Employee Benefits In India

Employee benefits in India basically consist of statutory employee benefits and other discretionary benefits provided by employers. Statutory benefits are government-mandated benefits that every employer is required to provide to their employees. The other fringe benefits depend on employers and what they want to provide.

Who Can Get Employee Benefits in India

Statutory employee benefits depend heavily on the employment contract, the industry and the state. For example, the employee benefit rights of a contractual employee in a rural area can vary vastly from those of a full-time software engineer living in an urban city.

Contract employees are not entitled to employee benefits. However, part-time and full-time employees get benefits, while remote employment can include flexible benefit features.

Essentially, there are two types of employee benefits in India: statuary and discretionary benefits.

-Statutory Employee Benefits

Statutory employee benefits are government-mandated benefits in India. These are crucial for employees to support them financially during dire situations. Statutory benefits also serve as a guarantee to employees from employers for fair and equal treatment.

The major examples of statutory employee benefits are employee provident fund, ESIC benefits for employees, maternity benefits and gratuity.

-Discretionary Employee Benefits

Discretionary employee benefits or voluntary benefits include vast types of benefits offered by employers to their employees. These are additional benefits other than government-mandated benefits; they are not legally required to be provided. Employers can choose to include them in compensation packages to attract and retain great talents.

Some discretionary benefits are health insurance, life insurance, child support, flexible work arrangements, wellness programs and performance-based bonuses.

All the discretionary and statutory employee benefits will be explained in detail in the next section.

Here are the government-mandated statutory employee benefits that employers need to provide to their employees:

-Employee Provident Fund

An employee provident fund (EPF) is one of the most crucial employee benefits, and every employee must check it before signing any job offer. The EPF is governed by the Employee Provident Fund and Miscellaneous Provision Act in India and is a part of social security contributions.

As per the act, employees who are eligible for the PF act have to contribute a fixed amount of their salary to the Employees Provident Fund; this amount is usually around 12% of the salary. The employer also contributes an equal amount of 12% of the employee's basic salary to the fund. Finally, 8.33% of contributions go towards the pension fund.

Also Read: What is EPF Form 15G- When and How to Fill?

-ESIC Benefits for Employees

ESIC benefits for employees is a state-mandated benefit whose main purpose is to empower employees in critical medical emergencies. The scheme provides coverage for employees' health-related issues, such as temporary or permanent disablement, sickness, occupational disease, or death due to work injury.

Such incidents or injuries render the employee’s power to work and earn. Thus, the scheme aims to provide financial assistance to negate its effects. Moreover, it provides maternity support (if required) to the beneficiaries.

-Gratuity

Gratuity is one of the employee benefits regulated by the Gratuity Management Act. Under the act, the employer is obliged to pay the gratuity amount to the employee for their services to the company or organisation.

However, the terms to get the gratuity amount is that the employee must be associated with the company for a minimum of 5 years to avail of the gratuity amount. There is a formula to calculate the gratuity amount, which is G = NB15/26.

Here, G= Gratuity

N= Numbers of years served in the company

B= Last drawn employee salary along with dearness allowance.

Also Read: Gratuity Calculation, Eligibility and Formula in Detail

-Maternity Benefits

Maternity benefits are another important statutory employee benefit that employees should be aware of. They are crucial, especially for female employees. As per the Maternity Benefit Act, employers are to provide maternity leaves to female employees when required. Employees become eligible to take maternity leave after working for an employer for at least 80 days in the preceding 12 months.

The minimum maternity leave days may differ from state to state, but India’s government has a set rule. Employers must provide a minimum of 26 weeks of paid leave to employees with fewer than two children (not including the one going to be born) and 12 weeks for employees with two or more children. The law also states that 12 weeks of maternity leave must be provided for adoption and children born via surrogacy.

Employees are allowed to take maternity leave as soon as eight weeks before their due date of pregnancy. New moms are guaranteed to be provided with a minimum of two additional breaks during the day for nursing till the baby is 15 months old.

-Health Insurance

Employees usually buy individual health insurance policies for themselves and their families. Several employers also provide health insurance to their employees as a discretionary employee benefit.

It is a comprehensive health insurance plan that covers the medical needs of employees and their families. Such health insurance is greatly beneficial during emergencies or for additional medical coverage.

Also Read: Benefits of Group Health Insurance Policy for Employees

-Life Insurance Policy

Another type of employee benefit plans is life insurance. It is a voluntary benefit provided by several organisations to employees. A life insurance policy provides financial assistance to employees' families in the event of an employee’s untimely death.

Moreover, having a good life insurance plan helps in getting timely claim settlements and provides comprehensive coverage that families may require during a crisis.

-Flexible Work Arrangements

Although there are different types of employee benefits, nowadays, flexi-timing is a benefit that attracts many employees. Flexible work hours allow employees to achieve a better work-life balance, which provides them with innate satisfaction and boosts work productivity.

Different organisations have their specific approach to flexi-timing. Some offer fully remote work environments, and then there is a hybrid option and part-time employment option, too. It is then up to employees to choose which option suits them the best.

-Wellness Programs

Health and wellness are crucial parts of every person’s life. Several companies understand this and provide wellness program subscriptions to their employees. These subscriptions can include benefits like in-office gym membership, health programs and stress management workshops. These things not only help employees stay fit but also build better rapport between employees and employers.

-Skill Development Programs

It is one of the various types of employee benefits that will benefit both parties. Upskilling is great for employees' career progression and getting better opportunities with more responsibilities. On the other hand, it helps employers train their employees for new development in their field and retain the best talent from their already existing pool of employees.

Also Read: What Are the Benefits of Employee Assistance Programs?

In today’s world, employees want fair compensation and additional employee benefits. Benefits are not only their right but also a necessary medium to ensure a better employee-employer relationship.

Some organisations offer all of the benefits mentioned above. Some might include or exclude other benefits as per company policies or employee needs. Whatever the case, having basic employee benefits like health insurance and retirement benefits is a must, and employers should not deny their employees such basic benefits.

Group mediclaim policy is another benefit that employers are obliged to provide to their employees. It is a health insurance benefit that provides coverage to a particular group of people, mostly employees.

A group health insurance policy is essential as it provides health protection benefits to employees, including coverage for doctor visits, surgeries, hospital stays, and medical prescriptions. Employers can thus ensure that their employees get the best medical services whenever they need them.

TATA AIG group mediclaim policy not only provides comprehensive coverage to the employees but also helps employers retain employees better, boost productivity, and create a positive working environment in the organisation.

With TATA AIG, businesses can choose from a range of SME insurance plans, which provide financial respite and help with business continuity during unfavourable circumstances and unplanned incidents.

What are the types of employee benefits as per IND as 19

The act covers short-term employee benefits, post-employment benefits, actuarial benefits, defined contribution and benefit plans.

What is the most common type of employee benefit

Some of the most common types of employee benefits in India include retirement savings plans, health insurance, paid time off, and tuition reimbursement.

What is VTO

VTO stands for voluntary time off, in which employees can take unpaid time off at their discretion without affecting their status of employment and its benefits.