On November 21, 2025, four new labour codes on wages, social security, industrial relations and occupational safety and health came into effect in India. The codes consolidate and codify 29 pre-existing laws, including the Minimum Wages Act, the Payment of Wages Act, the Industrial Disputes Act, the Factories Act, the Contract Labour Act and many others.One of the laws, now subsumed under and overridden by the code on social security, is the Employees’ State Insurance (ESI) Act, 1948. This Union government-sponsored universal welfarist scheme was promulgated in 1948 with the intent to create and develop a “foolproof multi‑dimensional social security system for workers in Independent India”.History of the legislationEfforts to draft this legislation began in 1942. During discussions between representatives of employers, workers and Feroze Khan Noon (the labour member of the Viceroy’s Executive Council in British India), it was acknowledged that India needed an “experimental” sickness insurance scheme. However, labour ministers from the provinces and several princely states refused to provide any financial support to it, so the scheme was pushed into cold storage.A year later, then labour minister B.R. Ambedkar announced an intent to introduce a social insurance bill. Consequently, Professor B.P. Adarkar, economist and public-policy thinker, was tasked with drafting a comprehensive plan. His 1944 report, presented at the Sixth Indian Labour Conference and later vetted by ILO experts, proposed a tripartite financing model and defined benefits such as medical care, sickness and maternity leave for workers as part of this plan.This 1944 report shaped the final ESI Act, 1948. While it was envisioned as a comprehensive health-oriented social security scheme, over the decades, it was confined to welfarist measures defined by thresholds such as wage scales and the number of workers in an establishment.The scheme therefore ended up excluding large sections of informal-sector workers, although they needed a social insurance scheme the most. Further, the implementation of the scheme became an exercise in tangled paperwork and bureaucratic roadblocks, worsened by the lack of service delivery infrastructure.Currently, the ESI Scheme (ESIS) is applicable to factories and other establishments, including road transport, hotels, restaurants, cinemas, newspapers and dispensaries. The Employee State Insurance Corporation (ESIC), an autonomous body, is mandated with the collection and disbursement of insurance contributions under the Act.Also read: For Unorganised Workers, New Social Security Code Creates Needless ConfusionESIS is a statutory group insurance policy wherein a 4% social security coverage is provided for each eligible worker via a joint contribution by the employer (0.75% of monthly gross wages) and employee (3.25%). The benefits can be claimed by insured workers in case of occupational accidents, and it includes benefits ranging from medical care to sickness, maternity, disablement and funeral expenses. There is also a monthly pension for dependents of a worker who dies in the course of work due to an occupational injury.However, one of the biggest limitations of the ESI Act is that it only applies (barring exceptions) mandatorily to non-seasonal factories employing ten or more workmen, and where the gross wage of a workman is Rs 21,000 per month or below. For persons with disabilities, the wage limit extends to Rs 25,000 per month.What the Social Security Code 2020 doesThe Social Security Code subsumed and overrode the ESI Act with a few changes. The scheme was expanded to the whole of India instead of notified districts, as the Act previously said. The scheme now covers certain hazardous establishments, even if the number of employees is below ten.Lastly, the code says that ESIS will be extended to gig and platform workers. Currently, this segment of workers is not counted as registered since they do not have fixed-term contracts as employees with platform companies.Some states, such as Rajasthan, Karnataka, Bihar and Jharkhand, have passed laws related to the registration and welfare of gig and platform workers. However, these laws have not come into effect. It seems that only through state-specific laws can ESIS be implemented for gig and platform workers, even though the central social security code promises ESIS to them.The changes to the ESI Act, while they look positive and appear to extend coverage and remove administrative bottlenecks (such as removing the requirement to issue ‘notifications’ for areas and districts), are ambiguous from an enforcement point of view.This is because they are unlikely to change employers’ attitude towards compliance. Further, the fiscal powers to create ESI healthcare infrastructure and institutionalise enforcement of the scheme lies with the states.Demands by trade unionsIn April 2026, just before the Union government notified the rules for the four labour codes including the Code on Social Security, a series of labour strikes were organised in the manufacturing hubs. Workers from the auto sector, garments and textiles, electronics and other sectors in North India including Noida, Gurugram and Manesar struck work over the new code. Their protest later spread to other cities including Panipat (Haryana), Surat (Gujarat), Barauni (Bihar) and other places.The central demand, across the strikes, was to raise the minimum wage, ensure fair pay for numbers of hours worked, humane working conditions, transparent contracts – and social security coverage.Also read: