Employer Payroll Cost Calculator
Find the true cost to company of an employee — gross pay plus employer EPF, ESI and gratuity provision, live per employee and for your whole team.
Cost breakdown
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Disclaimer: Indicative estimate of employer statutory cost. Actual CTC varies with bonuses, allowances, LWF, professional tax and company policy. EPF/ESI rates per current EPFO & ESIC rules.
What makes up the real cost of an employee
The salary you offer is never the full story. On top of the gross pay, an employer pays statutory contributions — provident fund, employee state insurance and a gratuity provision. These add roughly 13–18% over gross for lower salaries, and taper off as pay rises because EPF is capped and ESI stops entirely above ₹21,000.
Employer statutory rates at a glance
These are the components layered on top of gross salary. Employee-side deductions (their own PF and ESI share) come out of gross and are not an extra cost to the employer — this calculator shows the employer's own outgo.
| EPF (PF) — on capped basic | 12% |
| EDLI — on capped basic | 0.50% |
| PF admin charges — on capped basic | 0.50% |
| ESI — on gross (if ≤ ₹21,000) | 3.25% |
| Gratuity provision — on basic | 4.81% |
| PF wage ceiling (basic) | ₹15,000 |
| Max employer PF (13% of ₹15k) | ₹1,950 |
| ESI gross eligibility limit | ₹21,000 |
| Default basic % of gross | 40% |
How employer cost is calculated
Start with gross → compute basic (a % of gross) → add employer EPF at 13% of the lower of basic or ₹15,000 → add ESI at 3.25% of gross only if gross is ₹21,000 or less → add a gratuity provision of 4.81% of basic. Here are three worked examples (basic at 40% of gross):
Key terms explained
Employer EPF & the ₹15,000 ceiling
The employer contributes 12% of basic to PF, plus 0.5% EDLI and 0.5% admin (about 13% total). PF is calculated on basic capped at a ₹15,000 wage ceiling, so the maximum statutory employer PF is around ₹1,950 per month.
Employee State Insurance (ESI)
ESI applies only when gross wages are ₹21,000 or less per month. The employer pays 3.25% of gross and the employee 0.75%. Once gross crosses ₹21,000, ESI stops for that employee for the contribution period.
Gratuity provision (4.81%)
Gratuity is payable after 5 years of service, but prudent employers set aside 4.81% of basic every month (15/26 of a month's basic per year of service). It is an accrued cost, not a cash payout each month.
Cost to Company (CTC)
CTC is the total annual cost the employer bears — gross salary plus all employer contributions and provisions. This calculator builds CTC bottom-up from gross so you can see exactly where the extra spend goes.
What is the true cost of an employee?
Gross salary plus employer PF at 12% of PF wages, employer ESI at 3.25% where applicable, gratuity provision of about 4.81% of basic, any group insurance premium, bonus where payable, and the administrative charges on PF.
Why is gratuity taken at 4.81%?
Because gratuity is 15 days' wages for each year of service — 15 ÷ 26 of a month's basic, which works out to approximately 4.81% of annual basic salary. It is an accrual, funded or otherwise, even though it is paid only on separation.
Is employer PF part of CTC?
Yes, it is a real cost to the employer and is normally shown in CTC. The employee never receives it in hand, which is why CTC and take-home differ so much.
Are contract staff cheaper?
On paper, but the principal employer remains responsible under the Contract Labour Act and the PF and ESI Acts for the contractor's compliance. Add the contractor's margin and GST, and the saving is often smaller than expected.
What costs are commonly forgotten?
Recruitment fees, notice-period buyouts, laptop and workspace, training, insurance and the cost of leave — an employee is paid for roughly 240 to 250 working days but costs the employer for 365.
Disclaimer: This tool gives indicative results for general guidance only and is not professional advice. Please verify with a qualified CA before acting on the numbers.