Industrial workers to take home higher salaries, ESIC contribution lowered

Government brings down mandatory ESIC contributions to 4% and 0.75% for employers and employees, respectively.


With effect from 1 July, approx. four crore industrial and other workers earning up to Rs 21,000 every month, will enjoy raised take-home salaries. This is because, the Government has reduced the compulsory contributions under the Employees’ State Insurance Scheme (ESIC) to four per cent of the monthly wages.

The current fixed rate of 6.5 per cent of the wages includes 4.75 per cent as employers’ share and 1.75 per cent as employees’ share. This rate has been effective for over two decades now.

However, from next month onwards, that is, July 2019, about 3.6 crore employees will pay only 0.75 per cent of their wages as mandatory contribution to the ESIC, while approx. 12.85 lakh employers will contribute four per cent.

This move is expected to encourage more workers to join the workforce in the formal sector. This will also help bring down the financial burden of the factories and establishments, which, in turn will improve business and working conditions.

The ESIC scheme is applicable to factories that have a workforce of at least ten. Earlier, before 2017, the compulsory coverage under ESIC was limited to a threshold of Rs 15000 per month. Since 2017, the threshold limit was hiked to Rs 21,000 per month.

The ESI scheme provides medical care to the insured workers and their families from the day they join work. With no limit to the expenditure on the treatment of an insured worker or family member, this is a huge benefit for the workers.

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