India’s Labour Codes Need a Living WageThese were largely sporadic strikes by non-unionised, contractual and migrant labour, who were at the receiving end of a labour regime made precarious through years of pro-capital policies, from the labour codes allowing states to raise factory hours without raising minimum wages to the US-India tariffs and trade deal, and other factors. A key demand during the April 2026 strikes by central trade unions and non-formal trade unions of workers was the enforcement of all social security benefits, including universal coverage of the ESIS.The scheme’s promise of universal coverage on paperWhile ESIS continues to serve formal workers i.e. workers on the payroll of principal employers, this includes migrant, contractual and under-waged workers who put in physical labour beyond their formal working hours. For these workers, the ESIS is meant to be the one guarantee that stands between an industrial accident and financial ruin.It promises benefits including healthcare, disability compensation and a pension in exchange for a modest shared contribution. On paper, it is one of the most significant social security instruments in the world, covering roughly 4 crore insured workers and, with dependents, close to 16 crore people, about 10% of India’s population.However, in practical terms, the scheme does not reach the large number of constituents it intends to cover, nor does it benefit these workers at a time when the benefits are most needed.Where the scheme drifts away from its promiseRecurring audits by the Comptroller and Auditor General (CAG), insights from ESIC’s annual reports and ILO publications have consistently reported systemic issues. The ILO, for instance, says that over the past two decades, the scheme’s scale has expanded dramatically, from 0.22 million enterprises in 1999–2000 to 1.03 million in 2018– 2019. The covered employees have risen from 7.86 million to 31.17 million.However, these expansions have not translated into improved service delivery.Source: Directorate General, Factory Advice Service and Labour Institutes.The Directorate General, Factory Advice Service and Labour Institutes (DGFASLI) is the official arm of the Ministry of Labour and Employment mandated with advising workplaces, making standards, training and education, research and audits. The above data is under-represented because with increasing industrialisation, the registration of factories, which should have increased drastically every year between 2016 to 2020, has increased nominally or decreased.At the same time, the increase in employment in registered factories is marginal. The total number of injuries per lakh workers and per thousand registered factories has also dropped between 2016 to 2020.A major reason for this unusual trend is because DGFASLI collects data on occupational injuries and accidents from the Directorate of Industrial Safety and Health (DISH) located in each state. However, the data collected by DISH only accounts for registered factories, whereas about 90% of workers in India, as reported by ISignal, work in the informal sector where factory registration is not necessarily complied with.For instance, the DISH statistics for registered factories in 25 districts of Gujarat shows the total number of accidents between 2018 to 2022 at 992, but this data contradicts the data placed before Lok Sabha by the Union Ministry of Labour and Employment, according to which Gujarat reported 10,815 injuries (2,282 fatal factory injuries and 8,533 non-fatal factory injuries) between 2015 and 2024.A major loophole is the fact that employers and contractors escape mandatory registration of workers. For instance, CRUSHED 2026, a report by Safe in India (SII) that looks into the access to ESIC benefits by workers in the automation sector in Haryana and Maharashtra (who are routinely susceptible to crush injuries), reveals that roughly 63% of injured workers assisted by SII received their ESIC e-Pehchaan card only after their accident – not on day one of employment, as the law requires. In Maharashtra, this rises to nearly 79%.Also read: Too Little, Too Late: Wage Hikes, Welfare Promises and the Machinery of ControlOnly 15–17% of cases across Haryana and Maharashtra are “Post Accident Registrations” (PAR) – employers registering an injured worker with ESIC only after the injury occurs, an outright illegal practice that is nonetheless barely penalised.Secondly, there is a delay or complete avoidance by employers in filing the accident reports and submitting it to DISH (earlier known as Factory Inspector). The SII survey observed that even when a worker is registered, close to a quarter of injured workers (23–25%) report that employers delay or simply refuse to file the mandatory Accident Report, without which disability benefits cannot be processed.Further, penalties are too weak to deter employers. The current punishments for PAR or non-filing are nominal, not proportionate to what the worker may stand to lose: a lifetime Permanent Disability Benefit. Non-compliance, therefore, becomes systematic since the legal penalty it carries is nominal.The ‘Golden Hour’ gets missed by designEven a registered worker frequently does not reach ESI’s own healthcare system in the “golden hour” that matters most for a crush injury. Nearly half of injured workers in Haryana (50%) and over a third in Maharashtra (35%) are taken first to private hospitals – often of uneven and sometimes poorer quality – rather than an ESIC facility, largely because employers need time to “set the papers in order” before