefits, including:

  • Medical Care 

  • Sickness Benefit

  • Maternity Benefit

  • Disablement Benefit

  • Dependants Benefit 

  • Funeral and Confinement Expenses

Healthcare is an area of growing concern. The financial support ESI offers can help families retain their financial backbone and avoid falling into poverty due to unforeseen emergencies.

Example:

Ramesh earns ₹18,000 working in a pharmaceutical manufacturing plant.

  • Ramesh’s contribution: 0.75%*₹18,000 = ₹135

  • Employer contribution: 3.25%*₹18,000 = ₹585

A total contribution of ₹720 will be made, and the employer is accountable for depositing the amount with the ESIC in the same calendar month.

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Who is Eligible for ESIC? 

The Employees' State Insurance (ESI) Scheme covers eligible employees working in factories and establishments notified under the Employees' State Insurance Act, 1948. To qualify for ESIC benefits, both the employer and employee must meet specific eligibility criteria.

An employee is generally eligible if:

  • They work in a factory or establishment covered under the ESI Act.

  • Their monthly wages do not exceed ₹21,000 (₹25,000 for persons with disabilities).

  • They are employed in an establishment with 10 or more employees (or 20 or more employees in certain states, as notified by the respective State Government).

The ESI Scheme extends to employees working in a wide range of establishments, including:

  • Factories

  • Shops

  • Restaurants and hotels

  • Cinema theatres

  • Road motor transport undertakings

  • Newspaper establishments

  • Educational institutions

  • Medical institutions

  • Contract and casual employees of Municipal Corporations and Municipal Bodies

Additionally, the Central Government has extended ESIC coverage to establishments employing 20 or more persons engaged in:

  • Insurance businesses

  • Non-Banking Financial Companies (NBFCs)

  • Airport authorities

  • Port trusts

  • Warehousing establishments

Meeting these eligibility conditions allows employees to access medical care, cash benefits, and other social security benefits provided under the ESI Scheme.

Understanding the ESIC Contribution Process and Rates

ESI contributions are calculated based on an employee's total monthly wages. The employee contributes a nominal 0.75% of their wages, while the employer bears a larger share of 3.25%. To be eligible for ESI benefits, an employee's monthly gross wage must not exceed the current statutory ceiling of ₹21,000 per month.

The table below summarises the current ESIC contribution rates:

Who Pays

Contribution Rate

Additional Notes

Employee

0.75% of wages

Paid up to a maximum monthly wage of  ₹ 21,000

Employer

3.25% of employees' wages

Paid on total monthly wages (up to  ₹ 21,000)

Exception

 

Low-wage earners with a daily average wage of up to ₹ 176 are exempt from employee contributions. The employer still contributes their share.

The employer deducts the employee's contribution from their salary and contributes their own share on top of that. These contributions go towards funding the various benefits offered by the ESIC scheme. By contributing, employees become eligible for these benefits when needed.

Here are some additional points to note:

  • The contribution rates are set by the ESIC and can be revised from time to time. The current rates have been in effect since July 1, 2019. 

  • The ESIC scheme applies to most factories and establishments with more than 10 employees (or 20 employees in some states). There's a wage ceiling of ₹ 21,000 per month, which means contributions are calculated only on wages up to that limit.

Do you know

Did You Know?

Eligible ESIC-insured employees can receive unemployment assistance under the Atal Beemit Vyakti Kalyan Yojana if they lose their job involuntarily


Source: ESIC

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Features and Benefits of Employees' State Insurance Corporation (ESIC) Scheme 

The ESIC scheme offers a variety of benefits to covered employees and their dependents. Here's a breakdown of the key features and the benefits they provide:

  • ESIC Features:

    1. Covers Family Members: From the first day of membership, the scheme covers medical and emergency care for the employed member and their dependents (spouse and unmarried children).
    2. Specified/Critical Illnesses: Medical coverage is provided for specified critical illnesses along with cash benefits. If the employee has contributed for at least 78 days in the last 6 months, the scheme covers 70% of their wages for up to 91 days.
    3. Maternity Benefit: Female employees can avail a maternity benefit of 26 weeks, extendable by an additional month. During this period, they are also eligible to receive 100% of their average daily wages. 
    4. Unemployment Benefit: Members who lose their jobs due to factory closure, retrenchment, or permanent disability can receive benefits for up to three years. This includes:

      • Up to 50% of their last wages for a maximum of 2 years
      • Medical care for the member and their family at ESI hospitals and dispensaries during the benefit 
      • periodExpenses related to vocational training for skill development
  • Benefits of ESIC:

    1. Medical Care Benefit: This is the primary benefit, available from day one for the member, their dependents, retired members, and permanently disabled members with their spouses (for a nominal annual premium).
    2. Sickness Benefit: Employees who contribute for at least 78 days in a six-month period are eligible for sickness benefits. This provides 70% of their wages for up to 91 days in a year. The scheme also offers:

