ESI for contract workers: who is covered and how to work it out
ESI is a monthly payment for your workers, shared by you and the worker. This guide shows who is covered, how much to cut, and when to pay.
Who is covered
ESI covers workers who earn up to ₹21,000 a month in gross wages. Gross wages means the total pay for the month before any cuts.
- Gross wages up to ₹21,000 a month: covered
- A person with disability: covered up to ₹25,000 a month
- Gross wages above these limits: not covered (but see the mid-period rule below)
You may have heard that the limit will go up to ₹30,000. This has been talked about, but it is NOT notified. Keep using ₹21,000.
The rates
| Who pays | Rate on gross wages |
|---|---|
| Worker (cut from pay) | 0.75% |
| Employer | 3.25% |
| Total | 4% |
ESI is worked out on gross wages. This is different from PF, which uses PF wages. Under the new 50% rule, check that your wage parts are set up right. Check with your auditor.
Rates as of 21 October 2026.
The ₹176 a day rule
Some workers earn very little. If a worker's average daily wage is ₹176 or less, the worker pays nothing. The employer still pays 3.25%.
| Example: low daily wage | Amount |
|---|---|
| Daily wage | ₹160 |
| Days worked | 25 |
| Gross wages (₹160 × 25) | ₹4,000 |
| Worker share | ₹0 (below ₹176 a day) |
| Employer share 3.25% | ₹130 |
Worked example
Example: a housekeeping worker earns ₹16,000 gross this month.
| Item | Amount |
|---|---|
| Gross wages | ₹16,000 |
| Worker share 0.75% | ₹120 |
| Employer share 3.25% | ₹520 |
| Total to pay | ₹640 |
The worker's take-home goes down by ₹120. Your cost goes up by ₹520. Add this ₹520 to your client bill if your contract says so.
Contribution periods and mid-period pay rise
ESI has two contribution periods (six-month blocks) in a year.
| Contribution period | Months |
|---|---|
| First period | April to September |
| Second period | October to March |
A worker may cross ₹21,000 in the middle of a period. For example, OT pushes pay to ₹22,000 in December. The worker stays covered till that period ends in March. Keep cutting ESI on the full gross till then.
Example: on ₹22,000, the worker share is ₹165 and the employer share is ₹715.
Steps to pay ESI each month
- List the covered workers. Check each worker's gross wages and period status.
- Work out both shares. Use 0.75% and 3.25%. Apply the ₹176 a day rule.
- Upload on the ESIC portal. Enter or upload the month's wages and days.
- Pay by the 15th. Pay by the 15th of the next month on the ESIC portal.
Check one worker fast with our free PF and ESI calculator.
Doing ESI for many sites?
ContractPay works out ESI with the month's salary for each client site. It makes an ESI file and an ESI Portal Upload file (.xls) for the ESIC website. You upload it and pay on the portal. See PF and ESI software for contractors.
Questions people ask
Is the ESI limit now ₹30,000?
No. A rise to ₹30,000 has been talked about, but it is not notified. Use ₹21,000, or ₹25,000 for a person with disability.
Does a low-paid worker pay ESI?
If the average daily wage is ₹176 or less, the worker pays nothing. The employer still pays 3.25%.
What if pay goes above ₹21,000 in the middle of a period?
The worker stays covered till the end of that contribution period. Keep paying ESI till then.
When is ESI due?
Pay by the 15th of the next month on the ESIC portal.
Run this month’s salary the easy way
30 days free. No card needed. Send your Excel and we set up your first client free.