ESIC: applicability, wage limit and contribution rates
ESIC provides health and cash benefits to employees earning up to ₹21,000 a month in units with 10+ employees. Employer pays 3.25% and employee 0.75%.
Short answer
ESIC (Employees' State Insurance Corporation) runs the employees' state insurance scheme, which gives medical care and cash benefits for sickness, maternity, disablement and death to covered employees. It applies to establishments with 10 or more employees and covers employees earning up to ₹21,000 a month. The employer contributes 3.25% and the employee 0.75% of wages.
- Applicability
- 10 or more employees (20 in some states)
- Wage limit
- ₹21,000 a month (₹25,000 for persons with disabilities)
- Contribution
- Employer 3.25%, employee 0.75%
- Due date
- 15th of the following month
How ESIC works
Covered establishments register with ESIC, often through SPICe+ at incorporation, and register each eligible employee to generate an insurance number. Contributions are deducted from wages and paid monthly by the 15th of the following month. Employees and their dependants can then use ESIC hospitals and dispensaries and claim cash benefits. Coverage continues even if headcount later falls below the threshold. Half-yearly returns are due by 11 November and 11 May, covering April to September and October to March.
Status under the Code on Social Security
The Code on Social Security, 2020 came into effect on 21 November 2025 and consolidates the ESI Act with other laws, with central rules notified in 2026 and state rules at different stages. The ₹21,000 wage ceiling has been unchanged since January 2017, and the contribution rates since 1 July 2019. Employers should watch for revisions to the ceiling or the wage definition under the Code.
Why it matters for startups
Startups with support, operations or field teams often have employees below the wage limit, so ESIC applies once the 10-employee threshold is crossed. Missing registration exposes the employer to the cost of benefits and penalties if an uncovered employee is injured or falls ill. Register on time and include ESIC in payroll from the first eligible month.
Related services
Sources
Written by the Refogo Editorial Team from the official sources above and checked on 2026-10-31. Laws, rates and due dates change, and authorities often extend deadlines, so confirm your own case with a qualified professional. This is general information, not legal or tax advice. Read our editorial policy or report an error to support@refogo.com.
Common questions
Is ESIC mandatory for all employees?
Only for employees whose wages are within the ceiling, currently ₹21,000 a month, in covered establishments.
Does ESIC apply to an IT startup?
Yes, if it has 10 or more employees and some of them earn within the wage ceiling.
What happens if an employee's salary rises above ₹21,000?
Coverage continues until the end of the contribution period, after which the employee moves out of compulsory coverage.