Staff are your biggest headache and your biggest cost — and the rules that sit on top of those wages are the part most owners only learn about when an inspector, a contractor, or an angry former employee forces the issue. PF, ESI, minimum wages, working hours: each has its own threshold, its own deadline, and its own penalty, and they don't all switch on at the same headcount.
This is a plain checklist of the statutory dues you actually owe on your team in 2026 — what applies at your size, what you deduct and deposit, and where the quiet traps are (the deducted-but-not-deposited rule and the agency cleaner whose unpaid PF becomes your problem). Where the law is state-specific, this tells you what to look up rather than guessing a national number that doesn't exist.
Key takeaways
- ESI kicks in at 10 staff; PF at 20. Employees' State Insurance covers establishments with 10 or more employees, while EPF (provident fund) applies at 20 or more (ClearTax, 2026; ClearTax, 2026).
- ESI only covers wages up to ₹21,000 a month. Above that monthly wage, an employee falls outside ESI; employer contribution is 3.25% and the employee's is 0.75% of wages (ClearTax, 2026).
- PF is 12% from the employee, matched by you. Once registered, the employee contributes 12% of basic wages and the employer matches it (ClearTax, 2026).
- Minimum wages are set by your state, not by Delhi. Each state notifies its own rates and revises the dearness-allowance component periodically — there is no single national figure to quote.
- Your cleaning or security contractor's unpaid PF is your bill. As the principal employer, "if Contractor does not pay Contract Labour employees then the Principal Employer will be held responsible for it and will have to pay" (greytHR, 2026).
Which labour laws actually apply to my restaurant?
Not all of them, and not at the same time. Four sit on almost every independent restaurant, but they switch on at different points:
| Law | When it applies | What it governs |
|---|---|---|
| Shops & Establishments Act | From your first employee (state-registered) | Working hours, weekly off, leave, registration |
| Minimum Wages Act | Always | The floor wage you must pay, set per state |
| ESI (Employees' State Insurance) | 10 or more employees | Medical and cash benefits for staff earning up to ₹21,000/month |
| EPF (Provident Fund) | 20 or more employees | Retirement savings — 12% employee + 12% employer |
The headcount that matters is your total team — kitchen, floor, cleaners, part-timers — not just your "permanent" staff. Most owners under-track the thresholds because they count only full-timers. Work out your real number first, then tick through the sections below that apply to you.
The PF (provident fund) checklist
EPF registration is mandatory once you employ 20 or more people: "EPF registration is mandatory for factories with 20 or more employees and any other establishment employing 20 or more persons" (ClearTax, 2026). Fewer than 20 and you can still register voluntarily — but once you're in, you stay in even if the count later drops.
What you owe and when:
- [ ] Register on the EPFO portal within 30 days of crossing 20 employees.
- [ ] Deduct 12% of basic wages from each covered employee and match it with 12% as the employer (ClearTax, 2026).
- [ ] Deposit the combined amount every month through the Electronic Challan-cum-Return (ECR), by the statutory due date.
- [ ] Keep the UAN active for every worker and file the monthly return even in a month with no new joiners.
The one rule that turns a paperwork lapse into a serious problem: money you have already deducted from a worker's wages but not deposited is treated far more harshly than simply being late to register. It attracts damages under Section 14B of the EPF Act on top of the arrears, and withholding an employee's own deducted share has been treated as a breach of trust, not a clerical slip. If cash is tight, never fund the float by sitting on deducted PF — that is the version of this mistake that destroys staff trust and invites enforcement.
The ESI (Employees' State Insurance) checklist
ESI comes in earlier than PF — at 10 employees in most states (some still use 20 for certain categories): the scheme applies to establishments with "10 or more persons" employed (ClearTax, 2026). It is a genuine benefit for your team — medical cover, sickness and maternity cash, disability cover — funded by small contributions from both sides.
- [ ] Register on the ESIC portal once you hit 10 employees.
- [ ] Identify who is covered — every employee earning a monthly wage up to ₹21,000 (₹25,000 for employees with disabilities) is in; anyone above that ceiling is out (ClearTax, 2026).
