Employees' Provident Fund (EPF) under India's New Labour Codes

India's four new labour codes—Code on Wages, 2019; Industrial Relations Code, 2020; Code on Social Security, 2020; and Occupational Safety, Health and Working Conditions Code, 2020—were implemented effective November 21, 2025.

These consolidate 29 older laws, with key impacts on EPF coming from the Code on Wages (uniform wage definition) and Code on Social Security (EPF framework).

Key Changes to EPF

Expanded Coverage:EPF now applies universally to all establishments with 20 or more employees, regardless of industry (previously limited to scheduled sectors under the old EPF Act, 1952).

Wage Definition and the 50% Rule (from Code on Wages, 2019):"Wages" include basic pay, dearness allowance, and retaining allowance.

Excluded components (e.g., HRA, conveyance, overtime, bonuses, employer PF contributions) cannot exceed 50% of total remuneration (CTC).

If exclusions >50%, the excess is reclassified as "wages".

This forces basic pay to be at least ~50% of CTC in many cases, increasing the base for statutory benefits like gratuity and (potentially) EPF.

Impact on EPF Contributions:

Contributions remain 12% each from employee and employer (total 24%).

Mandatory only up to the ₹15,000 monthly wage ceiling (no change yet).

For employees with wages >₹15,000, contributions on higher amounts are voluntary.

Current Status (as of January 2026):

The old EPF Act, 1952 has not been fully repealed for provident fund provisions. Thus, PF calculations continue under the narrower "basic wages" definition (excluding most allowances like HRA).

The broader wage definition primarily affects gratuity, ESI, and bonus immediately, but not yet EPF due to transitional provisions.

Pension (EPS) provisions under the Social Security Code are in force, with a 1-year transition until November 2026 for new schemes.

Other EPF-Related Updates:Reduced appeal deposit: Employers deposit only 25% (down from 40-70%) when appealing EPFO orders.

Time limits: Inquiries must start within 5 years and conclude within 2 years (extendable by 1).

Employees' Enrolment Campaign, 2025: A 6-month window (Nov 2025–Apr 2026) for employers to regularise past non-compliance voluntarily with reduced penalties.

Implications for Employees and Employers

For Employees: Larger retirement corpus long-term (higher gratuity/pension base); potential short-term dip in take-home if salaries restructured (though PF ceiling protects many).

For Employers: Need to review/restructure salary components for 50% compliance; higher costs for gratuity/bonus; eased appeals and inquiries.

Ongoing Transition: Draft central rules (published Dec 2025) are under consultation; full operationalisation expected around April 2026. States will notify their rules variably.

These reforms aim for universal social security, better worker protections, and ease of compliance, while aligning with modern work (including gig/platform workers via new funds). For specific advice, consult the EPFO portal or a labour expert, as rules are evolving.