Labour Ministry tells employers not to reduce statutory wages after EPFO ceiling rises to Rs 25,000

Key facts

• On September 17, the government raised the Employees' Provident Fund Organisation (EPFO) wage ceiling from Rs 15,000 to Rs 25,000, extending mandatory coverage to over 10 million additional workers.
• The labour and employment ministry directed employers not to cut employees' statutory wages or pass on the additional employer contribution through cost-to-company (CTC) adjustments.
• Workers earning between Rs 15,000 and Rs 25,000 must be enrolled under the Employees' Pension Scheme (EPS); the employee's 12% contribution goes entirely to EPF, while 8.33% of the employer's 12% goes to EPS.
• The maximum monthly PF contribution, earlier capped at Rs 1,800 on the Rs 15,000 limit, can now rise up to Rs 3,000 with the Rs 25,000 ceiling.
• Employers can partly offset the additional burden through an incentive of up to Rs 3,000 per month for every additional employment created under the Pradhan Mantri Viksit Bharat Rojgar Yojana (PMVBRY).
• Employees already contributing on wages above Rs 25,000 will not pay more in total monthly contributions, though the split between provident fund and pension may be revised.