ESI
Employees' State Insurance: a scheme run by the ESIC that gives covered employees medical and cash benefits, funded by employer and employee contributions.
What it means in business
ESI covers employees whose wages are below a limit set by the government, in establishments of a size the law covers. Employer and employee each pay a percentage of wages, and the employee and family get medical care and cash benefits for sickness, maternity and injury.
Example
A factory registers with the ESIC, enrols its covered workers, deducts the employee share, adds its own and deposits both each month. This is an illustration of normal business use rather than a quoted case study.
How to use it correctly
Check each employee's wages against the current limit when they join and when their pay changes. Deposit by the due date and keep the challans. Keep the employee's insurance number on file.
Common confusion
ESI is not the same as PF. It is insurance and not savings, and the benefits are used when needed rather than paid out at retirement. Eligibility depends on a wage limit that changes over time.
Related glossary terms
Sources and further reading
Written on 24 October 2026 for lamp. Confirm the current rules with the official source or an adviser before relying on it.