Lesson content
Scroll through numbered sections or jump via the outline.
What you'll take away
- Paying interns cash without documentation.
- Founders on payroll without minimum wages compliance in some states.
- Not issuing UAN to employees — delays withdrawal and transfers.
- Ignoring multi-state establishment rules when hiring remote.
When registration triggers
EPF (PF): generally mandatory when you have 20+ employees; voluntary registration possible earlier for benefits.
ESIC (ESI): applies when you have 10+ employees (in non-exempt establishments) with wages up to ceiling — check latest wage ceiling notification.
Many startups register PF early to offer credible benefits to first hires.
Employer cost reality
PF: employer contributes 12% of basic wages (split across EPS/EPF/admin); employee 12% deducted.
ESI: employer ~3.25%, employee 0.75% on applicable wages (rates subject to notification).
Structure CTC statements so founders know true cost — '₹12L CTC' is not ₹1L/month take-home.
Monthly process
- Calculate wages and deductions.
- File ECR on EPFO portal by 15th with payment.
- ESIC challan and return on esic.in.
- Update exits/joins within deadlines to avoid compliance gaps.
Common startup pitfalls
- Paying interns cash without documentation.
- Founders on payroll without minimum wages compliance in some states.
- Not issuing UAN to employees — delays withdrawal and transfers.
- Ignoring multi-state establishment rules when hiring remote.
Why investors care
Labour non-compliance surfaces in due diligence and can block NBFC partnerships or enterprise vendor onboarding.