Employee Benefits in India: Types and Comprehensive List

  • postauthorEditorial Staff
  • postdateJune 11, 2024
  • postreadtime11 min read
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Employee Benefits in India

Employee benefits in India encompass a wide range of offerings provided by employers to their employees beyond basic salary. These include both statutory and discretionary components. Statutory benefits, mandated by law, include contributions to the Employee Provident Fund (EPF), Employee State Insurance (ESI), gratuity and maternity leave.

These benefits are crucial for employees’ financial security, health, and well-being. On the other hand, discretionary benefits, provided at the employer’s discretion, can include health insurance, transportation allowance, work-from-home benefits, performance bonuses, training and development programs, childcare facilities, and wellness programs.

The size and cost of employee benefits in India can vary significantly depending on the specific benefits offered, the industry, and the size of the company. For example, the average cost for a group medical insurance plan for a group of 25 employees and their dependents (spouse and two children) is around the 50th percentile. Adding parents to the plan increases the cost by approximately 75%.

What Are Employee Benefits?

Employee benefits refer to non-monetary incentives provided by organisations to employees in addition to their base wages or salaries. These benefits are designed to enhance the overall compensation package and support the well-being, motivation, and retention of employees.

They can include essential benefits like health insurance, retirement plans, and paid leave, as well as additional perks like performance bonuses, flexible work arrangements, and wellness programs. Employee benefits play a crucial role in attracting and retaining talent, improving morale, and creating a positive work environment in India.

Specific benefits may vary based on factors such as industry, company size, and employee level. It’s essential for employees to understand their entitlements and take advantage of the benefits provided by their employers.

Also, Read: Employee Benefit Expenses

Types of Employee Benefits

Essentially, there are two types of employee benefits, namely – statutory and discretionary. Let’s examine these two types of employee benefits.

types of employee benefits

1. Statutory benefits

Statutory benefits are legally mandated benefits that employers must provide to their employees. These include:

  • Employee Provident Fund (EPF): EPF, is a retirement savings scheme where both the employer and employee contribute a portion of the employee’s salary.
  • Gratuity: In gratuity, a lump sum payment is made to employees upon retirement, resignation, or termination after at least 5-years of service.
  • Maternity benefits: Maternity benefits offer paid leave for female employees, as mandated by the Maternity Benefit Act.
  • Employee State Insurance (ESI): The ESI is a health insurance scheme providing medical benefits to employees earning below a certain threshold.

Related Read: Important of Employee Benefits

2. Discretionary benefits

Discretionary benefits are among the types of employee benefits, where additional perks are provided by employers to attract and retain talent, though it may not be mandatory to do so. These include:

  • Health Insurance: Under health insurance, comprehensive medical coverage for employees and their families is offered.
  • Life Insurance: Many companies offer life insurance to employees as financial protection for employees’ families in case of untimely death. Companies like Onsurity offer group term life insurance that offers flexible payment options, effortless claims process and comprehensive coverage and is trusted by 5000 businesses and over 10 lakh members.
  • Flexible work arrangements: Flexitime, work-from-home options, and compressed work weeks have also become popular to attract and retain talent.
  • Childcare Support: Many companies today offer on-site daycare facilities or childcare allowances to motivate employees.
  • Wellness Programs: Gym memberships, health workshops, and stress management initiatives are many wellness programs that are today popular among both employers and employees.

Also, Read: Employer Employee Insurance

List of Top Employee Benefits in India

Employee benefits in India are a crucial aspect of the compensation strategy for organisations, providing employees with the necessary support and motivation to perform their jobs to the best of their ability. Let’s take a look at some of the top employee benefits in India:

list of employee benefits in india

1. Health Insurance Benefits

Investing in a comprehensive health insurance plan can ensure financial protection against unexpected medical expenses, access to quality healthcare, and also enable enjoying tax benefits. Employers in India typically offer the following types of health insurance plans to their employees:

1.1) Group health insurance plans

These plans provide comprehensive coverage to a group of employees and their dependents. They offer instant coverage for pre-existing diseases, no waiting periods, and a wide range of benefits like hospitalisation, daycare procedures, maternity coverage, and wellness benefits. Companies like Onsurity provide monthly healthcare and wellness membership plans starting at just ₹49 per employee.

