The revision has implications not only for employees who will now come within mandatory EPF coverage, but also for employer contributions, pension allocation, EDLI, payroll processing and compliance activities.

What has changed?

The most significant change is the increase in the statutory wage ceiling:

*These figures apply where contributions are restricted to the statutory ceiling. Employers already contributing on actual higher wages would continue accordingly.

Who will be impacted?

The most immediate impact is on employees earning between ₹15,001 and ₹25,000 per month who were previously treated as excluded employees and were not EPF members.

These employees will now need to be brought under EPF coverage. The document specifies 17 September 2026 as the date of joining in EPF, or the employee’s actual date of joining where this is later.

For existing EPF members, the impact will depend upon how contributions are currently being made.

Employees for whom contributions are already being made on PF wages may not see a change in the total PF outgo. However, the allocation of the employer contribution between EPS and EPF will change, and EDLI may increase marginally.

Employees earning above ₹25,000 who are not currently PF members remain excluded employees, with the voluntary coverage option continuing.

Existing members earning up to ₹15,000 continue as before.

What should employers do for newly covered employees?

Employers should first identify all employees whose wages fall between ₹15,001 and ₹25,000 and who are currently outside EPF coverage.

For each newly covered employee, the organisation should:

1. Generate or link the UAN. Where the employee already has a UAN from previous employment, the existing UAN should be linked rather than creating a duplicate. The document notes UAN generation through Face Authentication Technology via UMANG, as currently required by EPFO.
2. Bring the employee into EPF coverage from 17 September 2026, or the actual joining date if the employee joined subsequently.
3. Complete KYC requirements, including Aadhaar, bank account and PAN details.
4. Obtain the required declaration form and complete e-nomination.
5. Examine whether eligible employees can be enrolled under the Pradhan Mantri Viksit Bharat Rozgar Yojana (PMVBRY).
6. Include the newly covered employees in the September 2026 ECR, calculating wages on a pro-rata basis from 17 September.

Impact on Employees’ Pension Scheme (EPS)

The increase in the wage ceiling also affects the Employees’ Pension Scheme (EPS).

For employees who are members of EPS, pension contribution is now calculated on wages up to ₹25,000, rather than ₹15,000. At 8.33%, the maximum monthly EPS contribution therefore increases from ₹1,250 to ₹2,083.

Where an employer is already remitting EPF contributions on an employee’s actual Basic salary above ₹25,000, the document indicates that the overall 12% contribution does not change. However, a larger portion of the employer’s contribution will move towards EPS, with a corresponding reduction in the amount going to EPF.

Where contributions were previously restricted to the ₹15,000 ceiling, the revised ceiling can result in an increase in employer cost. For newly covered employees earning between ₹15,001 and ₹25,000, EPF-related contributions represent a new statutory cost.

Can employers offset some of the additional cost?

The document highlights the Pradhan Mantri Viksit Bharat Rozgar Yojana (PMVBRY) as a potential mechanism through which eligible employers may recoup part of the additional financial burden.

It states that an employer incentive of up to ₹3,000 per employee per month may be available for eligible additional employees. The benefit is stated as being available for two years for non-manufacturing establishments and four years for manufacturing establishments, with employee enrolment valid until 31 July 2027.

Employers should therefore examine eligibility rather than treating the increased PF contribution purely as an additional payroll cost.

Immediate compliance priorities

The change requires coordinated action between HR, Payroll and Finance, rather than merely changing a figure in the payroll system.

Employers should identify affected employees, review UAN and KYC status, make the necessary payroll changes, communicate the impact to employees and verify that contractors are also complying with the revised requirements.

The document specifically identifies the following timelines:

By 30 September 2026: communicate the change to affected employees and confirm contractor compliance.

September payroll: process the split-month calculation, applying the earlier ₹15,000 ceiling for 1–16 September and the revised ₹25,000 ceiling for 17–30 September.

By 15 October 2026: file the September 2026 ECR and remit the applicable contributions.

