EPFO Wage Ceiling Raised To ₹25,000; Govt Tells Companies Not To Cut Salaries
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The EPFO wage ceiling has been raised to ₹25,000, bringing over 10 million additional workers under mandatory coverage. The Labour Ministry has told employers not to reduce statutory wages as a result of this change.
The Labour and Employment Ministry has directed employers to ensure that employees’ statutory wages are not reduced following the government’s decision on 17 September to raise the Employees’ Provident Fund Organisation (EPFO) wage ceiling from ₹15,000 to ₹25,000.
Why Has The Government Asked Companies Not To Cut Salaries?
The ministry's direction follows concerns that companies could adjust the higher employer contribution against employees' existing cost to company (CTC).
The government said the employer's statutory contribution cannot simply be treated as an employee deduction by describing it as part of CTC. Employers have also been told to make the required statutory contributions correctly and ensure that employees' statutory wages are not reduced in violation of applicable law.
Who Will Be Covered Under The New EPFO Ceiling?
All eligible workers earning more than ₹15,000 but less than ₹25,000 will now be required to become members of the Employees’ Pension Scheme (EPS), bringing them under mandatory coverage.
Under the new arrangement, the mandatory 12% contribution from the employee will go entirely towards EPF. The employer will also contribute 12%, of which 8.33% will go towards EPS, with the remaining amount credited to EPF.
The move is expected to bring more than 10 million additional workers into mandatory social-security coverage and support greater formalisation of the workforce.
How Can Employers Offset The Higher Cost?
The ministry acknowledged that the higher ceiling will lead to an increase in employers' costs. It said companies can partly offset the additional burden through incentives available under the Pradhan Mantri Viksit Bharat Rojgar Yojana (PMVBRY), including an incentive of up to ₹3,000 per month for every additional employment created.
The ministry also encouraged employers to view their statutory social-security contributions as part of stronger human resource practices, which could support employee satisfaction and retention.
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Vishwa has spent 10+ years across fintech and FMCG doing what most people miss, connecting the dots, catching trends before they trend, and finding the angle nobody else thought to ask about.
At Kotak Neo, she drives content strategy for neoshorts, Kotak News Desk, and Investing Guide, turning market noise into something worth reading.
When she's not decoding markets, she trades charts for canvases, chasing art, painting, and architecture across cities she's yet to explore.
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