ESI Contribution Rate (0.75%/3.25%) — and Its 21 November 2026 Sunset

The clock: Section 164(2)(b)'s one-year sunset

Section 164 repeals the old ESI Act, 1948 along with eight other labour laws. But sub-section (2)(b) carries forward the old Act's rules, regulations, and schemes for a fixed window:

"...the rules, regulations and schemes made or framed under the Employees' State Insurance Act, 1948, shall remain in force, to the extent they are not inconsistent with the provisions of this Code for a period of one year from the date of commencement of this Code."

The Code on Social Security commenced 21 November 2025. Read literally, that one-year window closes 21 November 2026. Everything currently keeping the 0.75%/3.25% rate and the ₹21,000/₹25,000 wage ceiling alive — the old Act's notifications, rules, and schemes — sits inside that window. We haven't found reporting elsewhere that treats this as a dated deadline; most coverage of ESI under the new Code describes the rate as simply "unchanged," without flagging that the thing keeping it unchanged has an expiry date.

The delegation itself, verified directly against Section 29

Section 29(1) splits the ESI contribution into an employer's share and an employee's share. Section 29(2) is where the actual rate should be — and isn't:

"The contributions (employer's contribution and the employee's contribution both) shall be paid at such rates as may be prescribed by the Central Government."

No percentage appears anywhere in Chapter IV. This is the identical structure to the statutory bonus wage ceilings we covered separately — a figure everyone quotes as settled law is, in the Code's own text, entirely a notification matter.

A worked example, using the rate as it currently stands

An employee on ₹18,000/month in ESI-relevant wages:

employer's contribution = 3.25% × ₹18,000 = ₹585
employee's contribution = 0.75% × ₹18,000 = ₹135
total ESI contribution = 4% × ₹18,000 = ₹720/month

Nothing about this calculation is in dispute today. What's worth tracking is why it's still ₹720 and not something else — and that "why" has a built-in expiry.

What happens after 21 November 2026?

Two possibilities, and we're not going to guess which: either the Central Government issues a fresh notification under Section 29(2) restating the same rate (most likely, and consistent with how these transitions have gone so far), or the one-year window gets administratively extended or superseded by rules already in force before it lapses. Several sources report that a "Social Security (Central) Rules, 2026" has already been notified, restating the same 0.75%/3.25% figures under the new Code's own rule-making power rather than relying on the old Act's savings clause at all — which, if accurate, would make this whole question moot well before November. We flag this as reported, not independently verified: we couldn't fetch the actual Rules text to cite a specific number or date, only secondary sources describing it. If you're relying on this for compliance, don't take our word (or theirs) for the rate after November 2026 without checking the current notification directly.

Why this matters more than the rate itself

A rate that's "delegated but re-notified" behaves exactly like a fixed rate in practice, right up until the government changes it without needing to touch the Code at all. That's the structural point worth understanding, independent of whatever the number is today: ESI contribution rates can move by notification, not amendment. See the ESI wage ceiling for the same pattern applied to the ₹21,000 figure, and who ESI actually applies to for the one number in this chapter that isn't delegated.