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PF vs ESIC: what is the difference?

PF (EPF) is a retirement savings and pension scheme run by EPFO; ESIC is a health and social insurance scheme run by the Employees’ State Insurance Corporation. Both take a share of wages from the employee and the employer, and an employee can be covered by both.

Last updated 5 November 2026. Rates and limits change, so verify against the official sources below.

What is PF?

The Employees’ Provident Fund (EPF) is a retirement savings scheme run by EPFO. Each month the employee and the employer contribute a percentage of the PF wage. The money, with interest, is paid to the employee on retirement or when the employee leaves and withdraws it under the rules.

Part of the employer share goes to the Employees’ Pension Scheme (EPS), which pays a pension after retirement. Each member has a Universal Account Number (UAN) that stays the same across jobs.

What is ESIC?

Employees’ State Insurance (ESI) is a social security and health insurance scheme run by ESIC. Covered employees and their families can get medical care, and the scheme also pays cash benefits for sickness, maternity and employment injury, under its rules.

Who is covered by each?

PF applies to establishments above a set size (commonly 20 or more employees) and to employees whose PF wage is within the ceiling, with the option of covering higher wages. ESI applies to establishments above a set size (commonly 10 or more employees, with state variations) and to employees whose gross monthly wages are within the ESI limit.

Coverage thresholds have been changing under the Labour Codes. Check the current rule on the official portals before deciding that an employee is in or out.

What are the contribution rates and wage limits?

The table shows the commonly applied rates and limits as of 5 November 2026. The PF wage ceiling was ₹15,000 a month and was revised to ₹25,000 a month from 17 September 2026. The ESI limit is ₹21,000 a month of gross wages.

PF and ESIC at a glance (as of 5 November 2026)
Item	PF (EPF and EPS)	ESIC
Run by	EPFO	ESIC
Purpose	Retirement savings and pension	Medical care and cash benefits
Wage measure	PF wage (basic + DA)	Gross monthly wages
Wage limit	₹25,000 a month (from 17 Sep 2026)	₹21,000 a month
Employee share	12%	0.75%
Employer share	12% (8.33% EPS + 3.67% EPF)	3.25%

Can an employee be covered by both?

Yes. The two schemes cover different things, and many employees fall under both. An employee whose wages are above the ESI limit is outside ESI but can still be in PF.

What do employees get from each scheme?

PF gives a retirement corpus: the employee and employer contributions plus interest, and a pension under EPS once the pension conditions are met. The balance can usually be withdrawn, wholly or partly, when leaving a job or in other situations the rules allow.

ESI gives benefits while the employee is working and covered: medical care for the employee and family, sickness and maternity cash benefits, and disability or dependants’ benefits after an employment injury. The details and eligibility are set by ESIC, so check the current scheme.

Common mistakes to avoid

These are the slips payroll teams meet most often:

Using an old wage ceiling after it was revised.
Calculating ESI on basic instead of gross wages.
Forgetting that ESI contributions are rounded up to the next rupee.
Leaving the UAN or ESIC number blank for a new joiner.
Treating the employer share as a deduction from the employee’s pay.

Worked example

For an employee with basic + DA of ₹30,000 and gross of ₹40,000, with the ₹25,000 PF ceiling applied:

PF wage = ₹25,000. Employee PF = 12% = ₹3,000. Employer PF = ₹3,000 (EPS about ₹2,083, EPF about ₹918).
Gross of ₹40,000 is above the ₹21,000 ESI limit, so no ESI is deducted.

Frequently asked questions

Is PF compulsory?

It is compulsory for covered establishments and employees within the wage ceiling. Check the current coverage rules with EPFO.

Who pays ESIC, the employee or the employer?

Both. The employee pays 0.75% of gross wages and the employer pays 3.25%.

Does the employer’s PF come out of the employee’s salary?

No. The employer’s share is paid on top of the employee’s share, though many companies include it in CTC.