Calculation of Employee’s State Insurance (ESI)

Employees’ State Insurance (abbreviated as ESI) is a self-financing social security and health insurance scheme for Indian workers. The fund is managed by the Employees’ State Insurance Corporation (ESIC) according to rules and regulations stipulated in the ESI Act 1948. The calculation of Employee’s State Insurance is done as stated below.

The employee’s contribution is 0.75% of gross salary (basic plus allowances), rounded to the next higher rupee. Employer’s contribution is 3.25% of gross salary payable to each employee, rounded off to next higher rupee.


Therefore Calculation Employee’s State Insurance would be, Net pay = Gross pay – Total deductions

 The contribution has to be paid within 21 days from close of the month. If the contribution is not paid in time, interest @ 12% is payable. To read more about ESI click on the link below.