Employees whose wages exceed the wage ceiling during an ongoing contribution period will continue to receive ESI coverage and benefits until the end of that period, as clarified by the government.
Saloni Kumari | May 13, 2026 |
Government Clarifies ESI Coverage Continuity Despite Salary Hike Above Wage Ceiling
The Ministry of Labour and Employment under the Government of India has clarified that an employee whose wages exceed the prescribed wage ceiling during a contribution period will still continue to be treated as an employee under the scheme until the end of the ongoing contribution period.
The aforementioned wage ceiling has been set by the Central Government for Employees’ State Insurance (ESI) coverage under clause (89) of section 2 of the Code for the purposes of becoming a member under Chapter IV of the Code on Social Security, 2020. However, this rule applies only if the wages exceed the limit after the contribution period has already begun.
The government has taken this move in use of its powers granted under the first provision of clause (26) of section 2 of the Code on Social Security, 2020 (36 of 2020), and officially announced the same through a Notification No. S.O. 2351(E), dated May 08, 2026.
In simple words, if an employee receives a salary hike above the wage ceiling, he/she will not immediately lose his/her ESI benefits during the middle of a contribution period. They will still be included and continue to receive benefits until that contribution period ends.
Refer to the official notification for complete information.
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