Frequently Asked Questions
Find answers to common questions about Indian labour laws, PF, ESI, and payroll compliance.
Provident Fund (PF)
Is PF registration mandatory for all employers?
PF registration is mandatory for establishments with 20 or more employees. However, voluntary registration is allowed for establishments with fewer employees.
What is the PF contribution rate?
Both employer and employee contribute 12% of (Basic Salary + Dearness Allowance). Out of employer's 12%, 8.33% goes to EPS (Employee Pension Scheme) and 3.67% to EPF.
What is UAN and why is it important?
UAN (Universal Account Number) is a unique 12-digit number assigned to each employee. It remains constant throughout the employee's career and helps in tracking PF balance and transfers.
When can I withdraw my PF?
PF can be withdrawn for retirement (after 58 years), resignation (after 2 months of unemployment), home loan, medical emergency, education, marriage, and other specific purposes as per EPFO rules.
Employee State Insurance (ESI)
Who is eligible for ESI?
Employees earning up to ₹21,000 per month in establishments with 10 or more employees (in most states) are eligible for ESI coverage.
What are the ESI contribution rates?
Total contribution is 6.5% of wages - employer contributes 4.75% and employee contributes 1.75%.
What benefits does ESI provide?
ESI provides medical benefits, sickness benefits, maternity benefits, disablement benefits, dependent benefits, and funeral expenses.
Is ESI applicable in all states?
ESI is applicable in most states, but the threshold for coverage (number of employees) may vary. Some states have different rules.
Labour Laws
What is the minimum wage in India?
Minimum wages vary by state, skill level, and type of work. Each state government sets minimum wages for different categories of workers. Check your state labour department for current rates.
When is gratuity payable?
Gratuity is payable when an employee completes 5 years of continuous service, or on retirement, resignation, death, or disablement. The amount is calculated as: (Last drawn salary × 15/26 × Number of years of service).
Is bonus mandatory for all employees?
Under the Payment of Bonus Act, 1965, bonus is mandatory for employees earning up to ₹21,000 per month in establishments with 20 or more employees. The minimum bonus is 8.33% of salary.
What are the working hours as per Indian labour laws?
Generally, working hours should not exceed 9 hours per day and 48 hours per week. Overtime work requires payment at double the normal rate. However, this may vary by state and industry.
Payroll Compliance
What statutory deductions are made from salary?
Common statutory deductions include PF (12%), ESI (1.75% if applicable), TDS (as per tax slab), Professional Tax (state-specific), and Labour Welfare Fund (state-specific).
When should TDS be deducted from salary?
TDS should be deducted monthly from salary if the annual taxable income exceeds the basic exemption limit. The deduction is based on the employee's tax slab and declarations submitted.
What is Professional Tax?
Professional Tax is a state-specific tax on employment. It varies by state and is typically deducted monthly. Not all states levy professional tax.
What records should employers maintain for payroll?
Employers should maintain salary registers, attendance records, PF contribution records, ESI records, TDS records, leave records, and other statutory registers as required by various acts.
Still Have Questions?
If you have specific questions not covered here, we recommend:
- Consulting official government websites (EPFO, ESIC, Ministry of Labour)
- Contacting a qualified labour law consultant or advocate
- Reaching out to your state labour department
- Checking the latest circulars and notifications from relevant authorities
Disclaimer
This content is for informational purposes only and does not constitute legal advice. Laws and regulations may change. Please verify details from official government sources or consult a qualified professional.