Ongoing: assess PMVBRY eligibility and incentives and continue tracking EPFO circulars and FAQs.

What employers should take away

The increase in the EPF wage ceiling from ₹15,000 to ₹25,000 is more than a payroll revision. It potentially brings a new group of employees into mandatory provident fund coverage and changes contribution calculations for existing members.

For employers, the immediate priorities are to identify affected employees, assess the financial impact, update payroll, complete UAN/KYC formalities, communicate with employees, check contractor compliance and ensure the September 2026 ECR reflects the revised ceiling from 17 September.

A timely review will help organisations manage the transition smoothly while ensuring that eligible employees receive the social security benefits arising from the revised wage ceiling.

Download the notification here –

The Employee State Insurance Act, 1948 applies to an employee who is drawing a monthly wage of Rs. 21,000/- or below. However, under rule 50 of the ESI (Central) rules 1950, it provides that in case of an employee who is person with disability under the persons with Disabilities (Equal Opportunities Protection of Rights and Full Participation) Act,1995 (1 of 1996), and under the National Trust for Welfare of persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act. 1999 (44 of 1999) respectively, shall be Rs. 25,000/- per month

Our suggestion consists of two parts:

• Any employee who is not covered by ESI, by default gets covered under the Employees Compensation Act 1923-subject to that the employee is covered under Schedule II which spells out details the definition of an employee for coverage. However, this legislation limits the liability of the employer to cash compensation only and does not include Medical treatment as provided under ESI. Many insurance companies provide an insurance policy specifically to cover the risk under the EmployeesCompensationAct,1923. Dependinguponthefinancialliability,anemployercanopt for this insurance as the Employer is always legally liable to pay the compensation to the employee who is not covered by ESI, but covered by Employee Compensation Act. By taking any other variety of insurance policy, does not exempt the employer from the liability under the Employee Compensation Act 1923.

• Many companies extend insurance coverage to employees not covered by ESI, by two policies – Group personal accident policy and Group Mediclaim policy. To repeat, the liability of the employer continues under the Employees Compensation Act, 1923. In our opinion, for employees who are coming out of ESI coverage, the employer should offer insurance coverage to such employee with the clear understanding that the premium payable by the employer will be restricted to the employer contribution under ESI i.e. Rs. 21000*3.25% = 682.5 per month. The employee can be advised to take an insurance policy to his liking with the understanding that employers’ contribution will be restricted to Rs.682.5 per month or Rs.8190 per annum. If the company decides depending upon their financial capacity instead of stopping at Rs. 682.50 paisa per month they agree to pay 3.25% on their latest salaries.

To safeguard the interest of the company, an insurance Employee compensation policy is a must. While it is the choice of the Employer to take a Group Mediclaim and /or limit the premium payable is in the name of the employee to the outflow, if they were to have cover under ESI Act.

Standing Orders Act 1946 is a central act and applies to all Industrial Establishments employing 100 or more employees.

However, states have been empowered to apply the provisions of the Act to Industrial Establishments, even though they have less than 100 employees. Therefore, the Karnataka Government has amended the Act to apply Standing Orders to Industrial Establishments employing 50 or more employees.

Model to the Standing Orders have been prescribed both by the Centre as well as the States, while the Centre has made comprehensive models particularly in relation to mines.

Acts of indiscipline, insubordination have been more or less comprehensive, whereas, in comparison Karnataka Government model to the Standing Orders does not include sleeping while on duty or smoking on duty, as acts of misconducts.

We wish to draw the attention of the employers to section 12(A) of the Industrial Employment (Standing Orders) Act 1946, which is reproduced here;

12(A) Temporary application of  model standing orders- (1) not withstanding anything contained in section 3 to 12, for the period commencing on the date on which this Act becomes applicable to an Industrial establishment ending with the date on which the standing orders as finally certified under this Act come into operation under section 7 in that establishment, the prescribed model standing orders shall be deemed to be adopted in that establishment and the provisions of section  9, subsection (2) of section 13 and section 13 A shall apply to such model standing orders as they apply to the standing orders so certified.

