ESI & PF Registration for Employers – Benefits & Compliance

Introduction

For any business employing workers in India, compliance with labour welfare laws is not only a legal necessity but also a crucial step toward building trust and credibility. Among the most significant social security legislations in India are:

• Employees’ State Insurance (ESI) Act, 1948
• Employees’ Provident Funds and Miscellaneous Provisions (EPF & MP) Act, 1952

Both these laws safeguard employees’ rights and provide essential benefits related to health, retirement, disability, and family welfare. While ESI provides medical and health-related benefits, PF focuses on long-term financial security and retirement planning.

Every employer covered under these Acts is required to obtain ESI and PF registration, make timely contributions, file returns, and maintain compliance records. Non-compliance can result in heavy penalties and legal consequences.

This article provides a complete guide to ESI and PF Registration in India — its applicability, process, benefits, compliance requirements, penalties, and the role of RegistrationMART in ensuring seamless compliance.

1. Employees’ State Insurance (ESI) – An Overview

The Employees’ State Insurance Act, 1948 was enacted with the objective of providing social security and medical benefits to workers. The scheme is administered by the Employees’ State Insurance Corporation (ESIC), an autonomous body under the Ministry of Labour and Employment.

Key Features of ESI:

• Provides full medical care to insured employees and their dependents.
• Cash compensation during sickness, maternity, and employment injury.
• Covers funeral expenses, dependents’ pensions, and rehabilitation benefits.
• Applicable across India in notified areas.

2. Applicability of ESI

Employers Covered:

• Every factory with 10 or more employees (in some states, 20).
• Shops, hotels, restaurants, cinemas, road transport undertakings, and educational institutions with 10 or more employees.
• Establishments notified by the government from time to time.

Employees Covered:

• Employees earning a gross monthly wage of up to ₹21,000 (₹25,000 for persons with disabilities).
• Apprentices engaged under the Apprentices Act are excluded.

3. Contribution Rates under ESI (2025)

• Employer’s Contribution: 3.25% of the wages
• Employee’s Contribution: 0.75% of the wages

Example: If an employee earns ₹20,000/month:

• Employer’s share = ₹650
• Employee’s share = ₹150
• Total ESI contribution = ₹800/month

4. Benefits of ESI Scheme

1. Medical Benefit: Full medical facilities to insured employees and their families.
2. Sickness Benefit: Cash compensation at 70% of wages for up to 91 days in a year.
3. Maternity Benefit: Paid leave for 26 weeks to insured women.
4. Disablement Benefit: Compensation for temporary or permanent disability.
5. Dependents’ Benefit: Monthly pension to dependents in case of employee death due to employment injury.
6. Funeral Expenses: Lump sum payment to family members.
7. Rehabilitation Allowance: For employees undergoing vocational rehabilitation.

5. Registration Process for ESI

1. Online Application: Visit ESIC portal and sign up as an employer.
2. Submit Employer Details: Business details, PAN, address, nature of activity, number of employees.
3. Upload Documents: PAN, registration certificate, address proof, bank details, employee details.
4. Verification & Code Generation: A 17-digit Employer Code Number is issued.
5. Allotment of Insurance Number: Each employee gets a unique Insurance Number and Temporary Identity Card (TIC).

6. Employees’ Provident Fund (EPF) – An Overview

The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 ensures financial security and retirement savings for employees. It is administered by the Employees’ Provident Fund Organisation (EPFO).

EPF consists of three schemes:

• Employees’ Provident Fund Scheme, 1952
• Employees’ Pension Scheme, 1995
• Employees’ Deposit Linked Insurance Scheme, 1976

7. Applicability of EPF

Employers Covered:

• Every establishment employing 20 or more employees.
• Voluntary coverage possible for establishments with less than 20 employees.

Employees Covered:

• Employees earning up to ₹15,000/month are mandatorily covered.
• Employees earning above ₹15,000 can also be covered voluntarily.

8. Contribution Rates under EPF

• Employer’s Contribution: 12% of wages (8.33% to EPS, 3.67% to PF)
• Employee’s Contribution: 12% of wages (entirely to PF)

Example: If an employee earns ₹15,000/month:

• Employer’s share = ₹1,800 (₹1,250 to EPS + ₹550 to EPF)
• Employee’s share = ₹1,800 (to EPF)
• Total = ₹3,600 per month

9. Benefits of EPF Scheme

1. Retirement Savings: Lump sum withdrawal after retirement.
2. Pension (EPS): Monthly pension after retirement.
3. Insurance (EDLI): Life insurance cover for employees.
4. Partial Withdrawals: Allowed for marriage, education, housing, medical needs.
5. Tax Benefits: Contributions are tax-exempt under Section 80C.
6. Portability: UAN ensures portability across jobs.

10. Registration Process for EPF

1. Online Application: Visit EPFO portal and register as an employer.
2. Submit Details: Establishment name, PAN, TAN, address, business type, incorporation date.
3. Upload Documents: PAN, incorporation certificate, GST, address proof, bank details, employee details.
4. Verification: After approval, a PF Establishment Code Number is issued.
5. UAN for Employees: Each employee is allotted a Universal Account Number.

11. Compliance Requirements for ESI & PF

• Monthly: Deposit contributions before 15th of next month and upload challans.
• Annual: File annual returns with employee and wage details.
• Records: Maintain attendance register, salary register, accident register, inspection reports.

12. Penalties for Non-Compliance

ESI:

• Interest @ 12% p.a. for late payment.
• Penalty: 5% to 25% depending on delay.
• Prosecution in serious cases.

EPF:

• Interest @ 12% p.a. (Section 14B damages).
• Penalty: 5% to 25% of arrears.
• Imprisonment up to 3 years in severe cases.

13. Benefits of ESI & PF Compliance for Employers

• Legal Protection: Avoid penalties and litigation.
• Employee Welfare: Boosts trust, retention, and loyalty.
• Corporate Reputation: Builds brand credibility.
• Tender Eligibility: Required for many government contracts.
• Smooth Audits: Simplifies statutory audits and due diligence.

14. Challenges Faced by Employers

• Multiple registrations across locations.
• Complex documentation requirements.
• Changing laws and compliance deadlines.
• Maintaining employee records and UAN numbers.
• Handling inspections and queries from authorities.

15. How RegistrationMART Helps

RegistrationMART provides end-to-end assistance in ESI & PF Registration and Compliance:

• Advisory: Assessing applicability for your business.
• Registration: Filing applications online, document preparation, and obtaining code numbers.
• Employee Management: Allotting insurance numbers and UANs.
• Monthly Filing: Depositing contributions and filing returns.
• Compliance Support: Handling inspections, queries, and audits.
• Reminders: Timely alerts for due dates to avoid penalties.

With our team of Chartered Accountants, Company Secretaries, and Legal Experts, we ensure your organization remains fully compliant while focusing on growth.

Conclusion

For employers in India, ESI and PF registration is mandatory under the respective Acts. Beyond compliance, these schemes provide valuable benefits to employees in terms of health care, insurance, retirement savings, and financial security.

By ensuring proper registration and timely contributions, employers safeguard themselves from penalties while building a positive image as a socially responsible organization.

At RegistrationMART, we simplify the entire process — from registration to compliance — ensuring businesses of all sizes can focus on growth while staying legally protected. With our expertise, compliance becomes an opportunity to enhance credibility and employee satisfaction.