      • Extended Sickness Benefit (ESB): For critical and long-term illnesses, employees can receive 80% of their wages for up to two years after the initial 91 days
      • Enhanced Sickness Benefit: Full wages are payable for family planning procedures (7 days for Vasectomy and 14 days for Tubectomy)
    3. Disability Benefit: The scheme offers two types of disability benefits:

      • Temporary Disablement Benefit (TDB): Up to 90% of wages is provided for the period of disablement, starting on day one of coverage.
      • Permanent Disablement Benefit (PDB): Depending on the extent of disability, up to 90% of the monthly wage is payable.
      • Dependents Benefit: In case of the member's death due to occupational hazards, dependent family members receive up to 90% of the deceased's wage every month.
      • Funeral & Confinement Benefit: The dependents receive ₹15,000 upon the member's death. Additionally, a confinement benefit is provided to female members or their spouses when ESI facilities are unavailable.

Procedure for ESI Registration 

Any establishment employing at least 10 employees or workers should register itself under ESIC. The number of employees/workers is 20 for Maharashtra and Chandigarh. Employees with a salary of up to ₹21,000, or ₹25,000 for employees with disabilities, are eligible for ESI membership.

The following documents are necessary for securing ESI membership:

  • Registration certificate under the Shops and Establishments Act or Factories Act

  • Registration certificate for the company or partnership firm

  • Articles of Association and Memorandum of Association

  • List of directors and shareholders of the company

  • List of all employees and workers at the establishment

  • Compensation details of all employees and workers

  • PAN card details of the organisation and employees

  • A cancelled cheque for the company bank account

  • Attendance details of all employees

  • Completed employer’s registration form (the form can be downloaded from the website and will be uploaded as well after being completed)

ESI Registration Process 

Once you have all the documents, you can follow the online registration process for ESI membership:

Step 1: Visit the ESIC Portal and ‘Sign Up’ as a new user.

Step 2: Enter your details, such as company/employer name, state, region, email ID, and phone number.

Step 3: Tick the checkbox to confirm your establishment’s labour contract - workforce suppliers, security agencies, or contractors supplying labour categories.

Step 4: Submit the form, and you will receive an email with login credentials.

Step 5: Visit the ESIC Portal to ‘Log in’.

Step 6: Use the username and password received in the email to ‘Log in’ to your portal.

Step 7: Select ‘New Employer Registration’.

Step 8: Select the unit type, then click submit.

Step 9: On the next page, enter the name of the unit, the postal address, and the police station under whose jurisdiction your unit is.

Step 10: Enter whether the building or the premises of the factory or the establishment is owned or hired, and click on ‘Next’ to proceed.

Step 11: Provide details such as the nature of the business, category, PAN details, etc., and click ‘Next’.

Step 12: Enter the date of commencement of the establishment/factory and license details (if any).

Step 13: Provide the ownership details - the constitution of ownership, and details of owners. Click ‘Next’ after completing. You should ‘Save’ the form while you complete the details.

Step 14: Enter the total number of employees in your establishment and the number of employees earning less than ₹21,000 and click on ‘Save’.

Step 15: Enter the date when the first 10/20 employees were employed and click on ‘Employee Declaration Form’.

Step 16: Select ‘No’ if the Insured Person (IP) is not registered. If already registered, select ‘Yes’ and provide the IP number and date of joining. Click on ‘Continue’ once done.

Step 17: Enter the IP's name and details, such as the father’s name, address, date of birth, gender, marital status, family details, and date of joining. Click on the checkbox and click on ‘Submit’ once complete.

Step 18: ‘Close’ the new page after ensuring all details are complete.

Step 19: Select the nearest ESI branch and inspection division.

Step 20: Click the declaration checkbox and ‘Submit’. You’ll be redirected to a new page.

Step 21: On the next page, you will need to pay the first contribution. Check ‘Pay Initial Contribution’ and click ‘Submit’. You will receive a Challan Number for future reference.

Step 22: Continue to the required payment gateway and complete your payment. You will receive an ESI registration letter C-11 in your e-mail. The letter acts as proof of your successful registration.

What If You Are No Longer Eligible For ESI? 

When you started your career, your monthly wage may have been ₹21,000 or lower, which makes you eligible for benefits under the ESI Act. However, as your salary increased over the years through increments, your current monthly wage may now exceed this threshold, meaning you are no longer entitled to ESI social security benefits.

However, it does not mean you have to go without a backup for funding emergency medical treatments. Once you no longer qualify for social security schemes such as ESI, you should consider commercial schemes.

You must consider other aspects of life that carry risk and cover them with appropriate life insurance policies. Some of the popular life insurance polices that you can consider  are listed below:

  • Term Life Insurance: A term plan provides affordable financial safety for your family. It provides your family with financial protection in the event of your unfortunate, untimely demise. They will receive the death benefit and manage expenses during your absence. If you have a term cover of ₹1 crore and you pass away during the policy term, your nominee will receive this amount.

    Learn more about iSelect Smart360 Term Plan.

  • Guaranteed Savings Plan: Guaranteed Savings Plans work best if you are looking for payouts to match future expenses at specific milestones. These plans are ideal for you if you are looking to build wealth safely, as the returns are guaranteed.