1.2) Health Maintenance Organisation (HMO) plans

HMO plans offered by companies require employees to use a network of preferred doctors and hospitals. Employees need to select a primary care physician who coordinates their care and provides referrals to specialists.

1.3) Preferred Provider Organisation (PPO) plans

PPO plans are the most common type of employer-sponsored health insurance. Employees have the freedom to choose any network provider without a referral but have higher out-of-pocket costs for out-of-network care.

1.4) Point-of-Service (POS) plans

POS plans combine features of HMOs and PPOs. Employees have more freedom to choose providers than in an HMO but need a referral from their primary care physician to see specialists.

2. Retirement Benefits

Retirement benefits in India encompass various schemes and provisions aimed at providing financial security to individuals post their working years. These benefits are crucial for ensuring a comfortable and stable retirement. Some of these are as follows:

2.1) The Provident Fund (PF) and Employee Provident Fund (EPF)

These retirement savings schemes aim at providing social security and retirement benefits to employees in India. Both the employee and the employer contribute 12% of the employee’s salary to the EPF, with the employee having the choice to contribute more voluntarily.

2.2) National pension system

The National Pension System (NPS) is a government-sponsored pension scheme. It is designed to provide retirement income to individuals, primarily in the unorganised sector, including self-employed individuals and workers in the private sector.

2.3) Gratuity

Gratuity provides a lump sum payment to employees upon retirement, resignation, or death, ensuring financial security and stability during a critical phase of life. The calculation of gratuity is straightforward, using a formula that takes into account the last drawn salary and the number of years of service.

2.4) Employee stock ownership plan

An Employee Stock Ownership Plan is a retirement benefit plan that gives employees an ownership stake in the company. It is a form of defined contribution plan where employees receive shares of the company’s stock as part of their retirement benefits.

Quick Read: Group Health Insurance for Employees

3. Paid Time Off (PTO) and Leave Policy Benefits

Diverse leave policies cater to various needs and situations, ensuring employee well-being, work-life balance, and organisational effectiveness. The different types of leave policies that are commonly included in organisations are:

3.1) Annual leave

Annual leave is a type of leave policy that provides employees with paid time off for rest, relaxation, and personal activities. In India, employees are entitled to a certain number of annual leave days per year, in addition to public holidays and other types of leave.

3.2) Sick leave

This type of leave is provided for employees to recover from an illness and take care of their health, without worrying about losing pay.

3.3) Maternity and paternity leave

Maternity leave is granted to expectant mothers to take time off before and after childbirth, ensuring their well-being and providing time to care for the newborn. On the other hand, paternity leave allows fathers time off to bond with the newborn and support the family during the postnatal period.

3.4) Bereavement leave

This leave is given to employees to grieve the loss of a loved one and manage any funeral arrangements or personal matters.

Relevant Read: Maternity Health Insurance

4. Flexible Work Arrangements

Flexible Work Arrangements refer to variations from the usual work arrangements that allow employees to balance their work and personal responsibilities more effectively. These can take various forms such as:

4.1) Remote work options

Companies offering this option allow employees to work from locations outside the office, such as from home.

4.2) Flexible hours

Flexible hours enable employees to work at different timings with no changes to total work hours and workload, including staggered hours, flexible shifts, and compressed work schedules.

4.3) Job sharing and part-time opportunities

Job sharing allows employees regular part-time work where two employees share the responsibilities of one full-time position and split the hours. The two job sharers work part-time schedules, often complementing each other’s skills and availability.

5. Employee Assistance Programs

Employee Assistance Programs (EAPs) are work-based intervention programs designed to help employees in resolving personal problems that may adversely affect their performance and well-being. Here are a few examples:

5.1) Counselling services

By offering professional, confidential, and accessible counselling services, EAPs play a crucial role in supporting employee well-being and organisational effectiveness. The wide range of issues covered and flexible delivery modes make EAP counselling a valuable resource for employees facing personal or work-related challenges.

5.2) Financial assistance programs

While EAPs do not directly provide financial assistance, they aim to support employees in managing personal financial challenges that may impact their well-being and job performance. EAPs may offer short-term financial counselling to help employees manage debt, create budgets, and plan for the future.

5.3) Health and wellness programs

Health and wellness programs are initiatives implemented by employers to improve the overall well-being of their employees. These programs aim to promote healthy behaviours, reduce health risks, and create a supportive work environment.