- [ ] Deduct 0.75% of wages from each covered employee and add 3.25% as the employer (ClearTax, 2026).
- [ ] Deposit monthly, within 15 days of the end of the month in which it was deducted (Razorpay, 2026).
To make it concrete: on a worker earning ₹18,000 a month, that is roughly ₹135 deducted from their wages and ₹585 from you — about ₹720 a month buys them full medical and cash cover. It is a small line next to the cost of a single uninsured kitchen injury.
A note on the rumour mill: there has been talk of raising the ₹21,000 ceiling to ₹25,000–₹30,000, but that change has not been notified as of June 2026. Apply the ₹21,000 figure until an official notification says otherwise — don't restructure your payroll around a proposal.
Are you paying at least the minimum wage?
Yes is the only acceptable answer, but the figure is not yours — or India's — to set. Minimum wages for hospitality are notified by each state government, and they are revised periodically (the variable dearness-allowance component is typically updated twice a year). That means a rate notified in Maharashtra is irrelevant in Karnataka, and last year's number may already be stale.
- [ ] Find your state's latest minimum-wage notification for hotels/restaurants and the relevant skill category (unskilled, semi-skilled, skilled).
- [ ] Check the dearness-allowance revision — the base rate plus the current VDA is the figure you must meet.
- [ ] Re-check each cycle, because the VDA moves; a wage that was compliant last year may now be below the floor.
- [ ] Apply it to every worker, including part-timers, on a pro-rata basis.
Underpaying the statutory minimum is one of the cleaner cases against an employer to lose — the notification is public, and the gap is arithmetic. Build the current rate into your roster costing rather than discovering it in a claim.
The Shops & Establishments Act checklist
Almost every restaurant sits under a state-administered Shops & Establishments Act, and it is the everyday layer most quietly ignored. Registration is required, and the Act caps working time: under the typical state rules the maximum is around 9 hours a day and 48 hours a week, with at least one day of rest each week ("Providing one day of rest within a week is compulsory") (LegalRaasta, 2026).
- [ ] Register the establishment under your state's Shops & Establishments Act (and keep the certificate displayed).
- [ ] Cap ordinary hours at roughly 9 per day / 48 per week — confirm your state's exact figures, as they vary.
- [ ] Pay overtime at the statutory rate for hours beyond the cap.
- [ ] Give a weekly day off to every employee.
- [ ] Track leave — earned, sick and casual leave as your state prescribes.
- [ ] Keep attendance and wage registers, which an inspector can ask to see.
Because this Act is administered state by state, the precise hours, leave entitlements and registers differ. Treat the figures above as the common shape, then verify against your own state's Act — the same discipline you already apply to your FSSAI licence and the documents it demands.
What about contract, agency and part-time staff?
Here is the trap that catches owners who think they have outsourced the risk. If you bring in cleaners, dishwashers, housekeeping or security through a labour contractor, their PF and ESI do not stop being your concern. As the principal employer, you carry the ultimate liability: the principal employer "is liable for salary/wages, statutory dues e.g. PF, ESI, PT, Bonus, Gratuity etc., payable to Contract Labour employees," and "if Contractor does not pay Contract Labour employees then the Principal Employer will be held responsible for it and will have to pay" (greytHR, 2026).
This is not a fringe interpretation — under the EPF Act, "the principal employer is ultimately responsible for ensuring compliance" for employees working through contractors (S.S. Rana & Co., 2026). So when a cleaning agency pockets the PF deductions and disappears, the demand can land on you.
- [ ] Use only licensed contractors with their own valid registrations.
- [ ] Get monthly proof of deposit — the contractor's PF/ESI challans for the staff working on your premises, every month, before you release payment.
- [ ] Keep their workers' records — attendance, wage payments and PF code numbers allotted through the contractor.
- [ ] Don't treat "they're the agency's people" as a defence — it isn't one if the agency defaults.
Missed enrolling someone in the past?
