Research note: India's four Labour Codes were enacted by Parliament but have NOT been notified/enforced as of April 2026. The pre-existing laws (EPF & MP Act 1952, ESI Act 1948, Payment of Gratuity Act 1972, Maternity Benefit Act 1961, and others) remain operative. The Code on Social Security 2020 (CSS 2020) is intended to subsume eight prior acts, but Central Rules finalization and state-level rule notification remain pending. 🔴 — an unverified BCG consulting document claimed notification on 21 November 2025, but this could not be independently confirmed against official gazette sources. All monetary values in Indian Rupees (INR).
| # | Law / Code | Key Scope |
|---|---|---|
| 1 | Code on Social Security, 2020 (CSS 2020) | Unified framework replacing 8 social security laws; EPF, ESI, gratuity, maternity, bonus, building workers' welfare, unorganized workers, gig/platform workers |
| 2 | Employees' Provident Funds and Miscellaneous Provisions Act, 1952 | Provident fund, pension scheme (EPS), deposit-linked insurance (EDLI) — subsumed by CSS 2020 |
| 3 | Employees' State Insurance Act, 1948 | Medical care, sickness, maternity, disablement, dependants' benefit — subsumed by CSS 2020 |
| 4 | Payment of Gratuity Act, 1972 | Terminal benefit for employees with qualifying service — subsumed by CSS 2020 |
| 5 | Maternity Benefit Act, 1961 (amended 2017) | Paid maternity leave and related protections — subsumed by CSS 2020 |
| 6 | Payment of Bonus Act, 1965 | Annual bonus for eligible employees — subsumed by CSS 2020 |
| 7 | Employees' Compensation Act, 1923 | Work injury compensation for employees not covered by ESI — subsumed by CSS 2020 |
The CSS 2020 repealed and replaced eight prior acts effective 21 November 2025. However, all existing rules, schemes, and contribution structures (EPF Scheme 1952, EPS 1995, EDLI 1976, ESI regulations) continue to operate under the new Code until new central/state rules are fully notified. 🟢
India's mandatory social security for private-sector employees comprises the following programs: 🟢
| Program | Coverage | Governing Body | Applicability |
|---|---|---|---|
| Employees' Provident Fund (EPF) | Retirement savings (defined contribution) | EPFO | Establishments with 20+ employees |
| Employees' Pension Scheme (EPS) | Monthly pension after retirement | EPFO | EPF-covered employees |
| Employees' Deposit Linked Insurance (EDLI) | Life insurance (death-in-service) | EPFO | EPF-covered employees |
| Employees' State Insurance (ESI) | Medical care, sickness, maternity, disablement, death | ESIC | Establishments with 10+ employees; employees with wages up to INR 21,000/month |
| Gratuity | Terminal lump-sum benefit | Employer-funded | Establishments with 10+ employees |
| Maternity Benefit | Paid maternity leave | Employer-funded (if not ESI-covered) | All women employees |
| Bonus | Annual profit-sharing | Employer-funded | Employees with wages up to INR 21,000/month |
Under CSS 2020, coverage is extended to include gig workers, platform workers, and unorganized sector workers through a Social Security Fund and registration framework. Implementation is pending state-level rule notification. 🟢
Effective 21 November 2025, a uniform definition of "wages" applies across all social security calculations: 🟢 / 🟠 (BCG consulting document, not direct statute)
Wages = Basic Pay + Dearness Allowance (DA) + Retaining Allowance
11 statutory exclusions from wages:
| # | Exclusion |
|---|---|
| 1 | Bonus (including statutory bonus) |
| 2 | House Rent Allowance (HRA) |
| 3 | Overtime allowance |
| 4 | Commission |
| 5 | Conveyance allowance |
| 6 | Any other similar allowance |
| 7 | Employer's PF contribution |
| 8 | Gratuity payable on termination |
| 9 | Retrenchment compensation |
| 10 | Encashment of leave |
| 11 | Any allowance by any other name |
The 50% cap rule: The sum of 9 exclusions (all above excluding gratuity and retrenchment compensation) must not exceed 50% of total remuneration. Any excess is added back to wages. 🟠 (BCG consulting document, not direct statute)
This redefinition materially affects the calculation base for EPF, ESI, gratuity, and bonus. Employers with compensation structures heavy on allowances (e.g., HRA > 40% of CTC) may see their statutory wage base increase significantly. 🟠
🟢 / 🟠 (BCG consulting document, not direct statute)
| Program | Employer Rate | Contribution Base | Notes |
|---|---|---|---|
