Who is Covered Under ESIC? Eligibility & Contribution Criteria Explained
The Employees’ State Insurance (ESI) Act, 1948, provides a comprehensive social security scheme for workers, ensuring financial protection during medical emergencies, sickness, maternity, disability, and even unemployment. However, not all employees or businesses fall under the purview of ESIC. Understanding the eligibility criteria and contribution structure is crucial for both employers and employees to maximize their benefits.
This blog outlines who is covered under ESIC, the eligibility criteria, and the contribution structure that ensures employees receive their entitled benefits.
Who is Covered Under ESIC?
Employees Eligible for ESIC
The ESIC scheme covers employees working in:
- Factories with 10 or more employees (in some states, the threshold is 20).
- Any other notified establishments as per government regulations.
Salary Limit for Coverage
- Employees earning up to ₹21,000 per month (₹25,000 for persons with disabilities) are mandatorily covered under the ESIC scheme.
- Employees crossing this salary limit during a contribution period continue to be covered until the end of that period before being exempted.
Who is Not Covered?
- Employees earning above ₹21,000 per month (₹25,000 for disabled employees).
- Establishments with less than the prescribed number of employees.
- Employees working in government organizations.
Contribution Criteria for ESIC
Employer and Employee Contributions
The ESIC scheme is funded through contributions from both employers and employees, calculated as a percentage of wages.
| Contribution Type | Percentage of Wages |
| Employer Contribution | 3.25% of gross wages |
| Employee Contribution | 0.75% of gross wages |
Total Contribution: 4% of Gross Wages
Example Calculation:
- If an employee earns ₹18,000 per month:
- Employer contributes: ₹585 (3.25% of ₹18,000)
- Employee contributes: ₹135 (0.75% of ₹18,000)
- Total ESIC Contribution: ₹720 per month
Exemptions from Employee Contribution
- If an employee’s daily average wage is ₹176 or below, they are exempt from paying their share.
- The employer must still contribute for such employees.
Employees covered under ESIC receive various benefits.
Once covered, employees and their dependents can access a wide range of benefits:
- Medical Benefits: Free treatment, hospitalization, medicines, and specialized care.
- Sickness Benefits: Cash compensation for up to 91 days at 70% of wages.
- Maternity Benefits: 26 weeks of paid leave at 100% of wages.
- Disability Benefits: Compensation for temporary or permanent disability due to workplace injuries.
- Dependent Benefits: Monthly pension for family members if an insured worker dies due to employment-related causes.
- Funeral Expenses: Lump sum assistance of ₹15,000 to the deceased employee’s family.
Employer Responsibilities for ESIC Compliance
To ensure employees receive their entitled benefits, employers must:
- Register under ESIC if the establishment meets eligibility criteria.
- Deduct employee contributions and remit them along with employer contributions before the 15th of each month.
- Submit employee details and salary records to ESIC.
- Assist employees in claiming medical and cash benefits via the ESIC portal.
- Display ESIC registration details at the workplace.
Conclusion
The ESIC scheme provides a strong financial safety net for employees earning ₹21,000 or less per month, ensuring medical security, income replacement, and protection against unforeseen circumstances. Employers must adhere to ESIC compliance to facilitate timely benefits for employees.
For expert guidance on ESIC Eligibility and Contribution, ESIC registration, compliance, and claims, contact Exertion HR Solution Pvt Ltd today!
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