(2) nothing contained in subsection (1) shall apply to an industrial establishment in respect of which the appropriate Government is the Government of the State of Gujarat or the State of Maharashtra.

This is a simple process which if employers were to adopt, they cannot be taken for a ride by the Department of labour, who might issue show cause notice and harass managements, if draft of Standing orders have not been submitted for certification. If the model to the Standing Orders is displayed on the board, the officers of the Department of labour have no authority to harass managements on this score.

We therefore request employers who are employing 50 or more workmen and do not have certified Standing orders to be in touch with us and collect model to the Standing orders made by us to cover short commings and display the same on the notice board to avoid harassment.

The outlined rules mandated that all employers in Karnataka, except establishments under the jurisdiction of the State or Central Government, were required to secure an insurance policy within 60 days to safeguard their gratuity liabilities.

This unexpected notification caused significant challenges for many employers, as the financial burden of making the 1^st premium payment for the new insurance policy proved unfeasible, potentially threatening the stability and viability of existing industries.

Accordingly, the Bangalore Employers Association (BEA) filed a writ petition (WP 10140/2024) in the Karnataka High Court in March 2024, challenging the aforementioned rules.

We are glad to inform that in the hearing held on 28/4/25 the High Court have passed an interim order that there should not be any coercive measures to be taken on the members of BEA who also have filed separately the writ petition that the are permitted to  take a gratuity insurance policy   covering employees wo have completed five years and more only.

We are pleased to inform you that, during the hearing held on April 28, 2025, the High Court issued an interim order. The court directed that no coercive measures should be taken against members of the Bangalore Employers Association (BEA) who have filed separate writ petitions. Furthermore, the members are permitted to obtain a gratuity insurance policy covering only employees who have completed five years or more of service.

We will keep you updated you on the developments as and when it occurs. Do reach out to us if you need more information about Bangalore Employers Association (BEA) – rma@r-massociates.com

In this process what happened was the beginning of the contrary. Trade unions arose; their power grew, and Acts such as The Industrial Disputes Act- 1957, The Bombay Industrial Relations Act-1946 and such other Acts purporting to protect workers against management came into being including the Contract Labour (Regulation and Abolition) Act, 1970. According to which, up to Section 9 it has been stated that on routine regular jobs, contract labour cannot be employed. But Section 10 of the same Act reverses the entire thought.

Industrial revolution in the world which commenced 200 to 300 years ago where there were no trade unions and there were no labour laws or protection of workers against exploitation of working hours, carrying weights or practice of human relations etc, where workers were exploited by employers/owners, when there were no restrictions on weekly hours, daily hours or safety precautions etc.

In fact, all this led to the revolution by the worker groups like, the communists, socialists and others. The Trade Union Act came into being only 100 years ago. The present Trade Union Act saw the light of day in 1926. We are now in 2025 (100 years). Till now the workers have had their day.

To quote a few of the Acts which were introduced to protect worker’s rights, safety, welfare etc, the following Acts came into being;

• The Factories Act, 1948
• The shops and commercial establishments Act, 1961
• The payment of wages Act,1936
• The Minimum wages Act, 1948
• The Trade union Act, 1926
• The Industrial Disputes Act, 1947
• The Industrial Employment (standing orders) Act, 1946
• The Gratuity Act ,1972
• The Bonus Act, 1965
• The PF Act, 1925
• The ESI Act, 1948
• The contract Labour (Regulation and Abolition) Act, 1970 etc.

And now the Government is preparing to codify the plethora of the various labour Acts.
Industrial relations in this growth of interaction between employees and employers saw a miserable period for employers around 1970s, particularly during the declaration of emergency in India when employers were waylaid, beaten up, factories were set on fire etc. this was the period when the partners of R & M Associates were also threatened with arrest/incarceration for advising employers.

