Every employer in India who crosses the headcount threshold set under the Employees' State Insurance Act, 1948 has a legal duty to complete ESI registration. This single step brings an entire workforce under one of the country's largest self-financed social security schemes, giving employees and their families access to medical treatment, sickness pay, maternity benefit, disability compensation, and dependants' support in the event of an employment-related death.
ESI registration is not a one-time formality that employers can defer. Once a business crosses the applicable employee threshold, it has a narrow compliance window to register, and the ESIC's own digital audit systems now flag unregistered establishments far faster than they once did. This guide walks through who needs to register, the current contribution rates, the exact documents and steps involved, and what changes the new Labour Codes bring to ESI compliance in 2026.
At LegalDev, our team handles the entire ESI registration process end to end, from eligibility assessment and documentation to filing on the Shram Suvidha and ESIC portals, so that your business stays compliant from day one.
ESI registration is the process by which an employer enrols an eligible establishment, and in turn its employees, under the Employees' State Insurance Scheme administered by the Employees' State Insurance Corporation (ESIC). ESIC functions as an autonomous body under the Ministry of Labour and Employment, Government of India, and runs the scheme through a network of ESI hospitals, dispensaries, and empanelled healthcare providers across the country.
Once registered, the establishment receives a unique 17-digit employer code, and each covered employee is issued an Insurance Number along with a Pehchan Card that allows cashless treatment at ESIC-linked hospitals and dispensaries. As of 2026, the scheme covers more than 3.6 crore insured persons and close to 14 crore beneficiaries nationwide, supported by over 575 dispensaries and 159 hospitals.
ESI registration eligibility depends on two factors: the number of persons employed, and the wages drawn by each employee.
Employer threshold: ESI registration becomes mandatory once a factory or establishment employs 10 or more persons. A handful of states, including Maharashtra and Chandigarh, have set a higher threshold of 20 or more employees. It is worth confirming the exact threshold notified for your state before assuming your business falls outside the requirement.
Employee wage ceiling: Coverage under ESI applies to any employee, including temporary staff, contract workers, probationers, and salaried directors, whose gross monthly wages do not exceed ₹21,000. For persons with disabilities, this ceiling is higher, at ₹25,000 per month.
Types of establishments covered: The ESI Act applies to factories and has been extended by most state governments to shops, hotels and restaurants, cinemas, road transport undertakings, newspaper establishments, educational institutions, and private medical institutions employing the threshold number of workers.
Once covered, always covered: An important point employers often miss is that ESI coverage does not lapse if the headcount later drops below the threshold. Once an establishment is registered, it continues to be treated as a covered unit under the Act.
Exemptions: Seasonal factories operating for fewer than seven months in a year, establishments in areas not yet notified under Section 1(3) of the ESI Act, and units already covered under an equivalent or superior benefit scheme are generally kept outside mandatory ESI coverage.
The ESI contribution structure has remained unchanged since the last revision by the Government of India in July 2019, and no change applies for FY 2026-27 either.
The employer is responsible for deducting the employee's 0.75% share from wages and depositing the full 4% with ESIC every month, on or before the 15th of the following month. Contribution is calculated on gross wages, not on basic pay or CTC, though certain components such as employer PF contribution, gratuity, and reimbursement of actual expenses are excluded from the wage definition for ESI purposes.
Mid-period wage crossing: If an employee's gross wages cross ₹21,000 during a running contribution period (April–September or October–March), coverage and contribution continue for the remainder of that period, even though the employee is technically above the ceiling.
Since the entire application is filed online, all documents must be kept ready in digital form before starting the registration process.
ESI registration is completed entirely online through the Unified Shram Suvidha Portal, which offers a combined registration route for both ESIC and EPFO under a single application.
Note for newly incorporated companies: Since October 2020, new Private Limited Companies, Public Limited Companies, and One Person Companies no longer register separately for EPFO and ESIC on the Shram Suvidha Portal. Instead, they receive their EPFO and ESIC registration numbers automatically at the time of incorporation through the SPICe+ and AGILE-PRO forms filed with the Ministry of Corporate Affairs. These companies must still start complying with ESI provisions, including contribution payment and return filing, once their employee count crosses the applicable threshold.
Employers should register within 15 days of first becoming liable under the Act — that is, from the date the 10th (or 20th, where applicable) employee is engaged. Registering after the threshold is crossed but before the deadline avoids back-dated contribution demands and interest.
ESI registration is not merely a compliance formality; it gives every covered employee and their dependants access to a wide safety net:
Registration is the starting point, not the end, of ESI compliance. Once registered, an employer must continue to meet the following obligations:
The ESI Act, 1948 provides for both financial and criminal consequences for employers who fail to register or fail to deposit contributions on time.
Given the tight 15-day registration window and the compounding nature of interest and damages, employers approaching the 10-employee threshold are better served registering proactively rather than waiting for an ESIC notice.
The four central Labour Codes came into force on 21 November 2025, with ESIC issuing its implementing notifications in December 2025. The Code on Social Security, 2020 introduces a uniform definition of "wages" that directly affects how gross wages are computed for ESI purposes.
Under the new definition, an employee's basic pay plus dearness allowance must together make up at least 50% of total remuneration. Where allowances such as HRA and conveyance exceed 50% of the total pay structure, the excess is added back to "wages" for ESI calculation. This closes a long-standing practice of structuring salaries with a low basic pay and high allowances to keep gross wages, and therefore ESI liability, artificially low.
Businesses that have historically split salaries this way should review their compensation structures in 2026, since the revised wage definition can bring employees into ESI coverage, or increase the contribution base for those already covered, even without any change in take-home pay.
LegalDev is a CA and CS-led business compliance firm that handles ESI and EPF registration for employers across India. Our team manages:
We aim to complete the registration process accurately the first time, minimising the back-and-forth that typically delays employer code allotment.
ESI registration is the process of enrolling an eligible establishment and its employees under the Employees' State Insurance Scheme, a self-financing health insurance and social security programme administered by ESIC under the Employees' State Insurance Act, 1948.
It is mandatory for factories and notified establishments employing 10 or more persons in most states (20 or more in states like Maharashtra and Chandigarh), where at least one employee earns wages within the covered ceiling.
Any employee, including contract staff and probationers, drawing gross monthly wages of up to ₹21,000 is covered. The ceiling is ₹25,000 per month for employees with disabilities.
The total contribution is 4% of gross wages, split as 3.25% from the employer and 0.75% from the employee. These rates have been unchanged since July 2019.
Once the application and documents are submitted correctly on the Shram Suvidha Portal, ESIC typically allots the employer code within 7 to 15 working days.
Non-registration or delayed contribution payment attracts 12% annual interest, damages of 5% to 25% under Section 85-B, and potential prosecution under Section 85 of the ESI Act, which can include imprisonment of up to two years and a fine.
No. Since October 2020, new Private Limited Companies, Public Limited Companies, and One Person Companies receive their ESIC and EPFO registration automatically at incorporation through the SPICe+ and AGILE-PRO forms filed with the MCA.
No. Coverage and contribution continue until the end of the ongoing contribution period (April–September or October–March), even if wages exceed the ceiling mid-period.