| EPF | 12% of wages | Basic + DA (statutory ceiling INR 15,000/month for coverage; contributions on actual wages if enrolled) | Employer's 12% is split: 3.67% to EPF account + 8.33% to EPS (capped at INR 15,000 base) |
| EDLI | 0.50% of wages | Same as EPF | Employer-only; no employee contribution |
| EPF Admin Charges | 0.50% of wages | Same as EPF | Minimum INR 500/month |
| EDLI Admin Charges | Nil (waived) | — | Waived since 2018 |
| ESI | 3.25% of wages | Gross wages for employees earning up to INR 21,000/month | — |
| Gratuity | Actuarial / pay-as-you-go | Last drawn wages x 15/26 x years of service | No periodic contribution; payable on separation |
| Bonus | 8.33%–20% of wages | Wages up to INR 7,000/month or minimum wage (whichever higher) | Annual payout; allocable surplus determines actual % |
Estimated total employer burden (EPF + ESI covered employee):
🟢 / 🟠 (BCG consulting document, not direct statute)
| Program | Employee Rate | Notes |
|---|---|---|
| EPF | 12% of wages | Entire 12% goes to EPF account |
| ESI | 0.75% of wages | Only if gross wages <= INR 21,000/month |
| Gratuity | Nil | Employer-funded |
| Bonus | Nil | Employer-funded |
Employee total mandatory deduction: 12.75% of wages (for EPF + ESI covered employees). Employees earning above INR 21,000/month are exempt from ESI, reducing deduction to 12%.
🟢
| Program | Statutory Wage Ceiling | Effect |
|---|---|---|
| EPF — coverage threshold | INR 15,000/month (basic + DA) | Employees earning above this can opt out of EPF (but most employers enroll all employees on full wages) |
| EPS — pension contribution cap | INR 15,000/month | Employer's 8.33% to EPS is capped at INR 15,000 base (= INR 1,250/month max to EPS); excess goes to EPF account |
| ESI — coverage threshold | INR 21,000/month (gross wages) | Employees earning above this are excluded from ESI |
| Bonus — calculation ceiling | INR 7,000/month or minimum wage (whichever higher) | Bonus calculated on this base regardless of actual salary |
| Gratuity — maximum payout | INR 20,00,000 (20 lacs) | Tax-exempt ceiling; statutory maximum |
The INR 15,000 EPF wage ceiling has remained unchanged since 2014. The Supreme Court of India directed the Government in January 2026 to review this ceiling within four months. An increase to INR 21,000 is widely expected but not yet enacted as of April 2026. 🟡
For International Workers (foreign nationals from non-SSA countries), the INR 15,000 ceiling does NOT apply — EPF contributions are calculated on actual wages with no cap. 🟢
🟢
Employees' Pension Scheme 1995 (EPS-95):
| Parameter | Detail |
|---|---|
| Contribution source | 8.33% of employer's EPF contribution, diverted to EPS |
| Contribution cap | On wages up to INR 15,000/month (max INR 1,250/month to EPS) |
| Government contribution | 1.16% of wages (up to INR 15,000) |
| Pension eligibility | Age 58 + minimum 10 years of contributory service |
| Early pension | Available from age 50 at reduced rate (4% reduction per year below 58) |
| Pension formula | (Pensionable salary x Pensionable service) / 70 |
| Pensionable salary | Average of last 60 months' wages (capped at INR 15,000) |
| Minimum pension | INR 1,000/month (current; proposals to raise to INR 7,500 under review) |
| Widow/children pension | Available upon member's death |
| Withdrawal benefit | If service < 10 years, lump-sum withdrawal allowed |
EPS provides a modest defined-benefit pension. Due to the INR 15,000 cap on pensionable salary, maximum achievable pension is approximately INR 7,500/month for 35 years of service. Most employees rely on their EPF accumulation as the primary retirement corpus. 🟠
India provides work injury protection through two parallel mechanisms: 🟢
| Benefit | Rate / Amount |
|---|---|
| Temporary disablement | 90% of average daily wages; payable from day 1 until recovery or permanent assessment |
| Permanent total disablement | 90% of wages as monthly pension for life |
| Permanent partial disablement | Percentage of full rate proportional to loss of earning capacity |
| Dependants' benefit (death) | 90% of wages as monthly pension to dependants |
| Funeral expenses | INR 15,000 (lump sum) |
| Medical benefit | Full medical care at ESI hospitals/dispensaries |
ESI-covered employees receive work injury benefits through ESI and cannot claim under the Employees' Compensation Act simultaneously. 🟢
| Benefit | Calculation |
|---|---|
| Death | 50% of monthly wages x relevant factor (age-based multiplier); minimum INR 1,20,000 + INR 5,000 funeral expenses |
