Last Updated on October 29, 2026 by Abhijit Divekar
Short answer: This HR statutory compliance checklist for India covers what a startup must do in 2027. From the first employee you need Shops and Establishments registration, appointment letters, a Labour Code compliant salary structure and monthly TDS on salaries. At 10 employees, ESIC, gratuity, maternity benefit and a POSH Internal Committee apply. At 20 employees, PF and statutory bonus apply. Professional Tax and Labour Welfare Fund depend on your state.
What is an HR statutory compliance checklist?
An HR statutory compliance checklist is a list of the registrations, deductions, filings and documents an employer must keep up to date under Indian labour and tax laws. For a startup it answers three questions: which laws apply at our current headcount, what must be done every month, and what must be done once a year. Because many rules switch on at 10 or 20 employees, a startup’s checklist changes as it grows. Missing an item usually leads to interest, damages or a penalty, and a notice from EPFO, ESIC or the labour department is far harder to fix than a missed task.
What changed for startup compliance going into 2027?
The four Labour Codes came into force on 21 November 2025, so 2027 is the first full year under the new framework. Older checklists that cite the EPF Act 1952 or the Payment of Gratuity Act 1972 are out of date. The changes that hit small teams first:
- Every employee must get a written appointment letter (OSH Code).
- Wages must be at least half of total pay. Allowances above 50 percent are added back to wages (Code on Wages, section 2(y)).
- The PF wage ceiling rose from ₹15,000 to ₹25,000 a month on 17 September 2026.
- Fixed-term employees get gratuity when their contract ends, without the five-year rule (Code on Social Security, section 53).
What is required at each headcount?
| When it applies | Requirement | What to do |
|---|---|---|
| From the first employee | Shops and Establishments registration | Register under your state’s Act (rules and deadlines differ by state) |
| From the first employee | Appointment letter | Issue a written letter to every employee |
| From the first employee | TDS on salary | Deduct tax and deposit it monthly; file quarterly returns |
| From the first employee | Professional Tax (in states that levy it) | Register and deduct as per your state’s slab |
| From the first employee | Labour Welfare Fund (in states that have one) | Pay the employer and employee share on the state’s due dates |
| 10 or more employees | ESIC | Register; covers employees earning up to ₹21,000 a month (₹25,000 for employees with a disability) |
| 10 or more employees | Gratuity | Applies to shops and establishments with 10 or more employees; provide for it in your costs |
| 10 or more employees | Maternity benefit | Applies to shops and establishments with 10 or more employees |
| 10 or more employees | POSH Internal Committee | Form the committee, publish a POSH policy, run awareness sessions |
| 20 or more employees | EPF | Register with EPFO; PF applies on wages up to ₹25,000 a month |
| 20 or more employees | Statutory bonus | The bonus chapter of the Code on Wages applies to establishments with 20 or more persons |
| 50 or more contract workers | Contract labour rules | The OSH Code’s contract labour part applies once 50 or more contract workers are engaged |
Our EPFO and ESIC registration guide walks through both registrations step by step.
What is on the monthly payroll compliance checklist?
Every month, a startup with employees on payroll should complete these five tasks. Once PF and ESIC registrations are in place, contributions and returns are due monthly, and TDS deducted from salaries must be deposited with the government. Doing them in the same order each month, right after payroll is run, is the simplest way to avoid late fees.
- Run payroll on a Labour Code compliant salary structure, with wages at least half of total pay.
- Deposit TDS deducted from salaries.
- File PF and ESIC returns and pay contributions, once you are registered.
- Deduct and pay Professional Tax where your state levies it.
- Issue payslips and keep attendance and wage records.
What should you do once a year?
- Issue Form 16 to employees after the financial year.
- File the POSH annual report, if you have an Internal Committee.
- Pay statutory bonus, once the bonus chapter applies to you.
- Renew or update your Shops and Establishments registration where your state requires it.
- Review salary structures after increments so wages stay at least half of total pay.
- Update HR policies and offer letter templates for any rule changes.
Which PF and ESIC numbers apply in 2027?
PF is compulsory for employees with PF wages up to ₹25,000 a month, while the ESIC limit stays at ₹21,000. That creates a band, ₹21,001 to ₹25,000, where employees pay PF but not ESIC. Both limits are checked on wages, mainly basic pay plus DA, not on CTC. See PF ₹25,000 vs ESIC ₹21,000 for worked examples.
Which compliance items depend on your state?
Three items change from state to state: Shops and Establishments registration, Professional Tax and Labour Welfare Fund. Some states do not levy Professional Tax or have a Labour Welfare Fund at all, while others have monthly or half-yearly due dates. If you hire in more than one state, keep a separate line for each state on your checklist.
What mistakes do startups make with compliance?
- Registering late. PF and ESIC duties start when you cross the headcount, not when you remember to register.
- Keeping a pre-2025 salary structure. A low basic with high allowances may now break the 50 percent rule.
- Skipping POSH at 10 people. The Internal Committee is mandatory once you reach 10 employees.
- Ignoring state rules. Professional Tax, Labour Welfare Fund and Shops and Establishments rules differ by state.
- Using an old checklist. Lists written before November 2025 still cite repealed Acts.
How can HRTailor help?
HRTailor runs payroll and statutory compliance for startups with 5 to 100 employees, including PF, ESIC, Professional Tax and POSH setup, with a named HR expert for your team. Last year’s version of this list is our HR compliance checklist 2026. Talk to us if you want a quick compliance check.
Frequently asked questions
Is PF mandatory for a startup with fewer than 20 employees?
No. PF registration becomes compulsory at 20 employees. Smaller startups can register voluntarily.
When does ESIC apply to a startup?
ESIC applies once you have 10 or more employees, for employees earning up to ₹21,000 a month.
Does a 10-person startup need a POSH committee?
Yes. An Internal Committee is mandatory for workplaces with 10 or more employees.
Do startups need appointment letters under the Labour Codes?
Yes. The OSH Code requires a letter of appointment for every employee.
When does statutory bonus apply to a startup?
The bonus chapter of the Code on Wages applies to establishments with 20 or more persons.
Sources: Gazette notifications S.O. 5322(E), S.O. 5319(E) and S.O. 5321(E) dated 21 November 2025; S.O. 5109(E) dated 17 September 2026; Code on Social Security, 2020 (First Schedule and section 53); Code on Wages, 2019 (section 2(y) and bonus chapter); OSH Code, 2020 (appointment letters; section 45, contract labour); ESIC coverage page; PIB release on the POSH Act, 12 February 2026. Checked 29 October 2026. State-specific rules vary; check your state’s labour department.
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