disclosing an ESIC-registered accident. This delay can itself worsen the disability outcome.At the same time, ESI data on crush injuries and benefits received by workers is not integrated with the industrial accident data maintained by DGFASLI and on the basis of which DISH conducts factory audits around industrial safety.Even where the will to comply exists, ESIC’s healthcare delivery infrastructure has not kept pace with India’s manufacturing geography. The scheme’s dispensaries and hospitals remain concentrated around a handful of established industrial clusters (in Haryana, essentially three – Manesar, Faridabad, Gurgaon). Newer or more dispersed manufacturing hubs, including the growing automotive belt in Tamil Nadu, Karnataka and parts of Gujarat have thinner ESIC hospitals and dispensary networks relative to worker density.This partly explains why workers default to private hospitals – the nearest ESIC facility may simply be too far for an emergency crush injury. With the automotive sector alone employing an estimated 37 million people, and manufacturing MSMEs proliferating across new industrial corridors, ESIC’s physical footprint – beds, specialist trauma and reconstructive surgery capacity, staffing – has not scaled proportionately with either worker numbers or with the shift of accident-prone units into semi-urban and district-level clusters.Expansion of coverage without a parallel expansion of quality tertiary care (particularly limb-reconstruction and disability-management capacity) risks registering more workers on paper while leaving the “golden hour” problem for a worker to receive urgent care and treatment after accident remains unsolved.The evidence keeps piling up“A Torn and Tangled Safety Net? Critical Assessment of Performance of Employees’ State Insurance Scheme in Maharashtra”, a research report published by SATHI in April 2025, revealed that across 11 ESIC hospitals in seven districts there were severe shortages in medical staff, basic diagnostic equipment and medicine supplies. Further, delays in reimbursing empanelled private hospitals under Public-Private Partnerships (PPP) have discouraged private healthcare providers from participating, restricting access to super-specialty treatments.Also read: One Factory, 76 Injuries, Zero Action: Report Points to Auto Industry’s Worker Safety CrisisAn ILO study also indicates widespread lack of awareness about ESIS among workers. It found that while 89% of respondents were familiar with medical benefits, only 46% knew about cash benefits and 32% about disability provisions. This awareness gap significantly contributes to the underutilisation of the scheme.Parliament Standing Committee recommendationsThe Parliamentary Standing Committee on Labour for September 2023 reports the key findings and recommendations regarding the ESIC, which include:Wage cap revisions: The daily exemption wage limit (Rs 176 per day) has remained unchanged for seven years despite rising wages. The committee urged setting up an expert panel to revise wage limits, coverage, and entitlement rules.Expanding coverage: The Social Security Code (2020), under which the ESIC is now subsumed, expands coverage to hazardous jobs, gig/platform workers, and smaller firms with less than 10 employees. Pointing out ESIC’s lack of preparedness, the panel urged using Aadhaar integration and surveys to map eligible workers.Employer default: Non-payment by defaulting employers penalizes workers despite having their contributions deducted. The report calls for stricter enforcement of penal provisions.Healthcare and infrastructure gaps: Medical facilities face severe delays – only 2 of 39 sanctioned ESI hospitals (from 2019) were operationalised. The committee urged time-bound hospital completion, higher fees for Insurance Medical Practitioners (IMPs), and expanding Employer Utilization Dispensaries (EUDs).Staff shortages: About 35% of doctor and medical staff posts remain vacant in ESIC and state-run hospitals, requiring urgent recruitment rule restructuring.Corpus investment: Amid declining yields on government securities, the panel recommended annual reviews of investment policies, including diversifying into equity options.What workers are asking forThe ESIS enforcement crisis is a cumulative result of systematic weakening of accountability by the union labour ministry and the DISH at state levels. This begins with the hollowing of pressure groups such as unions and worker safety advocacy groups (the Industrial Relations Code, 2020, puts unrealistic conditions on powers that trade unions could exercise such as strikes), the systematic weakening of legal protections by employers that furthers non-compliance with the Act and the informalisation and marginalisation of the working class and lack of political will to improve ESIS governance.Workers are not asking for a new scheme – they are asking for the one that already exists on paper to reach them on day one of employment, in the first hour after an accident and in the years of disability that follow. Until registration, reporting and healthcare delivery work together and are backed by infrastructure that matches where India’s factories actually are, ESI will remain a safety net with a hole for workers to fall through.Bhargav Oza is a lawyer and independent labour researcher based in Ahmedabad. He has written on informality, migration, labour law, labour policy. Harsh Kinger is an advocate based in Vadodara. He also works with the Criminal Justice and Police Accountability Project as a research and advocacy consultant.