ESI Fund

• All contributions paid by the insured workers, their employers and income from other sources are pooled into a common fund called the Employees’ State Insurance Fund.
• The Corporation functions as the trustee of this fund which in turn is used for making social security provisions etc. as provided under the Act including administration of the Scheme.
i. Employer’s Contribution
• Employer’s contribution is a major source of revenue and is payable by the employers in respect of the insured employees in a factory, establishment covered under the ESI Act.
• The rates of contribution are in accordance with provision under clause 51 of the ESI (central) Rules 1950.
• These rates are reviewed and revised from time to time by the ESI Corporation for financial sustainability of the Scheme.
• The effective rate of contribution payable by the employers from 1.1.1997 is 4.75 percent of the wage bill.
• The employer also pays his share of contribution in respect of employees who are otherwise exempted from payment of employees’ contribution.

ii. Employee’s Contribution
• Insured employee’s contribution to the ESI fund is at the rate of 1.75 percent of the wages (effective from 1.1.1997).
• The actual contribution by an employee is worked out on the basis of daily wages payable to him in a particular wage period.
• In case the average daily wage during a particular wage period is Rs 100/- or less he/she is exempted from payment of his/ her share of contribution.

iii. State Government’s Share
• As provided under the ESI Act, currently every State Government’s share of expenditure on provision of medical benefit to ESI beneficiaries is fixed at 12.5 %.
• The remaining 87.5 % of expenses is borne by the Corporation keeping in view of the ceiling of expenses fixed on medical care.
• Amount spent in excess of the ceiling is, however, borne by the State Govt. concerned.

Further, wherever the incidence of sickness benefit payments to insured persons is found to be in excess of the all-India average, the excess amount is shared between the State Government and the ESI Corporation in the given proportion.