Employee State Insurance

Employee State Insurance Act (ESI) is established in 1948 and it is a health insurance for Indian workers. It is an autonomous corporation by a statutory creation under Ministry of Labour & Employment, Government of India. The Corporation can setup hospitals either independently or in collaboration with state government or other private entities but most of the hospitals & dispensaries are run by the state government.

Applicability of the Act

It is applicable to all factories & other establishment where 10 or more persons & has been extended to other undertakings & newspaper establishments employing 20 or more persons. ESI shal be deducted only for those employees whose wages are less than 21000/- per month, engaged directly or through contractor.


In ESI Employer shall submit ESI on behalf of Employee share of ESI & Company share of ESI towards their employee & the Employee share is deducted from their salary or wages. Acc. To PF Act, It is mandatory that Basic salary is minimum 55% of gross salary. Employee should contribute 1.75% on gross salary & Employer contribution is 4.75 %. Employees in receipt of a daily average wage up to Rs.137/- are exempted from payment of contribution.

Composition of ESIC

The ESIC generally consists of the following members as explained below.

Contribution Period and Benefit Period

There are two contribution periods each of six months duration and two corresponding benefit periods also of six months duration as under.

Contribution period Corresponding Cash Benefit period

Contribution Period Cash Benefit Period
1st April to 30th Sept. 1st Jan of the following year to 30th June
1st Oct to 31st March of the year following. 1st July to 31st December.

Key Features & Benefits of ESI :

There are a number of attractive features and benefits that are offered by the Employee State Insurance Corporation. Not only does it provide medical benefits but it also comes with a level of financial security in times of financial hardship like unemployment, etc. Some of these are listed below:

  • Medical Benefits:The Employee State Insurance Corporation takes care of an individual’s medical expenses by providing reasonable medical care. This cover comes into effect from day one of the individual’s employment.
  • Disability Benefit:In case an employee is disabled, ESIC ensures that the employee is paid their monthly wages for the period of the injury in case of a temporary disablement or for the remainder of the employee’s life in case of a permanent disablement.
  • Maternity Benefit:ESIC helps an employee welcome their baby to a household which has been showered with benefits. ESIC provides a total of 100% of the average daily wages for a period of to 26 weeks from the time of going into labor and 6 weeks in case of a miscarriage. 12 weeks of pay is provided in the case of an adoption.
  • Sickness Benefit:ESIC ensures that there is a flow of cash coming into the employee’s household during medical leave. 70% of the average daily wages of an employee is paid during medical leave for a maximum period of 91 days in two successive benefit periods.
  • Unemployment Allowance:ESI provides a monthly cash allowance for a maximum period of 24 months in case of permanent invalidity due to a non-employment injury or due to involuntary loss of employment.
  • Dependent’s Benefit:In case the employee meets with an untimely death due to an injury at the place of employment, ESIC will provide monthly payments apportioned among the surviving dependents.

Other benefits that are offered with ESI are:

  • Confinement Expenses
  • Funeral Expenses
  • Physical Rehabilitation
  • Vocational Training
  • Skill Up gradation Training under Rajiv Gandhi Shramik Kalyan Yojana (RGSKY)

Hope the information will assist you in your Professional endeavors. In case of any query / information, please do not hesitate to write back to us at [email protected].


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Company: Mediology Software Pvt Ltd
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May 2021