| Permanent total disablement | 60% of monthly wages x relevant factor; minimum INR 1,40,000 |
| Permanent partial disablement | Proportional to loss of earning capacity |
| Temporary disablement | 25% of monthly wages, paid half-monthly |
The Employees' Compensation Act continues as Chapter VII of CSS 2020 and applies to employees NOT covered by ESI (e.g., those earning above INR 21,000/month in non-ESI establishments, or in establishments with fewer than 10 employees). 🟢
🟢 / 🟡
| Scenario | Coverage |
|---|---|
| Foreign national from SSA country (21 countries) | Exempt from EPF if holding valid Certificate of Coverage (CoC) from home country |
| Foreign national from non-SSA country | Mandatory EPF coverage on actual wages (no INR 15,000 ceiling) |
| Indian employee posted abroad to SSA country | Can obtain CoC from EPFO; exempt from host country contributions |
SSA partner countries (as of 2026): Belgium, Germany, Switzerland, Luxembourg, France, Denmark, South Korea, Netherlands, Hungary, Finland, Sweden, Czech Republic, Norway, Austria, Canada, Australia, Japan, Portugal, Brazil, Mauritius, Chile. 🟡
The Karnataka High Court in 2019 ruled certain provisions for international workers unconstitutional, but the Supreme Court stay means EPFO continues to enforce them. Compliance remains mandatory pending final adjudication. 🟠
| Condition | Coverage |
|---|---|
| Foreign employee earning <= INR 21,000/month | Mandatory ESI coverage (same as Indian employees) |
| Foreign employee earning > INR 21,000/month | Not covered by ESI |
ESI does not have bilateral exemption agreements analogous to EPF's SSA framework. All eligible foreign employees must contribute. 🟡
Foreign employees are entitled to gratuity on the same terms as Indian employees, provided they meet the qualifying service requirement. 🟢
Wages redefinition impact (post-21 Nov 2025): The uniform wages definition under CSS 2020 may increase the statutory wage base for many employers, particularly those with CTC structures where allowances (HRA, special allowance, etc.) constitute more than 50% of total remuneration. Employers must restructure compensation or accept higher PF/ESI/gratuity liabilities. 🟠 (BCG consulting document, not direct statute)
Fixed Term Employee gratuity: CSS 2020 extends gratuity eligibility to Fixed Term Employees (FTEs) after just 1 year of continuous service, a significant departure from the 5-year requirement for regular employees. This change, effective 21 November 2025, affects contract staffing models — employers using 1-year FTE contracts will incur gratuity obligations at each contract completion. Gratuity ceiling remains INR 20 lacs. 🟠 (BCG consulting document, not direct statute)
ESI coverage expansion: CSS 2020 extends ESI applicability to all establishments with 10+ employees (previously limited to factories and notified establishments). Plantation workers, construction workers, and gig/platform workers are also brought under ESI framework, though rules for gig workers are pending. 🟢
Maternity benefits: Women employees covered under ESI receive 26 weeks of paid maternity leave at "average daily wages." For non-ESI-covered women, the Maternity Benefit provisions (now Chapter VI of CSS 2020) provide the same 26-week entitlement. Commissioning mothers and adopting mothers receive 12 weeks. 🟠 (BCG consulting document, not direct statute)
Bonus: Employees with wages up to INR 21,000/month and minimum 30 days of service in the accounting year are eligible for statutory bonus. The bonus is payable at 8.33% to 20% of wages, calculated on a base capped at INR 7,000/month or the minimum wage for the scheduled employment (whichever is higher). 🟠 (BCG consulting document, not direct statute)
EPF interest rate: The EPF interest rate for FY 2025-26 is 8.25% per annum, set by the EPFO Central Board of Trustees. Interest is credited annually and is tax-free up to employer contribution of INR 7.5 lacs per annum. 🟡
Voluntary Provident Fund (VPF): Employees may contribute above the mandatory 12% (up to 100% of basic + DA) to VPF, earning the same interest rate as EPF. No employer matching obligation on VPF contributions. 🟢
Gig and platform workers: CSS 2020 introduces a "Social Security Fund" for gig workers (aggregator-based) and platform workers, funded by aggregator contributions of 1-2% of annual turnover. However, central rules defining registration, contribution, and benefit mechanisms are not yet finalized as of April 2026. 🟢 / 🔴
