EPF vs ESIC for Employers: Coverage, Contribution Rates and Benefits Under the Labour Codes
EPF vs ESIC in 2026: EPF from 20 employees at 12% each on wages up to ₹15,000; ESIC from 10 employees for wages up to ₹21,000 at 3.25% + 0.75%.
Short answer
EPF is a retirement savings and pension scheme that applies to establishments with 20 or more employees, with 12% of wages contributed by both employer and employee. ESIC is a health and social insurance scheme that applies to establishments with 10 or more employees and covers those earning up to ₹21,000 a month, with contributions of 3.25% by employer and 0.75% by employee.
- EPF coverage
- Establishments with 20 or more employees
- ESIC coverage
- Establishments with 10 or more employees
- EPF contribution
- 12% employee + 12% employer
- ESIC contribution
- 3.25% employer + 0.75% employee
- ESIC wage ceiling
- ₹21,000 a month
- Governing law
- Code on Social Security 2020, in force from 21 November 2025
What is the difference between EPF and ESIC?
The Employees' Provident Fund provides retirement savings, a pension through the Employees' Pension Scheme, and life insurance through EDLI. Employees build a corpus they can withdraw on retirement or in specified situations. The Employees' State Insurance scheme provides medical care for the employee and family, along with cash benefits for sickness, maternity, disablement and dependants after an employment injury.
Since 21 November 2025, both are governed by the Code on Social Security 2020, which replaced the earlier EPF and ESI Acts. The core coverage rules, 20 employees for provident fund and 10 for ESIC, continue under the Code. ESIC's wage ceiling and contribution rates have not been re-notified under the Code, so the existing levels continue.
Side-by-side comparison
The table compares the two schemes for a typical employer. Rates are percentages of wages as defined under the Code on Social Security, and both contributions are due by the 15th of the following month.
| Factor | EPF | ESIC |
|---|---|---|
| Purpose | Retirement savings, pension, life cover | Medical care and cash benefits |
| Establishment threshold | 20 or more employees | 10 or more employees |
| Employee coverage | Mandatory for wages up to ₹15,000; optional above | Employees with wages up to ₹21,000 |
| Employee contribution | 12% of wages | 0.75% of wages |
| Employer contribution | 12%, of which 8.33% to pension on wages up to ₹15,000 | 3.25% of wages |
| Administrative charges | Payable by employer | None separately |
| Benefit to employee | Lump sum, pension, insurance | Medical treatment, sickness, maternity and disability benefits |
| Portability | UAN across employers | Insurance number across employers |
| Payment due date | 15th of following month | 15th of following month |
How do the labour codes affect wages?
The Code on Social Security uses a uniform definition of wages. Where allowances excluded from wages exceed 50% of total remuneration, the excess is added back to wages for contribution purposes. Employers who kept basic pay low and allowances high may see higher contributions, so review salary structures with your payroll adviser.
The Code also extends social security to gig and platform workers through aggregator contributions, and allows voluntary coverage of establishments below the thresholds. Smaller employers can choose to register voluntarily to offer benefits that attract staff.
What does compliance involve?
An employer registers on the EPFO and ESIC portals once thresholds are reached, obtains UAN and insurance numbers for employees, deducts the employee share from salary, adds the employer share, and pays through the monthly electronic challan cum return. Late payment attracts interest and damages, and employee contributions deducted but not deposited are treated seriously by authorities.
Coverage, once applicable, generally continues even if headcount later falls below the threshold, so plan registration and payroll processes as soon as hiring approaches 10 or 20 employees, rather than after the threshold is crossed.
Which applies to your business?
Most growing businesses end up registering for both. These rules show the usual sequence as headcount grows, assuming no state-specific notifications or area-based variations apply to your establishment or industry.
- Fewer than 10 employees: neither is mandatory; voluntary coverage is possible.
- 10 to 19 employees: ESIC applies for employees earning up to ₹21,000 a month.
- 20 or more employees: EPF and ESIC both apply.
- Employees all earning above ₹21,000: ESIC contributions are not payable for them, but EPF may still apply once coverage is triggered.
- Restructuring salaries: check the 50% wage rule under the Code before finalising.
Related services
Sources
- Code on Social Security 2020: coverage overview (Mondaq)
- Four Labour Codes effective 21 November 2025 (ABC AUS)
- ESI compliance in India: applicability and contribution rates (Treelife)
Written by the Refogo Editorial Team from the official sources above and checked on 2026-10-31. Laws, rates and due dates change, and authorities often extend deadlines, so confirm your own case with a qualified professional. This is general information, not legal or tax advice. Read our editorial policy or report an error to support@refogo.com.
Common questions
Is ESIC applicable to employees earning above ₹21,000?
No. Employees whose wages exceed ₹21,000 a month are outside ESIC contributions under the current ceiling, which continues under the Code on Social Security.
Can an employer register for EPF with fewer than 20 employees?
Yes. Voluntary coverage is allowed, and once registered the establishment remains covered.
When are EPF and ESIC contributions due?
Both are due by the 15th of the month following the month for which wages are paid.
Did the new labour codes change EPF and ESIC thresholds?
No. The 20-employee threshold for provident fund and 10-employee threshold for ESIC continue under the Code on Social Security, which took effect on 21 November 2025.