The Employees’ State Insurance Corporation (ESIC) has announced that more employees can now access ESI benefits following the notification of the Labour Code 2025 (Code on Social Security, 2020) effective from November 21, 2025.
The Labour Code 2025 consolidates and amends social security laws for employees in various sectors, ensuring they receive medical and financial security benefits as envisaged in the Code on Social Security, 2020.
In a circular (no. 35/BEC/MISC-FILE/23-24/CoSS2020) dated December 10, 2025, ESI said that it is mandatory for all establishments, that meet the prescribed criteria under the Code, to register themselves with Employees’ State Insurance Corporation (ESIC).
ESIC said in the circular: “The wage terminology has been redefined in the CoSS 2020. As per the section 2 (88) of CoSS 2020 new definition of wage, coverage of employees under ESI Scheme is expected to extend to many excluded employees also.”
ESIC advised that employers:
- A. Register all eligible employees working at their premises (as per the eligibility criteria set out under the Code on Social Security, 2020).
- B. Ensure timely payment of the contributions so that their workforce receives the necessary benefits under the Code on Social Security, 2020.
More employees are now eligible for ESIC benefits under new Labour Code 2025
While the wage ceiling limit to be eligible for ESIC benefits remains the same, but the definition of wages has changed under the new labour code. So by this way more employees are now eligible for ESIC benefits.
According to the ESIC website, effective January 1, 2017, there is a wage ceiling limit for getting ESIC benefits. The ceiling limits are: Rs 21, 000 per month and Rs 25,000 per month in case of Persons with Disability.
Paritosh Chauhan, Partner at Lakshmikumaran & Sridharan attorneys, said to ET Wealth Online that the definition of ‘wages’ under the Code on Social Security, 2020 (“Code”) (which has been standardised across all four labour codes), has been updated.
Chauhan says that this update states that if certain variable components in an employee’s salary, like bonus, house-rent allowance and overtime pay are excluded from the definition of ‘wages’, and constitute more than 50% of an employee’s total pay, then that extra amount will be treated as ‘wages’ and added back to the wage component for calculating employer contributions.
Chauhan says: “This change may impact the thresholds and process for calculation and payment of social security contributions, including contribution to the Employee’s State Insurance fund (“ESI Fund”).”
According to Chauhan, the Labour Code also defines and recognises ‘gig workers‘ and ‘platform workers‘, bringing them within the ambit of social security protections.
Chauhan says: “While this does not automatically entitle them to ESI benefits; appropriate governments will roll out specific schemes to extend benefits such as ESI, gratuity, etc., to these new categories of employees as well.”
What should be done now by employers?
According to Chauhan, employers are expected to review their current policies and ensure that they are paying social security contributions, including ESIC, in the prescribed manner and to all eligible employees.
Chauhan says: “This has to be done carefully, keeping in mind the changes introduced by the labour codes – some of which may also have an indirect impact.”
Under the Labour Code, employees will continue to receive benefits from the ESIC including sickness benefit, disablement benefit, medical benefit and maternity benefits, covering situations such as temporary or permanent physical disability.
Chauhan says: “Further, in case of the death of an employee, the person bearing the expenses for his funeral is entitled to receive a one-time lump sum payment.”
According to Chauhan, if the death is caused due to an injury sustained in the course of their employment, then the employee’s dependents (which now has been expanded to include maternal grandparents and, for male employees, dependent parents-in-law) are eligible to receive periodic payments from the ESIC.
In addition, Chauhan says that the Labour Code enhances the coverage for family members by including extended family members, such as mother-in-law and father-in-law, a minor unmarried brother or sister, within the definition of “family”, increasing the coverage of family members eligible for ESIC benefits.
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