ESI Contribution Reduction w.e.f July 1, 2019

Employees’ State Insurance Act, 1948 (“ESI”), is a social benefit legislation, enacted to provide certain benefits to employees in case of sickness, maternity and employment injury.

Amended Position:

The Ministry of Labour and Employment vide its Gazette Notification No.G.S.R. 423 (E) dated 13th June, 2019 has amended the Employees’ State Insurance (Central) Rules, 1950. The amendment rules i.e. the Employees’ State Insurance (Central) Amendment Rules, 2019 shall come into force from 1st July, 2019 and has made the following amendments:

  • The rate of contribution under the amended rules is reduced from 6.5% to 4% i.e., the employers’ contribution is being reduced from 4.75% to 3.25% and employees’ contribution is being reduced from 1.75% to 0.75%.

A tabular form has been depicted for easier reference:

Rate of contribution (in percentage) under Employees’ State Insurance Rules
Existing Rate till June 30, 2019 Revised Rate from July 1, 2019
Employers’ contribution 4.75 3.25
Employees’ contribution 1.75 0.75
Total contribution 6.5 4