Overview of Employee State Insurance (ESI) Scheme
The Employees' State Insurance (ESI) Act, 1948 provides for a self-financing social security and health insurance scheme for Indian workers earning below a specified wage ceiling. Managed by the Employees' State Insurance Corporation (ESIC), the scheme offers comprehensive medical care and cash benefits to insured employees and their dependants in case of sickness, maternity, temporary or permanent disablement, and death due to employment injury.
The ESI scheme is funded through contributions from both employers and employees. The employer contributes 3.25% and the employee contributes 0.75% of the employee's wages. Employees earning up to ₹176 per day are exempt from employee contribution. The scheme is applicable to all factories employing 10 or more persons (in some states, 20) and to establishments notified by the appropriate government with 10 or more employees.
The wage ceiling for coverage is ₹21,000 per month (₹25,000 for employees with disabilities). Once covered, an employee continues to be covered even if wages exceed the ceiling until they leave employment.
Applicability & Coverage
Covered Establishments
- • Factories with 10+ employees (using power) or 20+ (without power)
- • Shops, hotels, restaurants, cinemas with 10+ employees
- • Road motor transport, newspaper establishments
- • Private educational and medical institutions with 10+ employees
- • Establishments notified by state/central government
Contribution Rates
| Employer | 3.25% of wages |
| Employee | 0.75% of wages |
| Total | 4.00% of wages |
| Wage Ceiling | ₹21,000/month |
Benefits Under the ESI Scheme
🏥 Medical Benefit
Full medical care for insured person and family from day one. Includes OPD, specialist consultation, hospitalization, surgery, and super-specialty treatment at ESIC hospitals and tie-up facilities.
🤒 Sickness Benefit
70% of wages for up to 91 days in two consecutive benefit periods. Extended sickness benefit at 80% for chronic diseases (up to 2 years). Requires minimum 78 days’ contribution in the contribution period.
🤰 Maternity Benefit
Full wages for 26 weeks (extendable by 1 month on medical advice). Covers confinement, miscarriage, and medical termination of pregnancy. Requires 70 days’ contribution in preceding two contribution periods.
🩹 Disablement Benefit
Temporary: 90% of wages during treatment. Permanent: Monthly pension based on degree of disablement. No minimum contribution period required for employment injury.
⚰️ Dependants’ Benefit
Monthly pension to dependants (widow, children, parents) if insured person dies due to employment injury. Pension is 90% of wages distributed among eligible dependants.
⚱️ Funeral Expenses
Lump sum of ₹15,000 paid to the person who performs the funeral of the deceased insured person.
Registration & Compliance Process
Employer Registration
Register within 15 days of the Act becoming applicable. Apply online at esic.gov.in with establishment details, PAN, bank account, and employee information. ESIC allots a 17-digit Employer Code.
Employee Registration
Register each employee within 10 days of joining. Employee receives an Insurance Number and Pehchan Card for accessing medical benefits at ESIC hospitals.
Monthly Contributions
Deposit contributions by the 15th of the following month via the ESIC online portal. Generate challan and pay through net banking or bank counter. Late payment attracts 12% simple interest.
Half-yearly Return
File returns in RC-1 form by November 11 (for April–September) and May 11 (for October–March). Includes employee-wise contribution details.
Penalties for Non-Compliance
- • Non-registration: Imprisonment up to 2 years and fine up to ₹10,000
- • Non-payment of contribution: 12% simple interest on delayed amount
- • Non-filing of returns: Fine up to ₹5,000
- • False statement: Imprisonment up to 6 months and/or fine
- • Repeat offence: Imprisonment up to 2 years