Published by: OurTaxPartner.com | Expert ESI & EPF Registration and Compliance Services
Introduction
Every business in India—whether small, medium, or large—must understand its obligations under the Employees’ State Insurance (ESI) and Employees’ Provident Fund (EPF) Acts. These statutory schemes provide essential benefits like healthcare, maternity support, disability coverage, retirement savings, and pension to employees.
However, the applicability of ESI and EPF varies depending on business size, number of employees, employee salary, and type of industry. In this blog, we outline the ESI and EPF applicability criteria for businesses of all sizes, helping you assess whether your organization needs to register. If you’re unsure or need help registering, OurTaxPartner.com can manage the entire compliance process for you.
Understanding the Basics
Before diving into applicability by business size, here’s a quick refresher:
- EPF (Employees’ Provident Fund): A retirement savings scheme managed by the EPFO, requiring employer and employee contributions.
- ESI (Employees’ State Insurance): A health and social security scheme managed by ESIC, offering medical benefits to employees earning under ₹21,000/month.
Applicability Criteria Based on Business Size
1. Small Businesses (1–19 Employees)
EPF Applicability
- Not mandatory if the employee count is below 20.
- However, businesses can opt for voluntary registration under Section 1(4) of the EPF Act.
- Once voluntarily registered, all EPF provisions become applicable just as they are for larger businesses.
ESI Applicability
- Mandatory if the business has 10 or more employees (20 in Maharashtra & Chandigarh).
- If at least one employee earns ₹21,000/month or less, the business must register with ESIC.
- Even if fewer than 10 employees are present, advance planning for ESI may be advisable.
2. Medium-Sized Businesses (20–99 Employees)
EPF Applicability
- Mandatory EPF registration is required for all establishments employing 20 or more employees.
- Applies to permanent, temporary, and contract workers.
- Employees drawing a basic wage less than ₹15,000/month must be mandatorily enrolled in EPF.
- Those earning above ₹15,000/month can opt out only if they were not EPF members before and submit Form 11.
ESI Applicability
- Mandatory if there are 10 or more employees (20 in some states), and at least one earns ≤ ₹21,000/month.
- All eligible employees must be registered with ESIC and assigned an IP number.
3. Large Businesses (100+ Employees)
EPF Applicability
- Compulsory EPF registration and monthly compliance required.
- Regular audits, inspections, and adherence to Form 3A/6A filing is mandatory.
- All eligible employees must be assigned a UAN (Universal Account Number).
ESI Applicability
- ESI registration is compulsory if at least 10 employees are present and one or more earn ≤ ₹21,000/month.
- Additional scrutiny from ESIC officers is more frequent in larger businesses.
- Late filings or incorrect data may trigger audits and penalties.
Key Salary-Based Criteria
| Scheme | Employee Salary Threshold | Employer Threshold |
|---|---|---|
| EPF | Mandatory for salaries < ₹15,000/month (basic + DA) | Mandatory for establishments with ≥ 20 employees |
| ESI | Mandatory for salaries ≤ ₹21,000/month (₹25,000 for disabled) | Mandatory for establishments with ≥ 10 employees (20 in some states) |
Special Notes for Contractual & Part-Time Workers
- Contract labor under direct supervision is also counted for ESI/EPF thresholds.
- Part-time workers are eligible if they meet the salary and employment conditions.
- Interns and apprentices under the Apprentices Act are usually exempt.
Contribution Rates (FY 2024–25)
- EPF: Employer – 12% (8.33% to Pension, 3.67% to Provident Fund), Employee – 12%
- ESI: Employer – 3.25%, Employee – 0.75%
Consequences of Non-Compliance
- Penalty up to 25% of unpaid EPF dues under Section 14B
- Interest at 12% per annum under Section 7Q (EPF)
- ESI penalty of up to ₹5,000 per default and possible legal action
- Inspections and audit notices from EPFO/ESIC departments
Why You Should Register Even If Optional
- Enhances employee trust and retention
- Qualifies your business for tenders and CSR certifications
- Protects employees during medical or financial emergencies
- Avoids future penalties and litigation when thresholds are crossed
Documents Required for ESI & EPF Registration
- PAN and incorporation certificate of the business
- Address proof and utility bills of premises
- Cancelled cheque and bank details
- Employee salary sheet with joining dates
- Digital Signature Certificate (DSC) of authorized person
How OurTaxPartner.com Helps You Stay Compliant
- ✔ Expert advisory on whether your business is eligible
- ✔ End-to-end ESI & EPF registration process
- ✔ Monthly return filing and challan payment support
- ✔ Employee onboarding (UAN/IP generation)
- ✔ Compliance tracking, reminders, and inspection support
- ✔ Drafting of legal replies to EPFO/ESIC notices
Click here to register or outsource your ESI & EPF compliance to OurTaxPartner.com
Frequently Asked Questions (FAQs)
Is ESI/EPF registration based on number of employees or their salary?
Both. EPF is mandatory for businesses with ≥20 employees. ESI is mandatory if ≥10 employees and at least one earns ≤ ₹21,000/month.
Can small startups voluntarily register for EPF?
Yes. Startups with fewer than 20 employees can opt in voluntarily and gain long-term compliance benefits.
What happens if I delay registration?
You may be liable to pay dues retroactively with interest and face penalties or inspections.
Does ESI apply if only one employee earns below ₹21,000?
Yes, ESI applies even if only one employee meets the wage condition, provided total employees are 10 or more.
Conclusion
Understanding ESI and EPF applicability by business size is essential for every entrepreneur, HR manager, and finance head. As your business grows, so do your compliance responsibilities. Whether you operate with 10 or 1,000 employees, adhering to these laws helps protect your team and build your business reputation.
Need clarity or support? Consult OurTaxPartner.com today for simplified, affordable ESI & EPF registration and ongoing compliance services.
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