Employees’ State Insurance (ESI)


Employees’ State Insurance Corporation (ESIC) is a government organisation that manages the Employees’ State Insurance (ESI) scheme. The scheme basically provides medical and financial assistance to the employees and their families. The assistance is provided when an employee is unable to perform his duties due to sickness, employment injury, or maternity.

What is ESI?

ESI is a social security scheme offered by the Government of India as per the Employees’ State Insurance Act, 1948. The scheme provides protection to employees against disablement/death due to employment injury, sickness, and maternity. Employees must be subscribed for the scheme to get the medical care and other benefits. The financial assistance provided by the scheme may replace the employees’ loss of salary due to the health conditions.

This is a self-financing scheme, where the employees and the employers make regular monthly contributions to the scheme at a certain percentage of their wages.

Where is it Applicable?

ESI is applicable to any entity that employs ten or more people, such as shops, hotels and restaurants that is not engaged in manufacturing, cinemas, road motor transport establishments, newspaper establishments, private educational and medical institutions.

The minimum number of employees required to subscribe for ESI scheme varies with states, such as Maharashtra, Meghalaya, Mizoram, Nagaland, Goa, Chandigarh, and Assam-20; Jharkhand, Haryana, Karnataka, Rajasthan, Tripura, West Bengal, Andhra Pradesh, and Delhi-10.

Wage Limit

Employees with a monthly salary within Rs.21,000 are entitled to get the benefits of the scheme. Putting it together, employees working for factories/establishments with ten or more employees drawing wages of up to Rs.21,000 per month are entitled to receive health benefits under the ESI Act.

There are exemptions to the rule in the case of daily average wages of Rs.137. They do not have to contribute to the scheme from their wages. Only the employer’s contribution is paid for such people.