PF and ESIC Explained for Workers — What Gets Cut From Your Salary and Why

Every month money gets cut from your salary for 'PF' and 'ESIC.' Most workers see the deduction and accept it without understanding what they're getting in return. And a lot of employers don't explain it either. Here's the full picture — because this money belongs to you, and you should know how it works.

What is PF (Provident Fund)?

PF stands for Employees' Provident Fund (EPF). Every month, 12% of your basic salary is deducted and put into your PF account. Your employer also contributes 12% from their side — meaning 24% of your basic salary goes into PF each month. Of the employer's 12%, about 8.33% goes into the Employee Pension Scheme (EPS) for retirement pension, and the remaining 3.67% goes into your EPF account. PF is a government-mandated savings account — you get it back with interest (currently around 8.1-8.5% per year) when you retire or leave a job.

What is ESIC?

ESIC stands for Employee State Insurance Corporation. It's a health insurance and social security scheme. Your contribution is 0.75% of your gross salary. Your employer contributes 3.25%. Together, 4% of your gross salary goes toward ESIC — covering you and your entire family. In return, you get free medical treatment, hospitalization, medicines, and doctor visits at any ESIC hospital. Maternity benefits and disability coverage are also included.

Who Does It Apply To?

• PF is mandatory if your employer has 20 or more employees and your basic salary is under ₹15,000/month
• ESIC is mandatory if your employer has 10 or more employees and your gross salary is under ₹21,000/month
• Workers earning above the salary limit can voluntarily continue PF even after a raise
• If your shop has fewer employees than the threshold, PF and ESIC are optional — but workers can request voluntary coverage

How to Check Your PF Balance

Every PF member gets a Universal Account Number (UAN) — a 12-digit number linked to your Aadhaar. Log in to the EPFO member portal at epfindia.gov.in using your UAN and password to check your balance, see monthly contributions, and download your passbook. You can also check by sending SMS 'EPFOHO UAN' to 7738299899 from your registered mobile. If your employer hasn't given you a UAN, ask HR — its legally required to be issued.

What Happens When You Leave a Job

If you leave a job after 5 continuous years of PF contribution, you can withdraw the full PF amount including employer contributions and interest — completely tax free. If you leave before 5 years, partial withdrawals are allowed for medical emergencies, house purchase, or education. You can also transfer PF to your new employer's account when you change jobs, which preserves your pension years. If an employer deducts PF from your salary but doesn't deposit it with EPFO, file a complaint on the EPFO Grievance Portal — this is illegal and taken seriously.