The government has reduced the contribution under the Employees’ State Insurance (ESI) Act to 4% with effect from 1^st July 2019 from 6.5%, a move expected to increase the take home salary of workers as well as reduce the financial burden of employers. The decision will benefit 36 million workers and 1.28 million employers.

This includes a reduction of 1.5% in employers’ contribution to 3.25% from 4.75% and 1% reduction in employees’ contribution to 0.75% from 1.75%, the labour ministry said in a statement on 14^th June 2019.

Notification no dated: 13th June 2019 labour and employment department. No : D.L -33004/99

“The reduced rate of contribution will bring about a substantial relief to workers and will bring more and more workforce into the formal sector,” the ministry said.

Similarly, it said, a reduction in the share of contribution of employers will reduce the financial liability of the establishments, leading to improved viability of these establishments, and also lead to enhanced ease of doing business.

Disclaimer : This is an effort by Lexcomply.com to contribute towards improving compliance management regime. User is advised not to construe this service as legal opinion and is advisable to take a view of subject experts.