Quick Answer
Your 20th hire adds a new monthly cost and a new set of tasks. For a typical team of 20, PF costs you about ₹40,000 a month on top of salaries, and you also take on bonus.
In the first 30 days: count your team, work out the cost, tell your CA, register, and brief your employees before their first PF deduction. The plan is below. The rules and penalties are in our PF and ESI registration guide.
What a business owner must do after hiring 20 employees is not obvious, because nobody sends you a letter when you hire the twentieth person. The law simply begins to apply. You usually find out from your CA, a client who asks for your PF code, or an employee who asks why there is no PF.
I speak to owners at this stage often. Most are not careless. They are busy, and 19 to 20 felt like any other hire. This post is the plan I would follow in the 30 days after crossing 20. It does not repeat all the rules. For registration steps and penalties, read the PF and ESI registration guide. Here you get what to do, in what order, and what it costs.
| What | What it means for you | Time to act |
|---|---|---|
| PF (EPF) | Mandatory registration. 12% from you and 12% from the employee on PF wages up to ₹25,000. | Within about 30 days |
| Statutory bonus | Applies to employees whose Basic + DA is up to ₹21,000. Minimum 8.33%, up to 20%, paid within 8 months of year end. | Before the next accounting year ends |
| ESI | If your state starts ESI at 20 and you are not covered yet, register now. In most states it started at 10. | Within 15 days |
Also check what already applied at 10. If you missed ESIC, gratuity or a POSH Internal Committee earlier, fix those now. They do not wait for 20.
What it will cost you
Here is an illustration, not a quote. A team of 20 with PF wages like this:
- 10 employees at ₹12,000
- 6 employees at ₹18,000
- 4 employees at ₹25,000 or more (PF is capped at ₹25,000)
| Item | Per month |
|---|---|
| 10 employees × ₹1,500 (12% + 0.5% EDLI on ₹12,000) | ₹15,000 |
| 6 employees × ₹2,250 (on ₹18,000) | ₹13,500 |
| 4 employees × ₹3,125 (on ₹25,000) | ₹12,500 |
| EPF admin charge (0.5% of PF wages, ₹3,28,000) [VERIFY] | ₹1,640 |
| Employer cost | ₹42,640 |
| Per year | about ₹5.1 lakh |
Employees also pay 12% of their PF wage from their own salary. Their take-home goes down, and some will ask why. Talk to them before the first payslip, not after. Bonus is extra and depends on your state’s minimum wage, so ask your CA for the figure.
Your 30-day plan
| When | What to do |
|---|---|
| Days 1 to 3 | Write down every person you pay, including those on contract. Note PF wage, joining date and whether they have a UAN. |
| Days 4 to 7 | Run the cost. Decide how you will pay it. Tell your CA you have crossed 20. |
| Days 8 to 15 | Collect documents: PAN, address proof, bank account, digital signature, and employee Aadhaar and bank details. Register on the EPFO portal. |
| Days 16 to 22 | Create or link UANs. Tell employees what will change in their payslip. |
| Days 23 to 30 | Set up PF in payroll. File the first ECR and pay the challan by the 15th of the next month. Add the due dates to your calendar. |
Mistakes I see at this stage
- Counting only permanent staff. Anyone you pay directly generally counts.
- Waiting for a notice. By then interest at 12% a year and damages have started.
- Deducting PF without depositing it. This is the most serious one. Never do it.
- Surprising employees. Take-home drops after the first PF deduction. Tell them early.
- Assuming it can be undone. If you fall back to 18 people, you generally stay covered.
Where Runtime fits
Once you cross 20, the monthly job is not hard but it repeats every month: salary, PF, ESI, bonus, challan. In Runtime’s payroll software, statutory deductions are calculated with the salary, so the PF figure on the payslip is the same figure you pay.
New hires matter too. Collect Aadhaar, PAN, bank and UAN at onboarding, so the next employee does not need a scramble.
The Free plan covers up to 5 employees, and every plan has a 7-day free trial. A test payroll on your own 20 salaries shows you the real cost before you commit.
Crossed 20 and not sure your payroll is ready?
Run a test payroll with PF on your own team before the first deadline.
Book Your DemoFAQS
Is PF mandatory at 20 employees in India?
Yes. EPF registration becomes mandatory once an establishment has 20 or more employees.
Do contract workers count towards the 20?
Workers you pay directly generally count. Workers supplied by a licensed contractor are usually the contractor’s responsibility. Check your agreement.
Can I register for PF before reaching 20?
Yes. Voluntary registration is possible with the agreement of employer and employees.
What happens if I register late?
You pay the contributions for the missed months, interest at 12% a year, and damages. Do not wait for a notice.
Is statutory bonus applicable at 20 employees?
Yes, for employees whose Basic + DA is up to ₹21,000. Bonus is payable within 8 months of year end.
I fell below 20. Can I cancel PF?
Generally no. Once covered, you stay covered
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