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The Employees’ State Insurance Corporation (ESIC), operating under the Ministry of Labour and Employment, continues to expand social security coverage. Following the implementation of the four Labour Codes effective 21 November 2025, ESIC has issued fresh directions to bring more employees within its coverage by applying the revised definition of wages under the Code on Social Security.
The Employees’ State Insurance Corporation is the only Government organisation in India entrusted with providing comprehensive medical and social security benefits to insured employees and their dependent family members. The scope of the scheme has progressively expanded to include extended family members in recognition of evolving social and economic realities.
The ESIC scheme is designed primarily for the middle and lower income working population, ensuring access to healthcare services that would otherwise involve significant out-of-pocket expenditure in private healthcare systems.
After the notification of the four Labour Codes on 21 November 2025 consolidating 29 earlier labour laws, ESIC promptly issued directions to establishments to realign wage calculations in accordance with the revised definition of wages. Several employers also received direct communications instructing them to update payroll structures without delay.
The circular, issued with approval of senior ESIC authorities, directs all applicable establishments to register and implement compliance under the Code on Social Security, where coverage now applies due to changes in the definition of wages.
As stated in the circular, the definition of wages under Section 2(88) of the Code on Social Security, 2020, as notified by the Ministry of Law and Justice on 29 September 2020, is expected to extend ESIC coverage to many employees who were earlier excluded.
The concluding emphasis of the circular stresses immediate compliance to ensure eligible employees can access social security benefits without disruption.
Under the revised Labour Code framework, wages must constitute at least fifty percent of total remuneration. This change directly impacts ESIC eligibility thresholds.
For instance, an employee drawing a total monthly remuneration of Rs. 40,000 earlier remained outside ESIC coverage due to the wage ceiling. With the revised definition, fifty percent of this amount is treated as wages, thereby bringing such employees within the ESIC threshold.
The standardised wage definition is also expected to extend coverage to gig workers, platform workers, and segments of the unorganised sector, with similar implications for Provident Fund coverage.
These changes will require ESIC to further adapt its infrastructure to ensure seamless compliance and service delivery. Coverage has now been extended to all districts across India, with certain states applying ESIC coverage for establishments employing ten or more persons.
Where ESIC hospitals or clinics are unavailable, the Code enables voluntary enrolment through notified schemes to ensure employees in remote locations are not excluded from benefits. ESIC has reported enrolment of over sixteen lakh new workers by the end of 2025.
Karma Global has already updated its payroll systems to align with the revised wage definition and the fifty percent rule. Organisations partnering with Karma Global benefit from structured payroll processing and compliance management.
Services include EPF and ESIC registration, payroll processing, statutory filings, employee benefits administration, contribution tracking, and continuous regulatory updates.
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