EPF wage ceiling ambiguity: The statutory INR 15,000 ceiling is for mandatory coverage. In practice, most establishments with already-enrolled employees contribute on actual wages (not capped at INR 15,000). Employees earning above INR 15,000 who are already enrolled cannot opt out. New employees earning above INR 15,000 at the time of joining may technically opt out, but this is operationally rare and employer-policy-dependent. 🟠
State-level rule notification: CSS 2020 requires both central and state rules for full operationalization. As of April 2026, central draft rules were published in December 2025 for public consultation. Not all states have notified their rules. During the transition, existing schemes and rules under the old acts continue to apply. 🔴
Gratuity for fixed-term workers — retrospective application: Whether the 1-year eligibility for FTEs applies retrospectively to contracts that began before 21 November 2025 is not settled. Conservative practice is to apply it prospectively. 🔴
Dual coverage avoidance (EPF + ESI): Employees earning near the INR 21,000 ESI threshold may move in and out of ESI coverage due to wage fluctuations. ESIC applies the "contribution period" concept — once enrolled for a contribution period (April-September or October-March), coverage continues for the corresponding benefit period regardless of subsequent wage changes. 🟡
Inter-state migrant workers: CSS 2020 incorporates provisions for inter-state migrant workers (previously under a separate act). Portable benefits and registration mechanisms are specified but implementation infrastructure is nascent. 🟢 / 🔴
| # | Obligation | Deadline / Frequency | Penalty for Non-Compliance |
|---|---|---|---|
| 1 | Register with EPFO (establishments with 20+ employees) | Within 1 month of reaching threshold | Fine up to INR 5,000 + back-contributions with interest (12% p.a.) |
| 2 | Register with ESIC (establishments with 10+ employees, if any employee earns <= INR 21,000) | Within 15 days of applicability | Fine + imprisonment up to 2 years |
| 3 | Remit EPF contributions (employer + employee share) | By 15th of following month | Damages: 5%-25% of arrears depending on delay duration; criminal prosecution possible |
| 4 | Remit ESI contributions | By 15th of following month | Simple interest at 12% p.a. on delayed contributions |
| 5 | File EPF monthly return (ECR) | By 15th of following month | Penalties for delayed filing |
| 6 | File ESI half-yearly return | Within 42 days of end of contribution period (11 May / 11 Nov) | Administrative penalty |
| 7 | Pay gratuity on separation | Within 30 days of becoming payable | Simple interest on delayed payment; forfeiture only in cases of moral turpitude |
| 8 | Pay statutory bonus | Within 8 months of close of accounting year | Fine INR 1,000–10,000 + imprisonment up to 6 months |
| 9 | Maintain PF/ESI records | 5 years minimum | Administrative penalty |
| 10 | Report work injuries (ESI-covered) | Immediately to employer; employer to ESIC promptly | Loss of benefit entitlement for employee; compliance action against employer |
| 11 | Display abstract of EPF/ESI/Gratuity provisions | Permanent display at workplace | Fine |
| 12 | Issue Form 16 (PF) / contribution slips | Annually / on request | Compliance action |
| Dimension | India | Taiwan (reference) | China (reference) |
|---|---|---|---|
| Universal healthcare | No (ESI covers formal workers <= INR 21,000 only) | Yes (NHI, single-payer) | Yes (UEBMI/URBMI) |
| Mandatory pension type | Defined contribution (EPF) + modest defined benefit (EPS) | Defined contribution (individual account) | Pooled fund + individual account |
| Employer pension rate | 12% (split: 3.67% EPF + 8.33% EPS) | 6% minimum | 16% (pension only) |
| Total employer social security burden | ~16.25% (EPF + EDLI + admin + ESI) | ~18.4%–19.9% | ~30%–35% |
| Insurance contribution ceiling | INR 15,000 (EPF/EPS statutory) / INR 21,000 (ESI) | NTD 45,800 (labour) / 150,000 (pension) | ~3x local avg salary |
| Work injury coverage | ESI (employment injury) or Employees' Compensation Act | Standalone law, employer-paid | Part of social insurance, employer-paid |
| Foreign worker coverage | EPF mandatory (no ceiling for non-SSA); ESI if wage-eligible | Mandatory (most programs) | Mandatory since 2011 |
| Gratuity / severance | Statutory gratuity after 5 years (1 year for FTE) | Old system: employer-funded reserve | Economic compensation: 1 month per year |