PF and ESI for small businesses: who is covered, what you pay, what you file
Two social-security schemes switch on as your team grows — ESI around ten employees, EPF at twenty. Here is who they cover, the money involved, and the one date that matters.
For the first few hires, provident fund and state insurance feel like someone else’s problem. Then your headcount crosses a threshold and both become yours, with monthly deposits and their own portals. Here is the shape of it, without the jargon.
EPF — the provident fund
The Employees’ Provident Fund becomes mandatory once an establishment has 20 or more employees (you can join voluntarily below that). It applies to employees earning up to a wage ceiling of Rs 15,000 a month in basic plus dearness allowance.
- Employee contributes 12% of wages, all to the provident fund.
- Employer contributes 12%, split: 8.33% to the pension scheme (EPS, capped, about Rs 1,250) and 3.67% to the provident fund.
- Plus small charges — roughly 0.5% administration (minimum Rs 500) and 0.5% EDLI (about Rs 75). The employer’s all-in cost is a little over 13%.
The ECR is filed and paid by the 15th of the following month, with no grace period.
ESI — state insurance
The Employees’ State Insurance scheme typically applies at 10 or more employees (20 in some states — check yours) and covers employees earning up to Rs 21,000 a month (Rs 25,000 for employees with disability).
- Employee contributes 0.75%; employer 3.25% — a total of 4%.
- Payment is due by the 15th of the following month.
The practical takeaway
Both schemes share the same monthly deadline — the 15th — and both start from your payroll numbers. Whatever runs payroll needs clean attendance and wage data going in, which is the part a small firm most often gets wrong.
PF and ESI in one look
- EPF: 20+ employees · ceiling Rs 15,000 · 12% + 12% (+ ~1% charges) · ECR by the 15th
- ESI: typically 10+ employees · ceiling Rs 21,000 · 0.75% + 3.25% · by the 15th
- Both start from payroll data — get attendance and wages right first
General awareness only, accurate to the best of our research as of August 2026 — not tax, legal or HR advice. Thresholds vary by state and the rules are under review as the Labour Codes are notified; a proposed rise in the EPF wage ceiling to Rs 25,000 was under consideration but not yet in effect. Confirm on the EPFO and ESIC portals or with your consultant.
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