ESI (Employees' State Insurance)
A social security scheme providing medical and cash benefits to employees earning below a specified wage ceiling, funded through employer and employee contributions.
ESI is a self-financing social security scheme, administered by the Employees' State Insurance Corporation, that provides medical care, sickness benefit, maternity benefit, and disability-related benefits to employees earning below a specified monthly wage ceiling, at establishments covered under the ESI Act. Both employer and employee contribute a percentage of wages, with the employer's share considerably larger than the employee's.
It's separate from EPF and serves a different purpose: EPF is retirement savings, ESI is closer to health and income-protection insurance for lower-wage employees. Establishments above a specified employee threshold, engaged in specified categories of activity, are required to register for ESI regardless of whether any single employee explicitly requests it.
This glossary entry is for general informational purposes only and does not constitute professional tax, legal, or financial advice. Rules and rates change, so consult a qualified Chartered Accountant for advice specific to your situation.