Introduction
The Employees’ State Insurance Corporation (ESIC) is a government initiative under the Ministry of Labour and Employment that provides social security and health benefits to employees in India. ESIC deductions are made from both the employer and employee salaries to ensure financial and medical protection in case of illness, maternity, disability, or job loss.
In this blog, we’ll explore what ESIC deduction means, the latest deduction rates in 2025, eligibility criteria, and the key benefits for employees.
What is ESIC (Employees’ State Insurance Corporation)?
ESIC is a self-financing social security scheme that provides medical and cash benefits to employees and their families. It was established under the ESI Act, 1948, and is applicable to factories, organizations, and establishments that employ a certain number of workers.
ESIC Deduction Rate (Updated for 2025)
The ESIC contribution is shared between employer and employee.
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Employee Contribution: 0.75% of the employee’s gross salary
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Employer Contribution: 3.25% of the employee’s gross salary
So, the total ESIC contribution amounts to 4% of the employee’s gross monthly salary.
Eligibility for ESIC Deduction
Employees are eligible for ESIC deductions and benefits if they meet the following criteria:
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The employee’s gross salary is ₹21,000 or below per month (₹25,000 for persons with disabilities).
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The organization is covered under the ESI Act, i.e., it employs 10 or more people (in some states, 20).
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The employee works in a factory, shop, hotel, cinema, transport, or other notified establishment.
Calculation Example
Let’s take an example:
If an employee’s gross salary is ₹20,000/month:
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Employee’s contribution (0.75%) = ₹150
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Employer’s contribution (3.25%) = ₹650
Total ESIC contribution = ₹800/month
Benefits of ESIC for Employees
ESIC offers multiple benefits that provide social and medical security to employees and their dependents:
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🏥 Medical Benefits – Full medical care for insured employees and family.
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👶 Maternity Benefits – Paid leave and medical care for female employees during maternity.
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💰 Sickness Benefits – 70% of the average daily wages during certified sickness.
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⚙️ Disablement Benefits – Compensation for temporary or permanent disability due to employment injury.
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💀 Dependents’ Benefits – Monthly pension to dependents in case of an employee’s death.
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🧓 Funeral Expenses – Up to ₹15,000 provided for funeral expenses.
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🏡 Unemployment Allowance – Cash compensation during involuntary job loss under the “Atal Beemit Vyakti Kalyan Yojana”.
Documents Required for ESIC Registration
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Employer registration certificate (Factory/Shop Act)
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Employee details (Aadhaar, PAN, bank details)
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Address proof of establishment
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List of employees with salary details
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Digital signature of employer
Conclusion
The ESIC employee deduction is not just a salary cut — it’s a social security investment that protects employees and their families during tough times. Understanding your ESIC deduction helps you know how much you contribute and what benefits you can avail.
In 2025, with growing medical costs, ESIC remains a vital part of financial security for millions of Indian workers.