In our practice of Industrial Relations, we find an era of a full circle taking place, where in trade unions have almost exhausted themselves and we find a weakening of their strength, but find employers have to shed their fear of unions and the past era of dominance of the working force and the various laws made against employers. In our practice we have found the Factories Act good, made for the protection, safety, welfare of the child, lady workers etc, but the same and endless rules for its implementation have been misused by the concerned authorities to threaten the employers, instead of enlightening them/guiding them to implement rules made for the welfare, safety, health etc of the workers.

The Industrial Disputes Act 1947 and many of its provisions still continue to protect employees, particularly the mischievous and incorrigible ones, some of the provisions named below are examples;

1. Section-2oo(a) where a worker is free to retire at his will and no questions asked, whereas the same
right to retire an incompetent, disabled worker is not available to the employer, but he has to continue with him.

2. Section 9(a) provides that no employer who proposes to effect any change in the conditions of service applicable to him cannot be done without giving notice and without getting entangled in litigation, though this restriction is not applicable to Government and civil services.

NOTE:

1. Ten days have to be compulsorily notified under the Karnataka Industrial Establishments (National & Festival Holidays) Act, 1963. If your establishment is declaring more than 10 days, you will be required to continue the same.
2. Five days i.e. Republic Day, May Day, Independence Day, Gandhi Jayanthi and Kannada Rajyothsava have to be compulsorily declaredinyourlistofHolidaystobedisplayedonthenoticeboard. Thesefiveholidays,evenifitfallsonSunday,hastobenotified.
3. If the notified holiday falls on a Sunday, it is a paid holiday.
4. You will be required to share a list of your holidays to your jurisdictional Inspector of Factories and Labour Officer. We recommend that whatever is displayed on the notice board be sent with a covering letter under RPAD

The time limit for the payment of bonus to eligible employees for the financial year 2023-24 is 30th of November, 2024 i.e. eight months from the end of the financial year.

Bonus, under the provisions of the Payment of Bonus Act, 1965, is payable to all employees drawing a salary (Basic + DA) up to Rs.21,000/- per month. Bonus however, has to be paid on the actual wages earned.

The percentage of bonus to be paid is to be arrived at after complying with the computation of gross profits etc., and the employer is required to maintain the calculations by completing Form “A”, “B” & “C”.

Any employee who has worked for 30 days in that accounting year is entitled to bonus. Calculation of bonus to employees is based upon the following guidelines:

• If the Basic & DA is below Rs. 7,000/- per month then, that actual Basic & DA is to be taken for calculation of bonus.
• If the Basic & DA is more than Rs. 7,000/- per month, then bonus has to be paid on the actual salary or the minimum wage fixed for that scheduled employment whichever is higher.
• Minimum bonus payable is 8.33% and maximum is 20%. Thus, bonus is also, payable to ex employees also if they have earned wages for 30 days in the said financial year. Further you could recover any outstanding amount, due from the ex employee if is reflected in the full and final settlement.

The provision states that no adult worker is allowed to work in a factory when he is already working in another factory.

Sec. 60 of the Factories Act “No adult worker shall be required or allowed to work in any factory on any day on which he has already been working in any other factory, save in such circumstances as may be prescribed.”

However, under Karnataka Factories Rules, Rule 110 permits double employment with the previous approval of the jurisdictional Inspector of factories.

Rule 110. An adult worker may be employed in more than one factory on the same day, with the previous approval of the Inspector subject to the following conditions:

1. He shall not be employed for more than 9 hours in all on any one day.
2. He shall receive a weekly holiday in accordance with the provisions of Section 52.

While dual employment itself is not illegal, employers should obtain prior consent from the Inspector.

In India/Karnataka, it’s legal to hold multiple jobs without breaching the law. However, a person with a similar set of jobs may raise questions about a breach of confidence because many employers place such restrictions in their employment agreements in addition to rules barring holding down numerous jobs. If an employee’s contract stipulates non-compete and exclusive employment, as is the case with the majority of traditional employment contracts, such double employments are regarded as cheating.

