India Cuts Employees’ State Insurance Rates for Employers, Workers

India Cuts Employees’ State Insurance Rates for Employers

India has reduced the salary contribution rates from 6.5% to 4% for healthcare benefits provided to eligible industrial workers under the Employees’ State Insurance Act (ESI) Act as of 1 Jul 2019. Employees now have to contribute just 0.75% of their salary (basic plus allowances) instead of the 1.75%, while the employer contribution has dropped from 4.75% to 3.25%, according to the ministry of labour and employment. The healthcare benefits under the ESI scheme will remain the same.

The ESI Act — which applies to establishments with 20 or more employees who earn less than INR 21,000 — provides compulsory health insurance, medical benefits and hospital treatment. Employers and employees must make monthly contributions to the ESI Corporation, set up under the act. This is reportedly the first reduction in the contribution rate in 22 years.

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Stephanie Rosseau
by Stephanie Rosseau

Principal, Mercer’s Law & Policy Group

Fiona Webster
by Fiona Webster

Principal, Mercer’s Law & Policy Group

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