Provident fund (PF) becomes compulsory when an establishment employs 20 or more people. Employees’ State Insurance (ESI) becomes compulsory at 10 or more. Within a covered establishment, PF is mandatory for employees earning up to ₹15,000 a month in basic wages and dearness allowance. ESI covers employees earning up to ₹21,000 a month in gross wages, or ₹25,000 for persons with disability. Once an establishment is covered, it stays covered even if headcount later drops below the threshold.
The legal basis has changed. The ESIC circular of 28 November 2025 confirms that the Code on Social Security, 2020 came into force on 21 November 2025. It takes over from the separate EPF and ESI Acts, and ESIC describes the ESI Act, 1948 as repealed. The thresholds and contribution rates employers work with day to day have not changed so far. Schemes and rules are being re-issued under the Code, so check EPFO and ESIC notices before relying on any figure below.
If you are approaching either threshold, Complianto’s PF registration and compliance service handles the registration and the monthly filings after it.
Thresholds at a glance
| PF (EPFO) | ESI (ESIC) | |
|---|---|---|
| Establishment threshold | 20 or more employees | 10 or more employees |
| Employee wage limit | ₹15,000 per month (basic + DA) for mandatory membership | ₹21,000 per month gross (₹25,000 for persons with disability) |
| Employee contribution | 12% of PF wages | 0.75% of wages |
| Employer contribution | 12% of PF wages, split between PF and pension, plus EDLI and admin charges | 3.25% of wages |
| Monthly filing | Electronic challan-cum-return (ECR) by the 15th | Monthly contribution by the 15th |
Sources: ESIC’s coverage and contribution pages, and EPFO’s wage ceiling table.
Counting employees correctly
Headcount for coverage means everyone employed in or in connection with the establishment, directly or through a contractor. That includes contract staff working on your premises, trainees who are not apprentices under the apprenticeship law, and part-timers. It is the single most common reason a business finds itself covered earlier than it expected. A firm with 14 employees on payroll and 7 housekeeping and security staff supplied by an agency may already have crossed the PF threshold.
Multiple branches under the same employer are generally counted together. Once you cross the line, the obligation runs from the date you crossed it, not from the date you register.
PF: who is covered and what is paid
In a covered establishment, an employee whose basic wages plus dearness allowance are ₹15,000 a month or less must be enrolled. Employees above that limit may join, and once they are members they stay members. Contributions work like this, according to the EPFO rate table:
- Employee: 12% of PF wages, deducted from salary.
- Employer: 12% of PF wages. Of this, 8.33% (on wages up to the ceiling) goes to the pension scheme and the balance to the employee’s PF account.
- Employer only: EDLI insurance contribution and EPF administrative charges, each a small percentage of wages.
Paying PF on wages above ₹15,000 is optional. It needs a joint request from employer and employee, and the employer then pays administrative charges on the higher wage too.
ESI: who is covered and what is paid
ESI covers employees whose gross monthly wages are within ₹21,000. In return for contributions they get medical care for themselves and their families, sickness and maternity cash benefits, and disablement and dependants’ benefits. The employee pays 0.75% and the employer 3.25% of wages. An employee whose average daily wage is ₹176 or less pays nothing, but the employer still pays its share.
Coverage is decided by wages in the contribution period. An employee whose pay rises above ₹21,000 mid-period stays covered until that period ends. Coverage rules are being updated under the Code, so check the current ESIC position for your location and headcount with your adviser. For the registration and returns, our ESI registration and compliance service can take it on alongside PF.
Registration and monthly compliance
- Register the establishment with EPFO and ESIC online as soon as the threshold is reached. You receive an establishment code from each.
- Enrol employees. Each PF member is linked to a Universal Account Number (UAN), and each ESI employee gets an insurance number.
- Deduct and pay monthly. PF is paid by filing the ECR on the EPFO portal on or before the 15th of the following month, as EPFO’s ECR FAQ states. ESI contributions also fall due monthly.
- Keep the registers. You need wage registers, attendance and contribution records, because both organisations inspect against them.
Late payment brings interest and damages under both schemes. Unpaid employee contributions that were deducted from salary are treated far more seriously than an employer’s own delay.
Frequently asked questions
We have 12 employees. Can we register for PF voluntarily?
Yes. Voluntary coverage is possible where the employer and a majority of employees agree. Once covered, the establishment cannot later opt out simply because it is small.
Does an employee earning ₹30,000 need ESI?
No, unless they are a person with disability earning within ₹25,000. Gross wages above ₹21,000 take an employee outside ESI, though they remain eligible for PF membership.
Are interns and apprentices counted?
Apprentices engaged under the apprenticeship law are generally excluded. Other trainees and interns paid by you usually count. Check each arrangement against the definitions in the Code.
Complianto (complianto.in), operated by Mentorcorp Private Limited, is a private consultancy and is not affiliated with any government body. We do not issue official documents. We charge a professional fee for application assistance and advisory services. Applicants can apply directly to the government without our fees via the official portals: MCA (mca.gov.in), Income Tax (incometax.gov.in), GST (gst.gov.in), MSME (udyamregistration.gov.in), FSSAI (foscos.fssai.gov.in), Startup India (startupindia.gov.in), and IP India (ipindia.gov.in).
This article is general information, not legal or tax advice.
