Payroll & statutory · Updated September 2026
Employees’ State Insurance, or ESI, is a contributory health and social-security scheme for lower-paid employees. In exchange for a small monthly contribution from the employee and a larger one from the employer, the insured person and their family get medical care at ESI hospitals and dispensaries, plus cash benefits during sickness, maternity and employment injury. It runs under the ESI Act, 1948, and is administered by the ESIC.
ESI applies to non-seasonal establishments with 10 or more employees (20 in a few states), and within those, to every employee earning gross wages of Rs 21,000 a month or less. The threshold is Rs 25,000 for employees with disability. Once an employee is covered at the start of a contribution period, coverage continues to the end of that period even if a mid-period increment takes them above Rs 21,000.
| Contributor | Rate on gross wages |
|---|---|
| Employee | 0.75% |
| Employer | 3.25% |
On gross wages of Rs 18,000, the employee pays Rs 135 and the employer pays Rs 585, a total of Rs 720 for the month. Contributions are deposited by the 15th of the following month. There are two fixed contribution periods, April to September and October to March, and the benefit periods run three months behind them.
On gross wages, not just basic. Most allowances are included; washing allowance and a few specific heads are excluded.
You stay in ESI until the end of the running contribution period, then move out from the next one. At that point a group health insurance policy from the employer usually takes over.
Primary care is through ESI facilities. Referral to empanelled private hospitals is allowed for treatments the ESI network cannot provide, and emergencies are handled under separate rules.
Work out the split for any wage with the ESI Calculator, and see how it fits the wider deduction picture in the Take-Home Salary Calculator. For choosing a system that files ESI returns, see payroll software for India.