Which Labour Laws Apply at My Headcount? — Threshold Checker

How this is calculated

• Count every worker, not just payroll. Full-time, part-time, contractual, probationary and ad hoc all count towards the thresholds below.
• Ten is the first cliff: the POSH Internal Committee, the Payment of Gratuity Act, and maternity benefit all attach there.
• Twenty is the second: EPF registration, statutory bonus, and the Contract Labour Act where workers are engaged through a contractor.
• ESI is stated at ten here, but the Act leaves it to state notification and a few states still notify twenty — check the position for your state.
• Several of these continue to apply once triggered, even if the headcount later falls below the threshold.

The provision this implements

• Section 26, Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 — A fine of up to ₹50,000 for failing to constitute an Internal Committee or to comply with the Act, and more on repetition.

• Section 26, Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act

Worked example

For an employee whose last drawn basic plus dearness allowance was ₹50,000, with 10 completed years of service: 15 × ₹50,000 × 10 ÷ 26 = ₹2,88,462. Wages here means basic plus DA, not gross — using gross is the usual reason a figure comes out too high.

Common questions

Is EPF mandatory for a company with 20 employees?

Yes. The EPF & MP Act, 1952 applies to an establishment employing twenty or more persons, and registration and monthly contributions follow. Coverage generally continues even if the headcount later falls below twenty.

At what headcount does POSH become mandatory?

Ten. Section 4 of the POSH Act, 2013 requires an employer with ten or more workers to constitute an Internal Committee by written order, counting workers of every kind including contractual and part-time.

When does the Payment of Gratuity Act apply?

To a shop or establishment with ten or more employees on any day in the preceding twelve months, under section 1(3). Once the Act has applied, it continues to apply even if the number later falls.

Is ESI applicable at 10 or 20 employees?

Ten in most states. Section 1(5) of the ESI Act, 1948 leaves the threshold to state notification, and while most have notified ten, a few still apply twenty — so the answer depends on the state the establishment is in.

Related

• Section 4, POSH Act — the Internal Committee at 10
• POSH compliance at 10 employees
• Internal Committee constitution order

• Section 4, POSH Act — the Internal Committee at 10
• POSH compliance at 10 employees
• Internal Committee constitution order