Provident Fund (PF) and Employees’ State Insurance (ESI) registration are compulsory for organizations in India because they provide important social security benefits to employees.
PF is a retirement savings scheme that is jointly managed by the employer and the employee. Under the scheme, both the employer and the employee contribute a certain percentage of the employee’s salary towards the fund, and the employee is eligible to receive the accumulated amount upon retirement or termination of employment. The purpose of the PF scheme is to provide financial security to employees during their retirement years.
ESI is a health insurance scheme that provides medical coverage to employees and their families. The scheme is funded by contributions from both the employer and the employee, and it provides a range of benefits, including hospitalization, outpatient treatment, and maternity care. The purpose of the ESI scheme is to provide affordable and accessible healthcare to employees and their families.
Both PF and ESI registration are compulsory for organizations because they help to protect the welfare of employees and ensure that they have a safety net in case of unforeseen circumstances, such as illness or retirement. By providing these benefits, organizations can also improve employee morale and retention, as employees feel more secure and valued. In addition, compliance with these regulations is mandatory for all organizations, and non-compliance can result in penalties and legal action.