    Learn more about iSelect Guaranteed Future Plus.

  • Unit Linked Insurance Plans (ULIPs): ULIPs give you options to invest in both debt and equity instruments, because of which you benefit from the higher returns from equity while having the safety of debt. Social security schemes such as ESI are excellent options for protecting yourself and providing access to healthcare facilities with a nominal investment. However, broader insurance plans give you more benefits. You must consider upgrading to an insurance plan when you can.

Similarly, life insurance plans and the Public Provident Fund (PPF) are savings schemes that help to build a habit of saving among the working class. These schemes help you save tax, grow your savings, and build a better future for your family. The Payment of Gratuity Act, 1972 encourages employees to remain with an organisation for a long time and reap loyalty rewards.

Wrapping Up 

The Employees' State Insurance (ESI) scheme serves as a vital safety net for Indian workers and their dependents. By contributing a nominal amount, you gain access to a wide range of healthcare services, cash benefits during challenging times, and vocational training for employability. 

ESI offers medical coverage, cash benefits for sickness, maternity, unemployment, disability, and even funeral expenses. The scheme is contributory, with both employers and employees making regular contributions. Registration is mandatory for establishments with 10 or more employees (20 in some states). ESI ensures financial security and peace of mind for covered individuals and their families.

Glossary:

  1. Wage Ceiling: The maximum monthly wage limit up to which an employee remains eligible for ESIC benefits
  2. Benefit Period: The duration during which an insured employee can claim ESIC benefits after contributing.
  3. Disablement Benefit: Financial assistance provided to employees who suffer temporary or permanent disability due to employment.
  4. Nominee: A person designated to receive the policy benefits or claim amount in the event of the policyholder's death
  5. Dependent: A spouse, child, or other person who relies on someone else for financial support
Glossary book
Uncertain About Insurance

The full form of ESI is Employees’ State Insurance.

Employees and workers of establishments with 10 or more employees/workers are covered under the ESI scheme. The number goes to 20 for establishments and factories operating in Maharashtra and Chandigarh.

The due date for paying and filing monthly ESI contributions and returns is the 15th of every month.

Under the ESI Act, non-payment, delayed payment, or falsification of payments can result in imprisonment and a fine. The imprisonment period can extend up to 2 years with a fine of up to ₹5,000.

The Employees' Provident Fund (EPF) and Employees' State Insurance (ESI) schemes are mandatory social security schemes for eligible establishments and employees in India.
 

  • EPF: Both the employer and employee generally contribute 12% of the employee's Basic Salary + Dearness Allowance (DA) each month. The statutory wage ceiling for mandatory EPF coverage is ₹15,000 per month, although employers may voluntarily contribute on higher wages.

  • ESI: The scheme applies to eligible employees earning up to ₹21,000 per month (₹25,000 for persons with disabilities). The employee contributes 0.75% of wages, while the employer contributes 3.25%, for a total contribution of 4% of wages.

The government may revise the eligibility criteria, wage limits, and contribution rates from time to time, so employers should refer to the latest EPFO and ESIC notifications for compliance.

Employers with more than 10 employees or workers (20 in Maharashtra and Chandigarh) are legally required to register under ESIC. Employees or workers with salaries of less than ₹21,000 p.m. (₹25,000 in the case of workers with disabilities) are automatically eligible for ESI membership.

The ESI Code is a 17-digit code allotted to every establishment or factory registered under the Employees’ State Insurance (ESI) Act, 1948. The number is generated automatically by the ESIC portal after you complete the details and register as an employer.

You can check the claim status under ESIC using your smartphone with the following steps:
 

  • Download and install the UMANG App

  • Enter the IP number / ESIC Insurance Number and click on 'Get OTP'

  • Enter the OTP and click 'Submit'

  • Find and select 'Claim Status' under Services

The employer is responsible for paying the employees’ and its own ESI contributions into the authorised ESIC account within 15 days of the end of the relevant contribution month.

If an employee’s wages exceed ₹21,000 (or ₹25,000 in the case of an employee with a disability), the employee will remain a member of ESI until the contribution period ends in April or October. Thus, the employee will continue contributing at the new wages until the period and membership end.

The ESI Scheme applies to factories and establishments such as transport firms, hotels, restaurants, cinemas, newspapers, shops, and educational and medical Institutions. All such establishments employing 10 or more persons must avail themselves of the ESI membership. The maximum exempt number for employers is 20 for establishments in Maharashtra and Chandigarh.

Employers should maintain the following records for ESI compliance:
 

  • Muster roll, wage record and books of Accounts

  • Accident Register in Form-11

  • An inspection book 
     

The immediate employer must also maintain the Employees’ Register for the employees deployed to the principal employer.

ESIC is a contributory social security scheme funded through employer and employee contributions. The collected funds are used to provide medical care and cash benefits to eligible insured employees and their dependants.

Employees working in eligible establishments with monthly wages up to ₹21,000 (₹25,000 for persons with disabilities) qualify for ESIC benefits, subject to the prescribed conditions.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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