Your Complete Reference for
HR & Staffing Compliance in India

Following the Supreme Court's landmark ruling of November 4, 2022, EPFO opened applications for a higher pension under EPS-95 — based on actual wages rather than the statutory ₹15,000 ceiling. As of December 2025, nearly 99% of the 17.49 lakh applications received have been processed — a major milestone after years of delays.

Who was eligible?

• EPS-95 members in service or retired before September 1, 2014
• Employees who contributed to EPS on wages above the ₹5,000 / ₹6,500 ceiling
• Members whose joint options under para 11(3) of EPS-95 were rejected by EPFO
• Members with at least 10 years of pensionable service

Pension formula

Monthly Pension = (Pensionable Salary × Pensionable Service) ÷ 70. For those retiring after Sep 1, 2014, pensionable salary = average actual wages over last 60 months.

What HR teams must do now

• Check pending applications on EPFO Unified Member Portal under "Track Application Status for Pension on Higher Wages"
• Ensure historical wage data uploaded to EPFO matches payroll records
• Raise grievances on EPFiGMS portal for any unresolved cases

The Government of India implemented all four Labour Codes on November 21, 2025, consolidating 29 existing labour laws — the most significant overhaul of India's employment law in decades.

The four codes

• Code on Wages, 2019 — Basic pay must be ≥ 50% of total gross wages. Higher PF and gratuity result.
• Industrial Relations Code, 2020 — Governs unions, strikes, layoffs. Fully effective from Nov 21, 2025.
• Code on Social Security, 2020 — PF/ESI extended to gig workers. Fixed-term employees eligible for gratuity after 1 year (was 5 years).
• OSH Code, 2020 — Free annual health checks for workers over 40. Women permitted in all sectors with consent.

Critical payroll impact

Basic pay must be ≥ 50% of gross wages. Organisations structuring allowances to reduce PF liability must review CTC structures immediately.

What HR must do now

• Audit all CTC structures — identify employees below the 50% basic pay threshold
• Recalculate PF and gratuity liabilities under the revised wage definition
• Extend social security registration to contract and fixed-term workers
• Monitor Central and State final rules — expected April 2026

India's DPDP Act 2023 received Presidential assent in August 2023. DPDP Rules 2025 were notified November 13, 2025 — India's first comprehensive data protection framework. Every HR and payroll operation is directly affected.

Employee data covered

• PAN, Aadhaar, Passport and government IDs
• Salary details, bank account numbers, payroll records
• Biometric data — fingerprints, facial recognition for attendance
• Performance reviews, disciplinary records, health data
• Background verification reports and onboarding documents

Key obligations for employers

• Written, plain-language consent required for all data collection
• Every personal data breach must be reported to the Data Protection Board immediately
• Payroll vendors must have compliant data processing agreements
• Employee rights requests (access, correction, erasure) must be resolved within 90 days

Penalties & timeline

• Failure to protect personal data — up to ₹250 crore
• Breach involving children's data — up to ₹200 crore
• Full compliance deadline — May 13, 2027

The ISF 2025 annual report — "Indian Flexi Staffing Industry 2025: Employment Growth – Sectoral & State Analysis" — provides the most comprehensive picture of India's contract workforce market to date.

Key numbers — FY25

• Total tripartite (flexi) workforce reached 7.2 million in FY25 — 1.3% of India's total workforce
• ISF member workforce at 1.8 million formal flexi workers as of March 2025
• Flexi staffing grew 9.7% in FY25, adding 1.39 lakh net new formal workers
• India now ranks 3rd globally in flexi workforce size

Projections — FY26 & FY27

• Flexi workforce projected to reach 9.16 million by FY27 at 12.6% CAGR
• Industry revenue projected at ₹2.58 lakh crore (~$24 billion) by FY27 at 17.3% growth
• E-commerce recorded fastest flexi hiring growth — ~20% annually over 5 years

The Union Budget 2025-26 introduced several changes with direct implications for payroll processing, TDS, and workforce compliance — particularly for staffing companies managing large headcounts.

New income tax slabs (New Tax Regime)

• ₹0–₹4L: Nil  |  ₹4–₹8L: 5%  |  ₹8–₹12L: 10%
• ₹12–₹16L: 15%  |  ₹16–₹20L: 20%  |  ₹20–₹24L: 25%
• Above ₹24L: 30%
• Nil tax for income up to ₹12 lakh (with Section 87A rebate)

Key payroll updates

• TDS (Section 192) recalibrated — payroll systems must update TDS tables immediately
• Standard deduction increased to ₹75,000 under new regime
• Employer NPS contribution deduction increased from 10% to 14% of basic salary

What HR teams must update

• Update payroll software TDS tables for new regime slabs
• Re-collect Form 12BB declarations from all employees
• Recalculate Form 16 projections for FY 2025-26

As India's compliance landscape grows more complex — Four Labour Codes, DPDP Rules, EPFO reforms, and revised tax slabs all landing within 12 months — staffing companies are turning to AI-powered platforms to manage the burden without scaling headcount.

Where AI makes the biggest impact

• Automated statutory computation — PF, ESIC, PT, LWF, and TDS calculated at payroll run with zero manual intervention
• Intelligent timesheet validation — Flags anomalies before client billing — duplicates, overtime breaches, attendance gaps
• Compliance calendar automation — Auto-generates monthly, quarterly, and annual compliance task lists by location and employee category
• AI-assisted e-KYC — Validates Aadhaar, PAN, and bank details at onboarding — reducing turnaround from 3 days to under 4 hours
• Labour Code readiness checks — Flags CTC structures where basic salary falls below the 50% threshold under Code on Wages

The business case

Staffing firms using integrated ERP platforms report a 40–60% reduction in compliance-related man-hours per month — and significantly lower risk of penalties under Labour Codes and the DPDP Act.