Impact on PF & ESI applicability on employees due to uniform definition of wages w.e.f. December-2025
December 13, 2025
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‘Wages’ under wage code on which ESI & EPF contribution is payable
- State Minimum Wages and DA as notified time to time by the respective state government.
- Basic Wages/Salary (50% of Gross or state Minimum wages whichever is higher )
- DA, If any.
- Retaining Allowance (only applicable on Seasonal work Estt./Factory)
PF & ESI Contribution are payable on above ‘Wages’ subject to ceiling of Rs. 15000 & Rs. 21000 respectively.
Excluded Wages – 50% of Gross are allowed
- Statutory Bonus
- Conveyance Allowance
- Overtime Allowance
- Any commission payable on actual basis.
- House Rent Allowance
- Gratuity Payable
Please note that the Other Allowance which are being in paid practice like Special Allow, CCA, Medical Allowance, Child Education Allowance or any Other Allowance which are fixed in nature and are ordinarily being paid across the board shall be deemed to form the part of ‘Wages’ and considerable for the calculation of ESI, PF, Gratuity & Maternity Benefit etc.
Establishments that provide benefits to their employees over and above those prescribed under the New Wage Code shall be allowed to continue such benefits, and there will be no reduction in Wages as well as benefits.
Enrolment of employees under ESIC in respect eligible employees due to new definition of ‘Wages’
ESI contribution must be deducted from December-2025 on ‘Wages’ in respect of eligible employees as per above guidelines which are based on ESIC various notifications. Copies of ESIC notifications in this regard are attached herewith.
Please find attached the notification below:
