Loading page
All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
Indian labour law switches on in steps. Several obligations begin when an establishment reaches a given number of persons employed, and the twentieth hire is a particularly important step because EPF applicability and the Payment of Bonus Act both commonly start there.
This guide lists the thresholds a growing company typically meets, what each requires, and what to prepare before you reach it. Thresholds are set by each Act and by notifications, and some differ by state, so treat this as a map to check against the current law.
01
Most of these laws count persons employed in the establishment, not just permanent employees on the payroll. Depending on the Act, that can include contract workers, trainees and part-time staff. Some count on any day in the preceding year, not the current headcount.
Read the definition in each Act before you conclude you are below a threshold. A company with twelve employees and ten contract workers may already be over several lines.
02
Several obligations commonly begin at ten. None of these is optional once the condition is met.
03
The EPF Act 1952 applies under section 1(3) to factories in scheduled industries and notified establishments employing 20 or more persons. Once covered, the establishment stays covered under section 1(5) even if headcount falls.
The Payment of Bonus Act 1965 applies under section 1(3) to factories and to establishments employing 20 or more persons, requiring a minimum statutory bonus for eligible employees within the wage limit set by the Act. Bonus is computed per accounting year, so the effect is felt at the year end.
Watch for itThe twentieth person does not have to be permanent. Count interns, trainees and contract staff as each Act defines them before deciding EPF does not apply.
04
Further obligations apply at higher headcounts. The figures below are in the central Acts; states can and do vary some of them.
05
The practical risk is not the obligation itself but noticing it late, since most contributions are due from the date coverage began. Track headcount by establishment monthly against each threshold.
When a threshold approaches, prepare in advance: registration documents for EPF and ESI, payroll configured for the contributions, a POSH policy and Internal Committee, a bonus provision in the accounts. The labour codes, in force since 21 November 2025, restate several of these thresholds and state rules under them may still be in draft, so check the current position for your establishment.
Every guide ends here rather than in a summary. If a line below is not true yet, that is the next thing to do.
Yes. Under section 1(3) of the EPF Act 1952, factories in scheduled industries and notified establishments employing 20 or more persons are covered.
No. Under section 1(5), an establishment once covered continues to be covered even if the number of persons employed later falls below 20.
Often yes, depending on the Act's definition of persons employed or employees. Check each Act rather than counting only permanent staff.
Commonly the ESI Act where implemented, the Payment of Gratuity Act for shops and establishments, and the POSH Act's Internal Committee requirement. State laws may add others.
The codes, in force since 21 November 2025, restate many thresholds, sometimes with changes. Some details depend on state rules, which differ and may still be in draft, so check the current position for your establishment.
The checklist above is generic by necessity. Bring your own structures, states and rota and we will tell you which lines are already true and which are not.
14-day free trial · Full access to all 12 modules · Zero implementation fee · Cancel anytime