Employee benefits have evolved beyond just a salary package in India. As the job market becomes more competitive and employee well-being gains prominence, companies are increasingly offering a diverse range of benefits to attract and retain top talent. These benefits go beyond financial compensation, encompassing healthcare, work-life balance, personal growth, and more. In this article, we explore the array of employee benefits offered in India and their significance in today's workplace. The categories of statutory and optional employee benefits in India will be covered in this article.
What are Employee Benefits?
The compulsory and optional allowances, incentives, and compensation that are given to employees in addition to their base pay or earnings are known as employee benefits. Typical components of an employee benefits package include base pay, gratuities, health and life insurance, as well as travel and expense reimbursements. Many startups also give staff members the opportunity to invest in the business and receive profit-sharing and share appreciation incentives.
Types of Employee Benefits in India
In India, companies are required to offer two different kinds of benefits to employees which are as follows;
- Statutory Benefits; and
- Discretionary/Optional Benefits;
Discretionary benefits are those that employers offer at their discretion, whereas statutory benefits are those that are required by law. Let's talk about these two categories of employee benefits:
Statutory Employee Benefits
The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 ("EPF Act"), the Employees' State Insurance Act, 1948 ("ESI Act"), the Maternity Benefit Act, 1961 ("MB Act"), as well as other labor regulations that are specific to each state's shops and establishments, control employment benefits in India. Let's talk about the many statutory employee benefits available in India:
Every establishment that employs 20 (twenty) or more people is subject to the EPF Act. Employers are required to contribute 12% of an employee's earnings, dearness allowance, and retention allowance, while employees are required to match those contributions. In addition to the required contribution, an employee may also make a voluntary financial contribution.
The Payment of Bonus Act (the "PB Act") requires employers to pay bonuses as well. Every factory and establishment with 20 or more employees is subject to the PB Act. A bonus of 8.33% of the wage or income received is due to every employee whose salary is less than Rs. Twenty-one thousand (Rs. 21000) whichever is higher.
Every store, business, factory, mine, plantation, oil field, etc. that employs ten or more people is subject to the PG Act. A worker is entitled to a gratuity upon termination under the PG Act if they have provided at least five years of continuous service upon superannuation, retirement, resignation, death, or disablement as a result of an accident or illness.
Any employee who earns less than Rs. 21,000 (exclusively in Indian Rupees Twenty-One Thousand) is covered under the ESI Act. According to the ESI Act, employers are required to contribute 4.75% of each employee's payable earnings, while each employee is required to contribute 1.75%. A fund for employees' state insurance will be created to utilize the same in case of accident, sickness, and maternity leave for family members as well.
The government increased the amount of maternity leave that may be taken under the MB Act from 12 to 26 weeks in 2017. Every store, business, mine, circus, plantation, etc. that employs ten or more people must comply. According to the MB Act, every woman employee is entitled to maternity benefits paid at the rate of the daily average wage during her absence.
Discretionary/Optional Employee Benefits
Employers may offer additional perks in addition to the ones required by law to entice talent and keep workers on board for a longer period of time. These consist of travel reimbursements, vehicles, paid time off, etc. Let's examine a few optional employee advantages offered in India:
It makes sense to give employees the option of taking a shuttle or taxi to and from work in order to guarantee their comfort and safety upon arrival and departure. A few corporations might also give the organization's senior executives a means of maintaining the stature of their positions.
Life and health insurance
The ESI Act only applies to non-seasonal industries and other businesses that have been notified by Government. Hence, the majority of corporate employees are not covered by this legislation. However, businesses frequently offer their employees private health and life insurance. If an employee becomes unwell, they need to know that their family members will be cared for.
Employee Stock Ownership Plan
Employee stock ownership plans ("ESOP") are a corporate strategy used by startups and many other businesses to connect the interests of the employees and the employers. Organizations provide employees the chance to buy company stock through ESOP at a set price, which is typically a discounted rate.
Paternity leave is not a legislative necessity. To encourage workers to spend time with their families and take care of their newborn infants, businesses have begun to give paternity leave. After a child is born or adopted, dads are entitled to paid time off, which is known as paternity leave. Companies are becoming more progressive as they realize that society dynamics have changed and that women do not always have the same needs as fathers.
Memberships at a gym
The degree of physical activity and work productivity are strongly correlated. To encourage employees to engage in more physical activity, employers have begun to provide perks for gym memberships, on-site gym access, and payment for physical training courses like yoga, Pilates, etc.
The landscape of employee benefits in India is rapidly evolving to meet the diverse needs of today's workforce. From health and wellness provisions to fostering work-life balance and supporting professional growth, these benefits are more than just perks – they are vital components of a company's strategy to attract, retain, and engage top talent. As employees become more discerning about the organizations they choose to work for, the value of comprehensive and thoughtful employee benefits cannot be overstated. In the coming years, we can expect to see even more innovative and personalized benefits tailored to the needs and aspirations of the Indian workforce. If you are dealing with any such employee benefits issues, it is advisable to contact a corporation lawyer or labour lawyers for employees.
What are the basic employee benefits in India?
Some of the basic employee benefits in India include provident fund, bonus, gratuity, maternity benefits, health and insurance etc.
What are the top 5 types of employee benefits?
The top 5 employee benefits are provident fund, bonus, insurance, gratuity and maternity benefits.
What are employee health benefits in India?
Some of the employee health benefits include ESI contributions, mediclaim facility, gym membership etc.