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 ESIC


Employees’ State Insurance Act, 1948 (ESI Act) is a social security legislation aimed at providing benefits to employees in case of sickness, maternity, employment injury and certain other related matters. Under this self-financing health insurance scheme, funds are primarily built out of contribution from employers and employees. ESI fund, maintained by ESIC, is applicable to employees earning ₹21,000 or less per month to provide the cash and medical benefits to them and their families. This fund is a contributory fund in which both the employer and employee contribute 3.25% and 0.75% respectively to make it a total of 4%. For ESI calculation, the salary comprises of all the monthly payable amounts such as basic pay, dearness allowance, city compensatory allowance, HRA, incentive allowance and meal allowance. The salary, however, does not include the annual bonus, retrenchment compensation, encashment of leave and gratuity. ESI will be calculated for the total gross salary of the employee.

· Employee Contribution: 0.75 %

· Employer Contribution: 3.25 %

Employees’ State Insurance Scheme will be calculated for ₹21,000 of the gross salary. If Gross is above ₹21,000 ESI will be constant.

ESI Calculator

Gross Pay ₹50,000 /Month

ESI Contribution

Employee 0.75% of 21000: ₹157.50

Employer 3.25% of 21000: ₹682.50

Total ₹840.00


Employee's State Insurance(ESI) is a self-financing social security and health insurance scheme for Indian workers. ESI Registration is mandatory for employers having 10 or more employees. For all employees earning Rs.15,000 or less per month as wages, the employer must contribute 4.75% and the employee must contribute 1.75% towards ESI. The ESI fund is managed by the ESI Corporation (ESI) according to rules and regulations stipulated therein the ESI Act 1948, which oversees the provision of medical and cash benefits to the employees and their families through its large network of branch offices, dispensaries, and hospitals throughout India. ESI is an autonomous corporation under the Ministry of Labour and Employment, Government of India. IndiaFilings can help you obtain ESI registration for your business.

All employers having 10 or more employees are required to be registered with Employee State Insurance (ESI) Corporation. Those entities having ESI Registration must then file ESI returns.


Employees' State Insurance (known as ESI) is a social security and health insurance scheme for Indian employees financed by the Government. The fund is administered by the Employees State Insurance Corporation (ESIC) according to rules and regulations mentioned in the ESI Act 1948.

The Employees State Insurance Act (ESI) defines the rules, regulations of the Employee State Insurance Scheme (ESI) that is arranged by the Indian Government. It specifies benefits provided to the people working in factories as well as companies.

As per the ESI Act, an employee is an individual who is employed after discussing a certain amount to be paid to him on a weekly, monthly basis called salary or wage.

20 is the minimum number of employees that are needed in every organization after which they need to apply for Employees State Insurance Registration.

Benefits of Employee State Insurance

ESI scheme falls under the category of a social security scheme with the objective of providing benefits to employees in the organized sector. The employees registered under the scheme are entitled to medical treatment for themselves and their family members, unemployment cash benefits in certain possibilities and maternity benefits for the women employees.

ESI Registration is mandatory for employers having 10 or more employees. For the employees that earn an amount of Rs 15,000 or less per month as wages, the employer’s contribution is 4.75% and the employee must contribute 1.75% towards Employees State Insurance-ESI.

It works on the objective of providing economic security. It also provides financial benefits to employees in situations of sickness, injury or any other emergency cases.

Employee State Insurance Registration Process (ESI)

The corporations need to follow a process known as ESI Registration Process to be eligible for the ESI benefit scheme. They, later, need to file for ESI returns. The returns are required to be filed once in every two years.

Documents for ESI Return are-

  1. Attendance register of employees
  2. Register- Form 6
  3. Wages of registers
  4. Document describing monthly returns and fines
  5. Details of accidents appeared at the business location

SI Registration is a certification provided to almost all companies in India for providing medical, maternal and disablement benefits. However, not all employers need to obtain ESI Registration or ESIC Registration based on the number of people employed by them. This article focuses on ESI Registration, the benefits of having one and the penalty which you have to pay if you don’t obtain ESIC Registration.

What is ESI Registration?

The Employee State Insurance Act of 1948[1] is an act that provides benefits to employees in case of sickness, maternity and employment injury. After that, to provide those benefits to the employees by the employer, there was a need to set up a provision to provide certification to companies providing these benefits to its employees. ESI Registration is the certification that needs to be obtained by such companies employing over ten people (20 in some states) taking wages of Rs. 15, 000.

Who needs to obtain ESI Registration in India?

Under section 1 (5) of the ESI Act, 1948, the following entities need to obtain ESIC Registration;

  • Cinemas
  • Shops
  • Restaurants or Hotels only engaged in sales.
  • All Road Motor Transport Establishments
  • Every newspaper establishments (which are not covered under the factory act)
  • Private Educational Institutions

What are The Benefits of ESIC Registration in India

The advantages of getting the ESIC Registration are as follows;

  • Benefits in case of illness at the rate of 70% (in the form of salary), in case of any certified sickness and which may last for a maximum of 91 days in any year
  • Medical Benefits to the employee and their family members
  • Maternity benefits to women who are pregnant in the form of paid leaves
  • In cases, if any employee dies at work, then 90% of the salary is given to his direct dependents every month after the death of the employee
  • Same as the above point in case of disability of the employee
  • Funeral expenses
  • Old age care medical expenses

Documents required for ESI Registration in India

The documents required for ESIC Registration are as follows;

  • Registration certificate obtained either under the following acts;
  • Factories Act
  • Shops and Establishment Act
  • The Certificate of Registration in case of a Company, and the Partnership deed in case of a Partnership firm
  • (MOA) Memorandum of Association and (AOA) Articles of Association of the Company
  • List of all employees working in the business establishment
  • The PAN Card of the Business Entity as well as all the employees working in the organization
  • Compensation details of the employees
  • A cancelled cheque from the Bank Account of the Company
  • A list of Directors of the Company
  • Also a list of the Shareholders of the Company
  • A register containing the attendance details of the employees

Thereafter collecting all the above-mentioned documents, the following procedure needs to be followed for registering under the ESI Scheme;

  • Form No – 1 is to be downloaded and filled which is the Employers Registration Form
  • After downloading the PDF version of the form and filling it, it has to be submitted on the ESI website[2] itself along with the above-mentioned documents.

