PF, ESI & Gratuity

The statutory benefit trio

Three benefits dominate Indian payroll compliance: Provident Fund (PF), Employees' State Insurance (ESI) and Gratuity. Each has its own threshold, contribution and rules.

Provident Fund

EPF applies to establishments with 20+ employees. Employee and employer each contribute 12% of wages; a portion of the employer's share goes to the pension scheme (EPS). PF builds retirement savings and is administered by the EPFO.

Employees' State Insurance

ESI applies to establishments with 10+ employees, covering those earning up to the wage ceiling (commonly ₹21,000/month). It provides medical, sickness, maternity and disability benefits, funded by employer and employee contributions.

Gratuity

Gratuity is payable on exit (resignation, retirement, death/disablement) to employees who complete 5 years of continuous service, in establishments with 10+ employees. It is computed as 15 days' wages for each completed year, subject to a cap. Death/disablement waives the 5-year requirement. Timely registration and remittance of these dues is non-negotiable and heavily penalised when ignored.