The ESIC contributions are calculated on wages as defined under Section 2(zz) of the ESIC Act.
Components such as HRA and Other Allowances exceeding 50% of total remuneration are excluded from ESIC wages.
Download ESIC Act, 1948 (Official PDF)
As per Section 2(88) of the Code on Wages, 2019,
“wages” means all remuneration, whether by way of salaries,
allowances or otherwise, expressed in terms of money or capable of being so expressed,
which would, if the terms of employment were fulfilled, be payable to a person
employed in respect of his employment or work done.
Wages include:
- Basic Pay
- Dearness Allowance (DA)
- Retaining Allowance, if any
Wages do NOT include:
- Bonus payable under any law
- House Rent Allowance (HRA)
- Employer’s contribution to PF or Pension
- Conveyance or travelling allowance
- Special expense reimbursement
- Overtime allowance
- Commission
- Gratuity, retrenchment compensation or ex-gratia on termination
Important Proviso:
If excluded components exceed 50% of total remuneration,
the excess amount shall be deemed as wages and added back for statutory
computation under EPF, ESIC, Bonus and Gratuity.
This definition is the statutory foundation for ESIC wage determination and
is actively enforced during EPFO inspections.
Code on Wages, 2019 – Official PDF
- Incorrect wage definition leads to incorrect ESIC liability
- Overpayments or underpayments can attract penalties
- Inspections focus on Basic–Allowance ratio for ESIC wages
- Statutory contributions are strictly enforced under the ESIC Act
- 35+ years of labour law compliance experience
- PF inspections, audits & demand handling experts
- Legally compliant wage structuring advisory
- Complete EPFO liaison & representation
This Employees’ State Insurance (ESIC) calculator is provided for
informational and educational purposes only.
The calculations and eligibility determination displayed are based on the
personal and professional understanding of the
Employees’ State Insurance Act, 1948, relevant rules, notifications,
judicial interpretations, and prevailing compliance practices.
This calculator does NOT constitute an official interpretation,
clarification, notification, or circular issued by the Employees’ State
Insurance Corporation (ESIC), the Central Government, or any statutory authority.
ESIC applicability, wage determination, contribution liability, and
eligibility may vary depending upon:
- Actual wage structure and nature of allowances
- Uniformity and regularity of payments
- Coverage status of the establishment under the ESI Act
- Interpretation adopted by ESIC authorities during inspections
- Applicability of wage ceiling (₹21,000) and relevant contribution period
- Subsequent amendments, notifications, or judicial pronouncements
Even where wage calculations are shown under the 50% wage rule,
final ESIC coverage and contribution liability is subject to
statutory interpretation and departmental assessment.
Gupta Mertia Associates shall not be held responsible or liable
for any loss, demand, penalty, litigation, or adverse action arising from
the use of this calculator or reliance on its results.
Users are strongly advised to seek professional consultation
or verify applicability and contribution requirements with the
Employees’ State Insurance Corporation or a qualified
compliance professional before taking any financial, legal, or compliance decision.
Use of this calculator implies acceptance of the above disclaimer.
