In a Govt organisation proposals to enter into outsourcing of labour with firms through tenders are received. Sometimes the number of workforce required is less than 20. In this context I require to be advised on the following.
1) Shall we have to provide the elements of EPF & ESI in the estimate.
2) Is the minimum wages advised by ministry inclusive of EPF&ESI or mere wages alone.
Pl.help me to correctly estimate the cost.


Employees’ State Insurance Act, 1948 (ESI Act) is a social security legislation aimed at providing benefits to employees in case of sickness, maternity, employment injury and certain other related matters. Under this self-financing health insurance scheme, funds are primarily built out of contribution from employers and employees. ESI fund, maintained by ESIC, is applicable to employees earning ₹21,000 or less per month to provide the cash and medical benefits to them and their families. This fund is a contributory fund in which both the employer and employee contribute 3.25% and 0.75% respectively to make it a total of 4%. For ESI calculation, the salary comprises of all the monthly payable amounts such as basic pay, dearness allowance, city compensatory allowance, HRA, incentive allowance and meal allowance. The salary, however, does not include the annual bonus, retrenchment compensation, encashment of leave and gratuity. ESI will be calculated for the total gross salary of the employee.
• Employee Contribution: 0.75 %
• Employer Contribution: 3.25 %
Employees’ State Insurance Scheme will be calculated for ₹21,000 of the gross salary. If Gross is above ₹21,000 ESI will be constant.
Provident Fund
Employees’ Provident Fund is a small saving scheme that is offered to Indian workers as well as international workers through the EPFO of India. The scheme allows accumulation of funds as well as accrual of interest on the accumulated funds. The funds thus collected are made of contributions partly from employees and partly from their employers.
Contributions from employees as well as employers add to the EPF. However, unlike what is commonly thought to be, the entire portion of contribution from an employer doesn’t go exclusively towards the Employees Provident Fund.
Division of funds
1. 12% of Basic Salary and standard allowance of Employee goes directly towards Employees’ Provident Fund.
2. 13% of Basic Salary and standard allowance of Employer is divided as follows –
o 3.67% of contribution towards Employees’ Provident Fund
o 0.5% of contribution towards EPF Administration Charges
o 0.5% of contribution towards EDLI Administration Charges
o 8.33% of contribution towards Employees’ Pension Scheme
Minimum salary limits: Employees with monthly salaries less than or equal to INR 15,000 now have to contribute mandatorily towards EPF. PF amount is calculated for the basic amount. PF will be calculated as 12% of the basic.

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