New employee payroll document checklist

What it involves and when it is due

An establishment covered by EPF enrols every employee whose wages are up to ₹25,000 a month, the ceiling from 17 September 2026 (S.O. 5109(E)). The employee and the employer each contribute 12% of wages up to the ceiling, and the employee’s existing UAN is used where there is one. Contributions are paid and reported each month through the electronic challan cum return (ECR) by the 15th.

ESI covers employees earning up to ₹21,000 a month (₹25,000 for a person with disability), with contributions of 0.75% by the employee and 3.25% by the employer. Under the Labour Codes in force from 21 November 2025, wages for PF and gratuity are basic pay, dearness allowance and retaining allowance, and excluded allowances above 50% of total remuneration are added back, so the wage break-up in the appointment letter matters. The Occupational Safety, Health and Working Conditions Code requires an appointment letter for every employee.

Tax on salary is deducted under Section 392 of the Income-tax Act, 2025 (Section 192 earlier) on the regime the employee chooses; the new regime applies unless the employee opts out. Delhi does not levy professional tax.

Official forms

Common reasons for queries and rejections

• UAN not linked to Aadhaar or the KYC incomplete, so contributions or transfers fail.
• A second UAN generated for an employee who already had one.
• Employee not registered with ESIC on joining, though covered.
• Allowances above 50% of total remuneration, so PF and gratuity are worked on too low a wage.
• Tax regime not recorded, or previous employer income ignored, leading to short TDS.
• No written appointment letter.

Questions

Does a new employee who already has a UAN get a new one?

No. One UAN is meant to stay with the member across jobs. The new employer links the employee to the existing UAN, and the old balance can be transferred to the new account.

Which tax regime does the employer apply if the employee does not choose?

The new regime, which is the default. An employee who wants the old regime tells the employer, and the employer then deducts tax on that basis for the year.

Is an appointment letter compulsory under the Labour Codes?

Yes. The Occupational Safety, Health and Working Conditions Code, 2020, in force from 21 November 2025, requires the employer to issue an appointment letter to every employee.

Official sources

• S.O. 5109(E), 17 Sep 2026: EPF wage ceiling of ₹25,000 (Gazette, PDF)
• EPFO: revamped Electronic Challan cum Return (ECR)
• Code on Social Security, 2020 (text, labour.gov.in)
• Code on Wages, 2019 (Gazette text, PDF)