Employee Benefits in India: All You Need To Know

The employee benefits scheme in India was introduced to promote employee well-being and satisfaction. It is an essential part of a job offer that provides non-monetary benefits to the employees. 

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Employee benefits comprise both statutory and discretionary benefits. Statutory benefits are those mandated by law. 

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On the other hand, discretionary benefits are additional benefits other than statutory benefits offered by employers to employees.

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Statutory Benefits for Employees in India

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Mentioned below are the statutory benefits that Indian employees are legally entitled to: 

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1. Employee Provident Fund (EPF)

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The Employee Provident Fund (EPF) is a retirement benefits scheme governed by the Employee Provident Fund Organisation (EPFO).

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The EPF scheme requires both the employer and employee to contribute a portion of the employee’s salary towards the scheme. 

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2. Employee State Insurance (ESI)

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The Employees' State Insurance Scheme of India is a social security scheme that protects employees in the organised sector from sickness, maternity, disability, and death due to work-related injuries. It also provides medical care to insured employees and their families.

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3. Gratuity

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The Payment of Gratuity Act, 1972, states that employees are eligible for a lump sum payment upon retirement as gratuity as a token of appreciation. 

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Any employee retiring, resigning, or being terminated after more than 5 years of service is entitled to gratuity under the act. 

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4. Maternity Benefits

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Maternity leave is a statutory benefit under the Maternity Benefit Act 1961. Female employees are entitled to paid maternity leaves of up to 26 weeks.

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5. Employee Pension Scheme (EPS)

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On November 19, 1995, the Employees' Provident Fund Organisation (EPFO) introduced the Employees' Pension Scheme (EPS 1995).

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It allows employees to receive a monthly pension when they retire. When a member reaches the age of 58, they are eligible to receive their pension from the EPFO.

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Both new and existing EPF members can profit from EPS 95. The system is funded by both the employee and the employer, who each contribute 12% of their base wage and dearness allowance (DA).

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The EPF receives the entire employee contribution, while the employer contributes 8.33% to EPS and the remaining 3.67% to the EPF.

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Discretionary Benefits for Indian Employees

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Some employers offer additional non-monetary benefits, known as 'perks', to attract and retain top employees. These benefits include the following: 

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1. Flexible Work Policy

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Flexible working hours, work-from-home opportunities, and reduced work weeks have also become popular ways to recruit and retain employees.

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2. Health Insurance

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Health insurance provides comprehensive medical care for employees and their families.

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3. Life Insurance

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Many employers provide life insurance to employees as financial protection for their families in the event of an unexpected death. 

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Companies such as Onsurity provide life insurance for groups with flexible payment options, a simple claims process, and comprehensive coverage and are trusted by 8000 employers and over 15 lakh members.

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4. Wellness Programs

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Wellness programs that are currently popular among employers and employees include gym memberships, health workshops, and stress management initiatives.

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5. Child-Care Support

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To assist working parents in balancing professional and family duties, many employers now provide child care as a discretionary benefit. 

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To minimise employee stress and increase retention, support may include an on-site nursery, subsidies, or collaborations with child care providers.

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6. Professional Development

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Professional development benefits in India often include sponsored upskilling courses, certifications, or industry conferences. 

These discretionary perks aim to enhance employee expertise, engagement, and long-term retention.

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Who is entitled to employee benefits?

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• Full-time and many part-time employees are typically eligible for EPF, ESI, EPS, gratuity, and paid time off.

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• Independent contractors and freelancers often do not receive statutory employment benefits. However, if a contractor's working conditions are comparable to those of a full-time employee, they may be reclassified as employees and become entitled to benefits.

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• Certain perks require employees to have completed a minimum amount of continuous service. To be eligible for a gratuity, employees must have worked for at least five years.

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