If the employment contracts do not contain this clause or offer exceptions, it is not considered cheating. The concept of ‘dual employment’ is not dealt directly by the Indian law. However, there are certain statues that govern them.

1. A worker is not permitted to work in two workplaces at once, according to Section 60 of the Factories Act of 1948. However, an IT specialist or any employee holding an administrative or supervisory function is not included in the Factories Act’s definition of a worker.
2. According to the Industrial Employment (Standing Orders) Act 1946, a worker must not work against the industrial establishment’s interests and must not accept any supplementary employment that could jeopardise the employer’s interests.
3. The Shops and Establishments Act governs employees who work in, among other places, retail establishments, dining establishments, theatres, and other public amusement or entertainment facilities, as well as information technology and information technology-enabled services. Each state has a unique Shops and Establishments Act.
4. All country citizens have the right to practice any profession and to engage in any occupation, trade, or business, according to Article 19(1)(g) of the constitution.

It is now mandatory that the name boards display the name of the establishment, in Kannada, in the upper half of the name board and occupies 60% of the name board space.

Download THE KANNADA LANGUAGE COMPREHENSIVE DEVELOPMENT (AMENDMENT) ACT, 2024 here:

The Government of Karnataka has notified, by their notification in the gazette dated 10^th January 2024 that all existing establishments in Karnataka, covered under Gratuity Act, will be required to compulsorily take an insurance policy, with approved insurance companies, within the next 60 days.

This has come as shock to many employers, as Gratuity was being paid to employees as and when due, that is, on their retirement, death, termination, if they were eligible under this Act. Thus Gratuity was being paid as and when due and employers were aware of it.

Now with the notification of making insurance compulsory with the payment of gratuity has cast a burden on managements of shelling down a huge amount of money to cover the workmen under the

gratuity insurance.  For example, if for 20 years the worker has worked and is scheduled to work for another 15 to 20 years and his salary is 30000/- and Basic and DA would have been 25,000/-(the amount required Basic and DA for calculating gratuity) would have been 10 years’ salary, calculated on the formula Basic and DA monthly salary divided by 26x15x years of service.

In this particular case with Basic and DA at 25,000/-, applying the formula for Gratuity, it works out to(25,000/-divided by 26x15x20 years= 2,88,462/-) this amount would be multiplied by number of workmen engaged by the company, which will have to be deposited with the insurance company to fall in line  with the law. However, this would lead to a lot of negotiations/bargaining/discussions and heartburns for the employers. However, there is a possibility of the employer negotiating with the insurance agents etc to make periodical, amicable settlements of convenient payments.

Basics of application of Payment of Gratuity Act 1972: –

1. The establishments covered under the Payment of Gratuity Act 1972 should have at least 10 workmen, and if once covered and the number of employees fall below 10, the Act will continue to apply.
2. There is no salary limit for coverage of Gratuity and is based only on Basic and DA monthly salary.
3. There is no restriction on the category of employees, be it lowest worker or the director of a company on salary.
4. The maximum amount of Gratuity payable is limited to 20, 00,000/- (twenty lakhs).  This limit was notified on 29/3/2018.
5. Gratuity cannot be withheld for ordinary acts of misconducts and no deductions can be made from the Gratuity payable to the employee.
6.  Gratuity must be paid within 30 days of separation/termination.
7. Section 4 (sub section 6) provides for recovery of amount, from gratuity, in the following cases only:
8. The gratuity of an employee, whose services have been terminated for any act, willful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused;
9. The gratuity payable to the employee maybe wholly or partially forfeited:
10. If the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or
11. If the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.

All may note that this compulsory insurance applies also to contractors if they are covered under the Payment of Gratuity Act.  Thus, each contractor will be liable to comply and obtain Insurance.  The Principal Employer is not liable to obtain Insurance on behalf of the Contractor.