Procedure for ESI Registration in India

The following steps are involved in the ESI Registration procedure;

Step 1:

After the verification of the application form, the government will issue a 17 digit unique number

Step 2:

The employees registered under this scheme will have to fill the form and provide it to the employer along with photographs of his own family members as a part of the process. After registration, they are provided with the ESI card.

Step 3:

Also, any change in the company or its employees need to be intimated to the ESIC

ESI Return Filing

After obtaining ESIC Registration, you have to file ESI Returns twice a year.

Furthermore, you need to attach the following documents to file ESI Return;

  • Employees Attendance Register
  • Register of wages
  • Form 6 – Register
  • Register of any accidents which have occurred on the premises of the business
  • Monthly returns and challans

Offences and Penalties

The ESI Act prohibits the following activities by the employer and considers them as offences if committed at any point of time which is liable for punishment under this act;

  • If the employer fails to pay any contribution which under this act
  • In case they deduct or attempts to take away a part or whole portion from the wages of an employee
  • If the employer tries to reduce the wage, privilege or any other benefit of the employee which contradicts with Section 72 of this act
  • Also, performing any tasks like dismission, discharging, reducing or punishing an employee in contradiction with section 73 of this act
  • In case they fail or refuses to submit any return prescribed under relevant regulations
  • Furthermore, if the employer tries to obstruct the inspector or another official midst of his/ her duty
  • In case the employer is found non complying with any of the provisions of this act

Furthermore, in the case of above-mentioned offences the following penalties are imposed on the employer;

  • Imprisonment not less than one year in case of failing to pay the employee’s contribution which was deducted by the entity at the time of employment of such employees
  • Or a jail term not less than six months in case of any other offence along with a fine of Rs. 5000
  • Also, if the court seems fit, they can extend the term of imprisonment up to one year or a fine up to Rs. 4000 or both.

In Conclusion

ESI Act of 1948 provides with the regulations and guidelines of providing various benefits to the employees by the employers in case of illness, or death of an employee at the place of work. Also, companies holding the ESI Registration have to provide maternity benefits to pregnant ladies of the company in the form of paid leaves. Furthermore, every employee of such company enjoys various advantages mentioned in the ESI Act after registering under the ESI Scheme.


These are the steps For ESI Registration:-

1.Establishments/Factories must register within 15 days of the ESI applicability.

2. A 17-digit code number is provided which is used in all Correspondence.

3. At the time of joining, employees fill a Declaration Form and submit two copies of a family photo to the employer, which is submitted to the ESI.

4. The employee will then be allotted an insurance number for the purpose of his identification under the scheme.

5.The employees are issued a temporary identity card for availing medical benefit for three months.

6. Finally, employees are provided a permanent photo identity card.

To learn how to calculate ESI, PF and TDS you can join A TO Z OF PAYROLL PROCESSING course. It is available at a 50% discount.


Needs of ESI Registration in India

  • Cinemas
  • Shops
  • Restaurants or Hotels only engaged in sales.
  • All Road Motor Transport Establishments
  • Every newspaper establishments (which are not covered under the factory act)
  • Private Educational Institutions

Documents for ESI Registration in India

  • The Compensation details of the employees
  • The canceled cheque from the Bank Account of the Company
  • A list of Directors of the Company
  • Also a list of the Shareholders of the Company
  • A register containing the attendance details of the employees
  • Registration certificate obtained either under the following acts;
  • Factories Act
  • Shops and Establishment Act
  • The Certificate of Registration in case of a Company, and the Partnership deed in case of a Partnership firm
  • (MOA) Memorandum of Association and (AOA) Articles of Association of the Company
  • List of all employees working in the business establishment
  • The PAN Card of the Business Entity as well as all the employees working in the organization

ESI Registration Procedure: Documents Required

The following documents are required for registering under the ESI scheme:
1. A registration certificate or a license obtained under Shops and Establishment Act or Factories Act;
2. Certificate of registration (Memorandum and Articles of Association in case of a private limited company, partnership deed for LLPs, etc);
3. Certificate of registration for all entities and commencement of production for factories;
4. A list of employees with their monthly compensation, in detail;
5. A list of directors, partners and shareholders of the company;
6. The PAN card of the business and address proof of the establishment/firm;
7. Bank statements of the organization, with evidence of commencement of operation.

ESI Registration Procedure: Steps Involved

1. Once the documents are ready, the company can apply for registration by submitting the Employer’s Registration Form (Form-1).
2. A PDF format of the form is available on the website. Fill in the form and submit it to ESIC for registration on the official website.
3. Once verified, a registration number, a 17-digit unique identity will be provided to the organization. The ESI filings can be done once you receive the 17-digit number.
4. Employees registered under the scheme get an ESI card after submitting a form with photographs and details of family members.
5. Although the registration is permanent, and the number is valid for the lifetime of the company, any new changes, such as employee additions, need to be intimated to the ESI.

Documents for ESI Returns

The following documents must be maintained regularly for filing ESI returns.
1. Attendance register
2. Register for Form 6
3. Register of wages
4. Register of any accidents on the premises
5. Inspection book
6. Monthly challans and returns submitted for ESI




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