Remove the Wage Ceiling for the Applicability of ESI
[AICCTU submitted a memorandum on 29 April 2025 to the Minister of Labour and Employment demanding removal of wage ceiling for ESI and guarantee universal access to social security. Some Major points of the memorandum are given below.]
We are writing to you in regard to the exclusionary criteria in Employees' State Insurance Scheme (ESIS) resulting in lakhs of workers being excluded from the Scheme.
The Employees' State Insurance Corporation (ESIC) was constituted with the objective of providing social security to workers, through benefits such as medical care, cash compensation during sickness and maternity, disability benefits, and dependents’ benefits in case of death due to employment injury. While the scheme was envisioned as a pillar of workers' welfare in India, the current implementation falls short of this goal due to an outdated and exclusionary wage ceiling.
The salary threshold for coverage under ESIS was last revised in the year 2016, increasing the limit from Rs. 15,000/- to Rs. 21,000/- per month. However, over the past eight years, there has been a significant rise in the cost of living, inflation has eroded real value of wages despite increase in quantum. In spite of such a fall in real wages, the wage ceiling for the applicability of ESI, has remained static, effectively excluding millions of workers who were under the purview of ESI in the past and who are still languishing in vulnerable employment situations.
Workers who earn above Rs. 21,000/- are ineligible for ESIC benefits, despite the fact that their earnings are insufficient to afford quality private healthcare or financial protection in times of medical emergencies. These workers and their families are thus left in a precarious situation with no access to affordable healthcare, undermining both their right to health and economic security.
Based on prevailing costs of housing, food, transportation, education, healthcare, and other basic needs, it is evident that Rs. 21,000/- per month does not compensate the skyrocketing inflation and price rise. The calculation as per the SC judgment in Raptakos Brett case, would show that a worker must earn not less than Rs. 42,000/- per month in order to meet basic family needs and to maintain a dignified life in urban areas. The current wage ceiling is thus not only unrealistic but also unjust in its consequences.
Healthcare and social security are not privileges to be enjoyed only by a few but are fundamental rights that must be universally accessible, particularly in a welfare state. The conditionality imposed by the wage ceiling undermines the principle of universality and social justice.
In view of the above, we urge the ESIC and the Ministry of Labour and Employment to take immediate steps to correct this systemic exclusion and abolish the wage ceiling under the Employees’ State Insurance Act, thereby making all workers—irrespective of income levels—eligible for ESIC benefits.