Quick answer: Total employment cost is everything you spend to keep one person employed in India for a year. It starts with gross salary, then adds employer PF, EDLI, PF admin charges, a gratuity provision, ESI where it applies, insurance and benefits. Since 17 September 2026, employer PF is 12% of wages up to the ₹25,000 ceiling, or ₹3,000 a month.
- ESI adds 3.25% for employees earning up to ₹21,000 a month.
- Gratuity provision is about 4.81% of wages, even though it is paid only on exit.
- Statutory bonus applies only to employees earning up to ₹21,000 a month.
- Under the 50% wage rule, PF and gratuity are worked out on at least half of total pay.
How do you calculate total employment cost?
Gross salary plus every cost the employee never sees on a payslip. Here is a Pune engineer on ₹1,00,000 a month gross, with wages (basic plus DA) of ₹50,000.
| Line | Monthly | Yearly |
|---|---|---|
| Gross salary | ₹1,00,000 | ₹12,00,000 |
| Employer PF (12% of ₹25,000) | ₹3,000 | ₹36,000 |
| EDLI (0.5% of ₹25,000) | ₹125 | ₹1,500 |
| EPF admin (0.5% of ₹25,000) | ₹125 | ₹1,500 |
| Gratuity provision (4.81% of ₹50,000) | ₹2,405 | ₹28,860 |
| Group health insurance (assumed) | ₹1,500 | ₹18,000 |
| Total employment cost | ₹1,07,155 | ₹12,85,860 |
She earns above the ₹21,000 ESI limit and the bonus limit, so neither applies. Hence the statutory add-on is small. About 5.7% of gross. For lower-paid staff it is much higher, as our employer contribution page shows.
The EPFO contribution rate chart sets the PF, EDLI and admin percentages.
How is total employment cost different from CTC?
By whatever sits outside the offer letter. Cost to company is the number you promise the employee. Total employment cost is the number your finance team actually pays.
In the example above, a CTC of ₹12,67,860 might include salary, PF and gratuity but leave insurance out. Then total employment cost is ₹18,000 higher. Per hire. Every year.
The gap widens with joining bonuses, relocation and benefits you add later. And a fully loaded cost goes further still, adding laptops, workspace and recruitment.
What changes total employment cost in 2026?
Two rules. Both recent. The EPF wage ceiling rose from ₹15,000 to ₹25,000 on 17 September 2026, which lifted employer PF at the cap from ₹1,800 to ₹3,000 a month.
And the 50% wage rule under the Code on Wages, in force since 21 November 2025, stops you shrinking basic pay to cut PF and gratuity. If allowances exceed half of total pay, the excess counts as wages anyway.
How does Remunance show your total employment cost?
Remunance itemises every line of total employment cost on your monthly invoice and passes it through at cost. Our fee is a separate flat amount from USD 99 per employee per month. You can test salaries and locations in our EOR cost calculator for India, or read our guide to the cost of hiring remote employees in India. For figures on your own roles, request a line-by-line cost sheet.
What else do people ask about employment cost in India?
What percentage of salary is total employment cost in India?
It depends on pay level. For a ₹1 lakh a month earner it is about 5.7% above gross before insurance, and far more for staff under the ESI limit.
Does total employment cost include the EOR fee?
Not by most definitions. The EOR fee is a service charge, so it belongs in fully loaded cost.
Is gratuity part of employment cost if the employee leaves early?
Yes, as a provision. You accrue it monthly, and it becomes payable after five years of service, or one year for fixed-term staff.