If you have historically kept staff off the PF books, note that the EPFO ran a one-time amnesty — the Employees' Enrolment Campaign 2025 — open from 1 November 2025 to 30 April 2026, letting employers regularise staff who joined between 1 July 2017 and 31 October 2025 for a nominal one-time damage of just ₹100, with the employee's past share waived if it was never deducted (SGC Management Services, 2026).
That window has now closed (the deadline was 30 April 2026), so it is no longer a route open to you — but it signals the direction of travel: enforcement and data-matching are tightening, and quietly un-enrolled staff are an exposure, not a saving. Bring new hires onto the books from day one.
Your at-a-glance annual labour-compliance checklist
Pin this where you do the payroll:
- [ ] Headcount check — recount total staff; have you crossed 10 (ESI) or 20 (PF)?
- [ ] PF — 12% + 12%, deposited monthly via ECR; never sit on deducted amounts.
- [ ] ESI — covered staff up to ₹21,000/month; 0.75% + 3.25%, deposited by the 15th.
- [ ] Minimum wage — current state rate including the latest VDA, applied to everyone.
- [ ] Shops & Establishments — registration current; ~9h/48h hours; weekly off; registers maintained.
- [ ] Contractors — monthly PF/ESI challans collected before payment.
- [ ] New joiners — onto PF/ESI from day one, no backlog.
Labour and food are the two cost lines that decide whether a busy month is a profitable one. Once you have the compliance baseline solid, the next lever is the spend itself — the same way you would control food costs in your kitchen rather than just absorbing every supplier rise.
One last point owners often miss: a lot of staffing strain is really order-channel strain. When 30–40% of your covers ride on aggregator apps, you're effectively staffing — and paying statutory dues on — labour that exists to service a commission you don't control. Knowing exactly what Swiggy and Zomato cost you, and keeping at least one ordering channel that is fully yours (a simple own-website order page, the kind a tool like DineHere builds from a menu photo), shifts that balance back in your favour.
Frequently asked questions
When does ESI become compulsory for a restaurant?
ESI applies once you employ 10 or more people in most states; covered employees are those earning a monthly wage up to ₹21,000 (ClearTax, 2026).
When does PF (EPF) become compulsory?
EPF registration is mandatory for any establishment employing 20 or more persons; below that you may register voluntarily (ClearTax, 2026).
What are the PF contribution rates?
The employee contributes 12% of basic wages and the employer matches it with another 12% (ClearTax, 2026).
What are the ESI contribution rates?
The employer contributes 3.25% of wages and the employee 0.75% (ClearTax, 2026).
Is the ₹21,000 ESI wage ceiling going up to ₹25,000?
There has been a proposal to raise it, but no such increase has been notified as of June 2026. Continue to apply the ₹21,000 ceiling until an official notification changes it.
What is the minimum wage for restaurant staff in India?
There is no single national figure — minimum wages are notified by each state for hotels and restaurants, by skill level, and the dearness-allowance component is revised periodically. Check your own state's latest notification.
How many hours can restaurant staff legally work?
Under the typical state Shops & Establishments Act the cap is around 9 hours a day and 48 hours a week, with at least one weekly day of rest; the exact figures vary by state (LegalRaasta, 2026).
Am I responsible for the PF of staff supplied by a contractor?
Yes. As the principal employer you carry ultimate liability — if the contractor fails to pay the contract workers' statutory dues, you will be held responsible and have to pay (greytHR, 2026).
What happens if I deduct PF but don't deposit it?
It is treated much more seriously than simply being late to register — it attracts damages under Section 14B of the EPF Act on top of the arrears, and withholding an employee's deducted share has been treated as a breach of trust. Never use deducted PF as working capital.
Do I need to register under the Shops & Establishments Act for a small outlet?
Yes. Registration under your state's Shops & Establishments Act is required for the establishment, and it governs your working hours, weekly off, leave and the registers you must keep (LegalRaasta, 2026).
Treat labour compliance as part of running the kitchen, not a once-a-year scramble. Know which thresholds you have crossed, deposit what you deduct, pay your state's real minimum wage, and never assume a contractor has handled it — and you protect both your team and yourself from the demand that always arrives at the worst possible moment.
