ESIC Benefits Reach Wider Workforce As New Labour Code 2025 Takes Effect

The Employees' State Insurance Corporation (ESIC) benefits are expected to extend to a significantly larger group of employees with the implementation of the Labour Code 2025, widening access to healthcare and income support for workers and their families, according to a recent report by The Economic Times. The expansion does not come from a hike in the wage ceiling but from a quiet yet important change in how wages are defined for social security purposes.

For years, many salaried employees remained outside ESIC coverage because their basic pay was kept artificially low, with the rest of the salary paid through allowances and variable components. While this helped employers reduce statutory outgo, it also meant employees earning stable incomes were excluded from social security benefits. The new labour code seeks to address this imbalance. Under the revised framework, if allowances and other components exceed a specified proportion of total pay, the excess is treated as wages. This adjustment alone is expected to bring a sizeable number of employees within the ESIC net.

Wider Eligibility Without Raising The Wage Ceiling

The revised wage definition is likely to affect employees across sectors such as manufacturing, services, retail, hospitality, and logistics, where split salary structures are common. Many workers who were earlier outside the scheme despite working in organised establishments may now become eligible for coverage under the Employees’ State Insurance Corporation.

Once enrolled, employees gain access to medical treatment at ESIC hospitals and empanelled facilities, along with cash benefits during periods of illness. Women employees are entitled to maternity benefits, while those who suffer employment-related injuries can receive disability compensation. In the event of a worker’s death due to a work-related cause, dependents are eligible for financial support. For families with limited savings, these benefits can provide critical protection during health or income shocks.

Employers Face Fresh Compliance Requirements

From an employer’s perspective, the expanded ESIC coverage means payroll structures can no longer be viewed purely from a cost-optimisation lens. Companies will need to review salary break-ups, identify employees who now qualify for ESIC, and ensure timely registration and contribution. Human resources and payroll teams may need to update systems and processes to align with the revised wage rules.

Labour specialists note that delays or gaps in compliance could result in penalties and retrospective contribution demands. Employees who later discover they were eligible but not enrolled may also raise disputes, particularly when benefits are denied at the time of need.

Implications Beyond Traditional Employment

The Labour Code 2025 also formally recognises gig and platform workers within the broader social security framework. While ESIC coverage does not automatically extend to this group, the recognition creates space for future schemes aimed at providing health and income protection to non-traditional workers. This is particularly relevant as platform-based work continues to grow across urban and semi-urban India.

A Gradual But Meaningful Shift

By redefining wages instead of increasing thresholds, the new labour code aims to close long-standing gaps in worker protection. As ESIC coverage expands, more households are likely to gain access to affordable healthcare and income support. For employees, checking eligibility under the new rules becomes essential. For employers, early alignment with the revised framework may help avoid compliance risks as enforcement gathers pace.