The Labour and Employment Ministry has directed employers not to reduce workers’ statutory wages to absorb the higher provident fund contribution burden that follows the revised EPFO wage ceiling of ₹25,000 per month. The direction applies immediately to salary structures across establishments covered by the Code on Social Security, 2020.
The revised ceiling took effect on 17 September 2026 through the Ministry of Labour and Employment gazette notification S.O. 5109(E), and the change is expected to bring more than 51 lakh additional employees under mandatory EPFO coverage. The last revision was in September 2014, when the limit rose from ₹6,500 to ₹15,000.
Under the ministry’s directive, employers cannot recover the higher contribution from employees. “The government has said employers cannot recover their increased statutory contribution by reducing employees’ wages,” said the official directive. Where an employee’s applicable wages fall inside the revised ceiling, take-home pay can still shift because the employee’s own 12% share now applies on a higher base.
The maximum employer outgo at the ceiling now stands at ₹3,250 per employee per month, up from ₹1,950 earlier. Of the new ₹3,000 employer contribution at the ceiling, ₹2,083 flows to the Employees’ Pension Scheme and ₹917 to EPF.
Employers have been asked to review affected staff, complete fresh Universal Account Number enrolments where required, reconfigure payroll to a split-basis calculation for September 2026, and remit statutory contributions on the revised base. Foreign parents of Indian subsidiaries and Global Capability Centres are also expected to review their India benefit stacks in light of the change.
