Introduction

Employee welfare compliances like ESI (Employees’ State Insurance) and PF (Provident Fund) are mandatory statutory requirements for eligible businesses in India. These schemes ensure social security, medical benefits, and retirement savings for employees.

In this 2026 updated guide, we explain registration process, applicability, contribution rates, and monthly compliance requirements for ESI & PF.

What is PF (Provident Fund)?

The Employees’ Provident Fund (EPF) is a retirement benefit scheme managed by the EPFO. It helps employees build a retirement corpus through monthly contributions from both employer and employee.

Key Objective:

• Long-term savings for employees
• Retirement security
• Pension benefits (EPS)

What is ESI (Employees’ State Insurance)?

The ESI scheme provides medical and cash benefits to employees and their dependents in case of sickness, maternity, disability, or employment injury.

Key Benefits:

• Free medical treatment for employees & family
• Sickness & maternity benefits
• Disability compensation
• Death benefits

Applicability of PF & ESI

PF Applicability

• Mandatory for establishments with 20 or more employees
• Applicable to employees earning salary up to ₹15,000 (mandatory)
• Voluntary for higher salary employees (with employer agreement)

ESI Applicability

• Mandatory for establishments with 10 or more employees (in most states)
• Applicable to employees earning up to ₹21,000 per month (₹25,000 for persons with disability)

PF Contribution Rates (2026)

• Employee contribution: 12% of basic wages + DA
• Employer contribution: 12% (split into EPF + EPS + admin charges)

Breakdown:

• 3.67% → EPF
• 8.33% → EPS (pension)
• Remaining → EPF/admin

ESI Contribution Rates (2026)

• Employee contribution: 0.75% of gross wages
• Employer contribution: 3.25% of gross wages
• Total contribution: 4% approx.

PF Registration Process

Step 1: Register on EPFO Portal

Create establishment login on EPFO employer portal.

Step 2: Fill Establishment Details

• PAN, GST, incorporation details
• Employee strength
• Bank details

Step 3: Submit Application

Upload required documents and apply for PF code.

Step 4: Approval & PF Code

After verification, PF establishment code is generated.

ESI Registration Process

Step 1: Register on ESIC Portal

Employer creates account on ESIC employer portal.

Step 2: Fill Business Details

• Company PAN
• Address proof
• Employee details

Step 3: Submit Documents

Upload incorporation and bank documents.

Step 4: Generate ESI Code

ESIC issues a 17-digit employer code.

Monthly Compliance for PF & ESI

PF Monthly Compliance

• Deduct employee contribution from salary
• Add employer contribution
• Deposit by 15th of every month
• File ECR (Electronic Challan cum Return)

ESI Monthly Compliance

• Deduct employee contribution
• Deposit both contributions by 15th of every month
• File monthly contribution return on ESIC portal

Due Dates Summary

Penalties for Non-Compliance

• Interest on delayed payment
• Damages up to prescribed %
• Legal action under EPF & ESI Acts
• Employee benefit loss risk

Key Changes & 2026 Compliance Focus

• Increased digital monitoring by EPFO & ESIC
• Faster auto-returns via payroll integration
• Strict scrutiny of wage components
• Strong focus on timely deposit compliance

Conclusion

PF and ESI are not just statutory obligations but essential employee welfare mechanisms. Proper registration, accurate payroll deduction, and timely monthly compliance help businesses avoid penalties and ensure employee trust.

For startups, SMEs, and corporates, maintaining PF & ESI compliance is critical for smooth operations and statutory hygiene.

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