EPF — Employees' Provident Fund

The Employees' Provident Fund (EPF) is a mandatory retirement savings scheme governed by the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. Under this scheme, both the employer and the employee contribute a percentage of the employee's basic wages each month to a fund managed by the Employees' Provident Fund Organisation (EPFO). Udyamo HRMS automates EPF calculations, deductions, and reporting to help your organization stay compliant.

This chapter covers the EPF rules applicable in India, how to configure EPF in Udyamo HRMS, how to enroll employees, and how to generate the reports required for monthly filing.

What You Will Learn

• EPF contribution rules and wage ceiling
• How to enable the EPF component at the organization level
• How to enter the organization's EPF establishment code
• How to enroll individual employees with their EPF number and UAN
• How EPF is calculated during payroll
• How to generate EPF reports and the Electronic Challan-cum-Return (ECR)
• Compliance deadlines and penalties

Prerequisites

Required: Before configuring EPF, ensure the following are in place:

• Your organization profile is complete (see Organization Profile & Branding)
• At least one office exists with a valid address (see Offices & Locations)
• Salary components (Basic Wages) are configured (see Salary Components)
• You have your organization's EPF establishment code from EPFO

Understanding EPF Rules

Applicability

EPF is applicable to establishments employing 20 or more persons. Once an establishment is covered, it remains covered even if the number of employees falls below 20. Voluntary coverage is available for smaller establishments.

Contribution Rates

The employer's 12% contribution is further split:

Wage Ceiling

Tip: Many organizations choose to calculate EPF on the full basic wages (not capped at Rs 15,000) as a better employee benefit. Udyamo HRMS supports both capped and uncapped configurations.

Administrative Charges

Enabling the EPF Component

Step 1: Navigate to Statutory Components

1. From the sidebar, click Settings.
2. Under the Payroll section, click Statutory Components.
3. Locate the EPF component in the list.

Step 2: Enable EPF

1. Click the EPF component row to open its configuration.
2. Toggle the Enable switch to On.
3. Enter your organization's EPF Establishment Code (also called the EPF Number). This is the code assigned by EPFO when your establishment was registered. The format is typically: STATE/OFFICE/ESTABLISHMENT/EXTENSION (for example, MH/BOM/12345/000).
4. Click Save.

Warning: The EPF Establishment Code must exactly match the code registered with EPFO. An incorrect code will cause errors when uploading ECR files to the EPFO portal.

Step 3: Verify the Configuration

After saving, the EPF component should appear as Enabled in the Statutory Components list. The establishment code is displayed alongside the component name.

Enrolling Employees for EPF

Each employee who is covered under EPF must have their EPF member number and Universal Account Number (UAN) recorded in Udyamo HRMS.

Understanding EPF Identifiers

Step 1: Open the Employee Profile

1. From the sidebar, click Employees.
2. Search for and click the employee's name to open their profile.
3. Navigate to the Statutory Details tab (or section).

Step 2: Enter EPF Details

1. In the EPF Number field, enter the employee's member ID under your establishment.
2. In the UAN Number field, enter the employee's 12-digit Universal Account Number.
3. Ensure the EPF Enable toggle is set to On for this employee.
4. Click Save.

Tip: For new employees who do not yet have a UAN, you can generate one through the EPFO employer portal. Enter it in Udyamo HRMS once it is assigned. Payroll processing can still proceed, but the UAN is required for ECR filing.

Step 3: Verify Enrollment

After saving, confirm the EPF details appear correctly on the employee's Statutory Details tab. The employee will now be included in EPF calculations during the next payroll run.

Enabling or Disabling EPF for Individual Employees

Not all employees may be covered under EPF. You can control EPF enrollment at the individual level.

Scenarios for Disabling EPF

How to Disable EPF for an Employee

1. Open the employee's profile.
2. Navigate to the Statutory Details tab.
3. Set the EPF Enable toggle to Off.
4. Click Save.

Warning: Disabling EPF for an employee who is legally required to be enrolled may result in non-compliance penalties. Consult your legal or compliance team before disabling EPF for any employee.

EPF Calculation in Payroll

When you run payroll (see Running Payroll), Udyamo HRMS automatically calculates EPF contributions for all enrolled employees.

Calculation Logic

1. The system identifies all employees with EPF enabled.
2. For each employee, it determines the EPF-eligible wages (Basic Wages + Dearness Allowance).
3. It calculates:
   • Employee EPF contribution = 12% of EPF-eligible wages
   • Employer EPF contribution = 3.67% of EPF-eligible wages (to PF account)
   • Employer EPS contribution = 8.33% of EPF-eligible wages (to Pension account, capped at Rs 15,000 wages)

Example Calculation

Tip: The EPF deduction appears as a separate line item on the employee's payslip under the Deductions section. The employer's contribution is shown separately in the payroll summary but is not deducted from the employee's net pay.

Viewing EPF on Payslips

After payroll is processed:

1. Navigate to Payroll > Payslips.
2. Select the month and click on an employee's payslip.
3. The Deductions section shows the employee's EPF contribution.
4. The Employer Contributions section (if displayed) shows the employer's share.

EPF Reports

Udyamo HRMS provides several EPF-related reports to support your compliance filing.

Available Reports

Generating the EPF Contribution Report

1. From the sidebar, click Reports.
2. Select EPF Report (or Statutory Reports > EPF).
3. Choose the Month and Year.
4. Click Generate.
5. The report displays a table of all EPF-enrolled employees with their contribution details.
6. Click Export to download the report in Excel or PDF format.

Generating the ECR File

The ECR file is the primary file you upload to the EPFO Unified Portal each month.

1. From Reports, select ECR Report.
2. Choose the Month and Year.
3. Click Generate ECR.
4. The system generates a text file in the EPFO-prescribed format containing:
   • UAN of each employee
   • EPF-eligible wages
   • EPF contribution (employee)
   • EPS contribution (employer)
   • EPF contribution difference (employer)
   • NCP days (non-contribution period days)
5. Click Download to save the ECR file.
6. Upload this file to the EPFO Unified Portal at https://unifiedportal-emp.epfindia.gov.in.

Tip: Always verify the ECR file totals against your payroll summary before uploading. Discrepancies can delay challan generation and attract penalties.

Monthly Filing Process

Follow this process each month to stay compliant with EPF regulations.

Filing Workflow

Compliance Deadlines

Warning: Late payment of EPF contributions attracts both interest (at 12% per annum, calculated on a daily basis) and damages that can range from 5% to 25% of the arrears depending on the delay period. Ensure payments are made on or before the 15th of each month.

Troubleshooting

Next Steps

• Configure ESIC for eligible employees — see ESIC — Employees' State Insurance
• Set up Professional Tax for your offices — see Professional Tax
• Review the payroll process that triggers EPF calculations — see Running Payroll