Loading page
All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
ESI turns on a threshold, tested against gross wages excluding overtime, while the contribution itself is charged on every rupee paid, overtime included.
Employees' State Insurance is contributed at 0.75% by the employee and 3.25% by the employer, on gross wages, for employees within the statutory wage threshold of ₹21,000 a month.
The part that catches payroll teams out is not the rate. It is that two different wage figures are in play: coverage is tested on gross excluding overtime, but the 0.75% and 3.25% are applied to gross including it.
Enter your figures, then press Calculate
Your 2 inputs become a full breakdown, with every step of the working shown beneath the headline figures.
The contribution rates are the easy half. The eligibility test, and the fact that it is fixed for a contribution period rather than checked monthly, is the half that costs employers money.
If (Gross − Overtime) ≤ ₹21,000 → Employee = 0.75% × Gross, Employer = 3.25% × Gross (each rounded up)
Gross wages for the month less overtime. ESIC leaves overtime out when deciding coverage, and tests gross rather than basic.
Where those wages are ₹21,000 or less, the scheme applies. The threshold is inclusive, an employee at exactly ₹21,000 is covered.
The employee contributes 0.75% and the employer 3.25% of all wages paid, overtime included, each rounded up to the next rupee.
What this does not include
Asked often enough about this calculation to be worth answering beside it.
No. Overtime is left out when testing coverage, so overtime alone cannot take an employee out of ESI; contributions are still paid on the overtime. ESI also runs on contribution periods: an employee covered at the start of a period continues through it even if wages rise above the threshold within it.
On gross wages excluding overtime. Allowances such as shift and attendance allowances count towards it; overtime does not, although ESI is still paid on overtime.
Contributions fund the medical and cash benefits available to insured employees and their dependants under the scheme. The contribution is the employer's cost and does not reduce the employee's take-home.
The employee contributes 0.75% and the employer 3.25% of gross wages, each rounded up to the next rupee, for employees within the ₹21,000 monthly threshold.
Yes. The threshold is inclusive, so monthly gross wages of ₹21,000 or less fall within the scheme.
Because overtime is excluded when testing the ₹21,000 coverage limit but included when calculating the contribution. Entering it separately lets the calculator apply both rules correctly.
Shift differentials and attendance-linked allowances count towards gross. Overtime counts for contributions but not for the coverage test. Whether a specific allowance forms part of the wage base is a question for your advisers or the ESIC.
A system that re-tests applicability month by month, with no memory of the contribution period, produces under-deduction, over-deduction and disrupted benefit entitlement in turn.
A calculator applies a rule to figures you type in. A payroll run applies it to your actual employee record, your locations and your verified declarations, which is where Professional Tax, LWF and TDS also resolve.
14-day free trial · Full access to all 12 modules · Zero implementation fee · Cancel anytime