Employing people brings statutory obligations that exist whether or not anyone is tracking them. Most employers discover the gaps during an inspection or when a departing employee raises a claim — both avoidable with a basic understanding of what applies.
Provident Fund
EPF registration is mandatory once an establishment crosses the employee threshold, and contributions are due from both employer and employee on wages up to the statutory ceiling. Late deposit attracts interest and damages, and unlike many penalties these are not readily waived. The common error is treating PF as applying only to permanent staff; contract workers engaged through a contractor can also create liability for the principal employer.
Employees' State Insurance
ESI applies to establishments above the threshold, for employees below the specified wage limit. Registration and monthly contribution are the employer's responsibility. Where an employee's wages cross the limit mid-year, the contribution period rules matter — coverage does not simply stop the month the raise takes effect.
TDS on Salary
Tax has to be deducted at source from salary and deposited monthly, with quarterly returns in Form 24Q and Form 16 issued to employees annually. Under-deduction because an employee's declared investments never materialised is still the employer's problem, which is why investment proofs should be collected before the final quarter, not after.
Gratuity and Bonus
Gratuity becomes payable on completion of the qualifying period of continuous service, and the Payment of Bonus Act applies to eligible employees within the prescribed wage limits. Both are frequently overlooked in early-stage companies and both surface later as claims.
The practical answer is a compliance calendar and correctly drafted employment contracts. Most disputes we see turn on documents that were written carelessly years earlier.
This article explains the position in general terms and is not legal advice. Speak to an advocate about your own facts before acting on it.
