| Item | 2026 figure | Notes |
|---|---|---|
| Employer statutory costs | About 3–6% of gross | For salaries of ₹12–60 lakh: PF and gratuity on basic pay |
| Provident fund (EPF) | 12% of basic (13% with charges) | On basic up to ₹25,000 a month from 17 September 2026 |
| Gratuity | 15 days' wages per year | About 4.81% of wages; payable after 5 years |
| Wages rule | Basic + DA at least 50% of pay | Excess allowances count as wages under the Labour Codes |
| Maternity benefit | 26 weeks | Paid by the employer |
Indian employers' statutory costs are calculated on wages (basic pay plus dearness allowance), not total pay. Under the Labour Codes, if allowances exceed half of total pay the excess counts as wages, so the table assumes wages are 50% of pay.
The provident fund rate applies to wages up to ₹25,000 a month (₹3 lakh a year) from 17 September 2026.
| Contribution | Employer rate | Applies to |
|---|---|---|
| Provident fund (EPF + EPS + EDLI + admin) | 13% | Wages (50% of pay) up to ₹3 lakh a year |
| Gratuity provision | 4.81% | Wages (50% of pay); provision, paid after 5 years |
Employer statutory costs for a full year, assuming wages (basic plus DA) are half of pay:
| Annual gross salary | Employer contributions | Share of salary |
|---|---|---|
| ₹1,200,000 | ₹67,860.00 | 5.66% |
| ₹2,400,000 | ₹96,720.00 | 4.03% |
| ₹4,000,000 | ₹135,200.00 | 3.38% |
| ₹6,000,000 | ₹183,300.00 | 3.06% |
- If excluded payments (such as house rent allowance, conveyance, employer pension and PF contributions, overtime and commission) exceed half of total remuneration, the excess is added back into 'wages' for statutory calculations.
- Every employer must issue an appointment letter to each employee on appointment, in the form the government prescribes.
- A 'worker' may work at most 8 hours a day and 6 days a week. Overtime beyond the hours the government prescribes is paid at twice the ordinary wage rate.
- A worker who works 180 days or more in a calendar year earns one day of paid leave for every 20 days worked.
- Up to 26 weeks of maternity benefit (no more than 8 before the expected delivery), paid by the employer at the average daily wage. Women with two or more surviving children get 12 weeks.
- 15 days' wages for each completed year of service (or part above six months), payable on leaving after 5 years of continuous service, capped at ₹20 lakh.
- Retrenching a 'worker' with at least one year's service requires one month's written notice (or pay in lieu), compensation of 15 days' average pay per completed year of service, and notice to the government.
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- From 17 September 2026: Provident fund wage ceiling raised from ₹15,000 to ₹25,000 a month. The Cabinet approved the increase on 16 September 2026, and Gazette notification S.O. 5109(E) brought it into force the next day. It is the first change since 2014.
What is the employer PF contribution in India?
How is gratuity calculated?
What is the 50% wages rule?
- 1Code on Wages, 2019 (as on 21 November 2025)
India Code (Legislative Department)
s. 2(y): definition of wages, with excluded payments above one-half of remuneration added back.
- 2Code on Social Security, 2020 (as on 21 November 2025)
India Code (Legislative Department)
s. 53 (gratuity), ss. 59–61 (maternity benefit), provident fund, ESI and other schemes.
- 3Industrial Relations Code, 2020 (as on 2 April 2026)
India Code (Legislative Department)
s. 2(zr) (definition of worker), s. 70 (retrenchment conditions), s. 83 (worker re-skilling fund).
- 4Occupational Safety, Health and Working Conditions Code, 2020 (Gazette of India text)
Ministry of Labour and Employment
s. 6(1)(f) (appointment letters), ss. 25–27 (hours, weekly holidays, overtime at twice the wage rate), s. 32 (annual leave with wages).
- 5Present rates of contribution (EPFO), archived 1 February 2026
Employees' Provident Fund Organisation (EPFO), via the Internet Archive
Employer: EPS 8.33%, EPF 3.67% (difference from 12%), EDLI 0.5%, EPF admin 0.5% (min ₹500 a month), EDLI admin nil. The document shows the earlier ₹15,000 ceiling, raised to ₹25,000 from 17 September 2026 (see PIB release).