Labour Laws — Employee Rights & Employer Obligations
Comprehensive guide to Indian labour laws — PF, ESI, gratuity, minimum wages, maternity benefits, working hours, termination rules, and the new Labour Codes for salaried employees and employers.
🏛️ Background
India has a complex web of labour laws — over 40 central laws and 100+ state laws. In 2020, Parliament consolidated 29 central labour laws into 4 Labour Codes: Code on Wages (2019), Industrial Relations Code (2020), Social Security Code (2020), and Occupational Safety Code (2020). While the Codes received Presidential assent, implementation is pending as states finalize rules. Until then, existing laws remain in force.
🏦 Provident Fund (EPF & MP Act, 1952)
- ✅ Applicability: Establishments with 20+ employees. Government can notify factories with fewer employees.
- ✅ Contribution: Employee: 12% of basic + DA. Employer: 12% (3.67% to EPF + 8.33% to EPS). Optional higher contribution allowed.
- ✅ Interest Rate: 8.25% p.a. for FY 2024-25 (notified by EPFO annually).
- ✅ Withdrawal: Full withdrawal on retirement (58 years), or 2 months of unemployment. Partial withdrawal allowed for house, illness, education, marriage.
- ⚠️ Tax: Employer contribution >₹7.5 lakh p.a. is taxable. Interest on employee contribution >₹2.5 lakh p.a. is taxable (from FY 2021-22).
⚕️ ESI — Employees' State Insurance Act, 1948
- ✅ Applicability: Establishments with 10+ employees (20+ in some states). Employees with gross monthly wages ≤₹21,000 (₹25,000 for disabled).
- ✅ Contribution: Employee: 0.75% of wages. Employer: 3.25%.
- ✅ Benefits: Sickness benefit (70% wages, 91 days), maternity benefit (100% wages, 26 weeks), disablement benefit, dependants' benefit, funeral expenses (₹15,000), medical benefit for family.
💰 Gratuity (Payment of Gratuity Act, 1972)
- ✅ Eligibility: Minimum 5 years of continuous service (4 years 240 days for seasonal establishments). Exception: death/disability — no minimum service needed.
- ✅ Calculation: (Last drawn salary × 15 × Years of service) ÷ 26. Salary = basic pay + DA. Service >6 months rounds up.
- ✅ Maximum: ₹25,00,000 (tax-free limit). Amount above this is taxable. Gratuity must be paid within 30 days of it becoming payable.
- ✅ Applicability: Every factory, mine, plantation, shop, establishment with 10+ employees.
🤱 Maternity Benefit (Amendment Act, 2017)
- ✅ Leave: 26 weeks paid leave for first 2 children (was 12 weeks before 2017). 12 weeks for 3rd child onwards.
- ✅ Adoptive/Commissioning mother: 12 weeks from date child is handed over.
- ✅ Work from home: Employer may allow WFH after maternity leave period, on mutually agreed terms.
- ✅ Crèche: Establishments with 50+ employees must provide crèche facility. Mother allowed 4 visits to crèche daily (including travel).
- ✅ Eligibility: Women who have worked at least 80 days in the 12 months preceding delivery.
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⚠️ Disclaimer
This page is for educational and informational purposes only and does not constitute legal, tax, or financial advice. While we strive for 100% accuracy, laws and regulations change frequently. Always refer to the official gazette notifications, consult a qualified Chartered Accountant (CA), Company Secretary (CS), or legal professional before making any financial or legal decisions. Tenhash is not responsible for any actions taken based on this information. Last reviewed: March 2026.