Employees' State Insurance (ESI) Contribution Rates – 2025 Guide

The Employees' State Insurance (ESI) scheme is a social security and health insurance program for Indian workers. As of 2025, the contribution rates under this scheme remain as follows:

Contribution Rates (2025)

• Employee Contribution: 0.75% of monthly wages
• Employer Contribution: 3.25% of monthly wages

This brings the total combined contribution to 4% of an employee’s wages. These rates were reduced from the previous total of 6.5% (comprising 1.75% employee and 4.75% employer contributions) in 2019.

Eligibility Criteria for ESI

Employees are eligible for ESI coverage under the following conditions:

• Wage Ceiling: Employees earning up to ₹21,000 per month (or ₹25,000 for employees with disabilities) are covered under the scheme.
• Employer Threshold: The ESI Act applies to establishments with 10 or more employees.

How ESI Contributions Are Calculated

The contributions are calculated based on the employee’s gross monthly wages. Here’s an example:

Example: For an employee earning ₹15,000 monthly:

• Employer Contribution: ₹15,000 × 3.25% = ₹487.50
• Employee Contribution: ₹15,000 × 0.75% = ₹112.50
• Total Contribution: ₹600.00

In this case, the total ESI contribution of ₹600 is divided between the employer and the employee, with the employer remitting both contributions to ESIC.

Due Dates and Payment of ESI Contributions

ESI contributions must be submitted to the Employees' State Insurance Corporation (ESIC) by the 15th of the following month after the wages are paid. Employers must remit both employee and employer shares together.

Exemptions from ESI Contributions

Some employees are exempt from contributing to the ESI scheme:

• Employees with a daily wage of ₹137 or less are exempt from contributing to the ESI scheme. However, employers must still contribute for such employees.

Wage Components and ESI

The following components are considered part of the wages for ESI contribution:

• Basic Salary
• Dearness Allowance (DA)

Excluded components: Annual Bonuses, Incentive Bonuses, and Production Bonuses are excluded from the wage calculation for ESI contributions.

Conclusion

The Employees' State Insurance scheme provides valuable social security benefits to workers, including healthcare, medical treatment, maternity benefits, and more. Employers must ensure timely and accurate contributions to comply with ESI regulations.

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Key Takeaways

• Total Contribution Rate: 4% of monthly wages (0.75% employee + 3.25% employer)
• Wage Ceiling: ₹21,000 per month (₹25,000 for disabled employees)
• Employer Responsibility: Employers must deduct employee contributions and remit both shares to ESIC on time.

Frequently Asked Questions (FAQ) on ESI Contribution Rates – 2025

1. What is ESI?

Employees' State Insurance (ESI) is a social security scheme designed to provide financial assistance and medical care to employees in case of sickness, maternity, disability, or death due to workplace hazards. It also provides medical benefits for their family members.

2. What are the ESI contribution rates in 2025?

The total ESI contribution rate is 4% of the employee’s monthly wages. This is split as follows:

• Employee Contribution: 0.75%
• Employer Contribution: 3.25%

3. Who is eligible for ESI?

Employees earning a monthly wage of up to ₹21,000 (or ₹25,000 for employees with disabilities) are eligible for ESI coverage. The ESI Act applies to establishments with 10 or more employees.

4. How are ESI contributions calculated?

ESI contributions are calculated based on the employee’s gross monthly wages. For example, if an employee earns ₹15,000 monthly:

• Employer Contribution: ₹15,000 × 3.25% = ₹487.50
• Employee Contribution: ₹15,000 × 0.75% = ₹112.50
• Total Contribution: ₹600.00

5. How often should ESI contributions be paid?

ESI contributions must be submitted to the Employees' State Insurance Corporation (ESIC) by the 15th of the following month after the wages are paid. Employers must remit both employee and employer shares together.

6. Are there any exemptions from ESI contributions?

Yes, employees earning a daily wage of ₹137 or less are exempt from contributing to the ESI scheme. However, employers must still contribute for such employees.

7. What components are considered for ESI wage calculation?

The following components are considered part of the wages for ESI contribution:

• Basic Salary
• Dearness Allowance (DA)

Excluded components: Annual Bonuses, Incentive Bonuses, and Production Bonuses are excluded from the wage calculation for ESI purposes.

8. What are the benefits under ESI?

Employees who contribute to ESI are eligible for benefits such as medical care, sickness benefits, maternity benefits, disability benefits, and death benefits for their family members.

9. Do I need to register my establishment for ESI?

Yes, any establishment with 10 or more employees and meeting the wage ceiling criteria must register with ESIC to ensure that employees receive ESI benefits.

10. Can ESI contributions be paid online?

Yes, ESI contributions can be paid online through the official ESIC website using the ESI Online Payment Portal.

11. What happens if an employer fails to remit ESI contributions?

If ESI contributions are not remitted on time, the employer may face penalties or legal action. Employers should ensure timely payments to avoid penalties.

12. How do I claim benefits under ESI?

Employees can claim ESI benefits by applying directly at any ESIC hospital or through the official ESIC website. Medical benefits, sickness benefits, and maternity benefits are available as per the eligibility criteria outlined by the scheme.