Code on Social Security, 2020: in force from 21 November 2025, it replaced the EPF Act, 1952 and the ESI Act, 1948; the EPF and ESI schemes continue under it. It brings a single definition of wages — where allowances excluded from wages exceed half of total pay, the excess is added back — and the EPF wage ceiling rose from ₹15,000 to ₹25,000 a month from 17 September 2026.
Two schemes, two different thresholds
PF and ESI are separate schemes, administered by separate authorities, with separate employee-count thresholds that trigger mandatory registration — a business can cross one threshold well before the other. ESI applies at a lower headcount — every establishment, other than a seasonal one, with 10 or more employees, and any establishment in a notified hazardous occupation even with one — while PF applies once an establishment reaches 20 employees. A growing business needs to track both thresholds independently rather than assume crossing one means the other is automatically covered too.
Once a threshold is crossed, registration isn't optional and doesn't wait for a convenient moment — the obligation begins from the point the threshold is met, and deductions need to start from employees' salaries from that point.
Documents required
- PAN and Certificate of Incorporation (or equivalent) of the business.
- Proof of the business premises.
- Details of all employees — name, date of joining, salary, and PAN/Aadhaar.
- Bank account details of the business.
- Digital Signature Certificate of the authorised signatory, for online filing.
The registration process, step by step
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Confirming which threshold has been crossed
Current and projected headcount is checked against both the PF (20 employees) and ESI (10 employees) thresholds independently.
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Preparing and filing the application
The relevant application — EPFO for PF, ESIC for ESI — is prepared with business and employee details and filed online.
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Code allotment
Once processed, the business receives its own PF establishment code and/or ESI employer code, used for all future filings under that scheme.
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Integrating into payroll
The relevant deductions are built into the payroll process from the effective date, with the first contribution due on the standard monthly cycle.
Practical notes from our engagements
- ESI threshold crossed well before PF, and only PF registration actioned. Because ESI applies at a lower headcount in most cases, a growing business can be liable for ESI registration for some time before it reaches the PF threshold — checking both independently avoids missing the earlier one.
- Registration delayed until "the business is more settled." Once the threshold is crossed, the obligation exists regardless of how new or small-feeling the business still is — delaying registration accumulates a compliance gap that has to be reconciled eventually, with interest and potential penalties.
- Contract or part-time staff excluded from the headcount count. Depending on the nature of the engagement, contract and part-time workers can still count toward the employee threshold for both schemes — this is worth checking carefully rather than assuming only full-time payroll staff count.
How we handle PF and ESI registration
We track a growing client's headcount against both thresholds independently, since they're set at different levels, and register as soon as either is crossed rather than waiting for a more convenient moment. Once registered, deductions are built directly into the ongoing payroll process so there's no gap between registration and actual compliance.
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Frequently asked questions
At what employee count does PF become mandatory?
Once an establishment has 20 or more employees.
At what employee count does ESI become mandatory?
At 10 or more employees, for every establishment other than a seasonal one, under the Code on Social Security, 2020. In a notified hazardous occupation it applies even with one employee, and establishments below 10 can join voluntarily.
Can a business cross the ESI threshold before the PF threshold?
Yes, since ESI generally applies at a lower headcount — a business can be liable for ESI registration for some time before it reaches PF's 20-employee threshold.
Can a smaller business register for PF or ESI voluntarily?
Yes, an establishment below the mandatory threshold can register voluntarily for either scheme if it chooses to.
Do part-time or contract workers count toward the employee threshold?
Often yes, depending on the nature of the engagement — this needs to be checked carefully rather than assuming only full-time payroll staff are counted.
What happens if registration is delayed after the threshold is crossed?
The obligation exists from the point the threshold is actually crossed, regardless of when registration is completed — a delayed registration still needs to reconcile contributions from that earlier date, along with any applicable interest.