Is ESIC Mandatory for Service Industries? Understanding Salary Deductions and Contributions

Being a financial consultant, I want to know if ESIC is applicable to service industries as per updated laws. Is there any compulsion to deduct from the employee's salary? Also, what contributions should be considered when calculating the gross salary?

Hi,

Yes, ESI is applicable if 10 or more employees are employed. ESI should be deducted for employees whose gross salary is 21,000 and below. The revised ESI contribution with effect from 1st July 2019 is as follows:

- Employee's contribution: 0.75% (previously 1.75%)
- Employer contribution: 3.25% (previously 4.75%)

Thank you.

For all the employees earning INR 15000 or less per month as wages, the employer contributes 3.25 percentages and employee contributes 0.75 percentages and the total share comes to 6.5 percentage. The company who has 10 or more than 10 workers employed and whose wages is UP to 21000/— is eligible for esi