5.4) Legal and Childcare Assistance

EAPs provide legal advice and referrals to employees dealing with legal issues, including those related to employment, family law, and financial matters. Legal assistance can include consultations with attorneys, legal advice on employment-related matters, and referrals to legal professionals for help drafting or updating wills. Employee Assistance Programs can also offer a range of childcare assistance services to support working parents, including childcare locator services, adoption support, referrals to summer camps and aftercare programs etc.

6. Training and Development Opportunities

The employee benefits programme for training and development opportunities encompasses a range of opportunities that companies offer. These include:

6.1) Professional Development Workshops

These workshops help employee performance by keeping their skills up-to-date, leading to increased productivity and efficiency. Providing professional development opportunities fosters a culture of continuous learning and growth, making employees more likely to stay with the company.

6.2) Skill Enhancement Programs

Skill enhancement programs are a valuable component of employee benefits programs, offering employees opportunities to develop and improve their skills, knowledge, and capabilities.

6.3) Career Progression Paths Within the Organisation

Career progression paths within an organisation are a crucial component of employee benefits programs, offering structured frameworks for employees to advance in their careers. A career path guide emphasises the importance of competencies, developmental activities, and formal training to strengthen skills at each career stage, supporting employees in their progression within the organisation.

7. Performance-based Bonuses and Incentives

Bonuses and incentives are a common type of employee benefit in India that provide financial rewards to employees based on their individual performance and the company’s overall success. Here are some of them that are used to reward employees:

7.1) Annual Bonuses

While annual bonuses are not legally mandated in India, they have become a standard practice among companies looking to motivate and retain their workforce. Annual bonuses are typically calculated as a percentage of the employee’s base salary and the percentage could vary based on factors like the employee’s performance rating, seniority, and the company’s financial performance.

7.2) Sales Commissions

Sales commissions are a common type of employee benefits programme that incentivises employees to meet or exceed sales targets. Commissions can be calculated as a percentage of the total sales made by an employee, with the percentage varying based on the company’s policies and the employee’s performance.

7.3) Performance-based Incentives

Among the various types of employee benefits is performance-based incentives. These as part of employee benefits programs recognise and reward high performance and foster employee engagement, as employees see a direct correlation between their efforts and tangible rewards.

7.4) Recognition Programs

Recognition programs are a crucial component of employee benefits programs and can take various forms like peer-to-peer recognition, leader-to-team-member recognition, employer-to-employees recognition, verbal praise, written praise etc.

Suggested Read: 7 Tips for Employee Performance Reviews

8. Work-life Balance Initiatives

Work-life balance initiatives are an important part of employee benefits programs, offering a range of advantages to both employees and employers. Here are some key work-life balance initiatives that can be integrated into employee benefits:

8.1) Employee Wellness Programs

Employee wellness programs are necessary for promoting good health, reducing health-risk behaviours, reducing stress, increasing productivity, and fostering a psychologically safe workplace. Some of the programs include physical activity programmes, nutrition programs, work-life balance, mental health balance and community engagement programs.

8.2) Fitness Memberships and Gym Subsidies

Fitness memberships and gym subsidies are popular employee benefits that support employee health and well-being. Some of the benefits offered include subsidised or discounted gym memberships at local fitness facilities, reimbursements for health and wellness products services and memberships, free or discounted access to on-site fitness facilities and fitness challenges and rewards programs tracked through wearable devices.

8.3) Work-life Balance Workshops and Seminars

Work-life balance workshops and seminars offer employees the opportunity to enhance their well-being, manage their time effectively, and achieve a harmonious balance between work and personal life.

8.4) Policies Promoting a Healthy Work-Life Balance

Policies promoting a healthy work-life balance as part of an employee benefits program are essential for supporting employee well-being and productivity. Some of these include flexible working options, part-time off, support for caring duties, encouraging restorative time etc.

Also, Read: 10 Best Health and Fitness Apps

9. Employee Discounts and Perks

Employee discounts and perks could motivate employees and come in various forms which are as follows:

9.1) Discounts on company products/services

Discounts on products allow employees to access company offerings at reduced prices, enhancing their purchasing power. It also provides opportunities to try new products or services at a lower cost.

9.2) Tie-ups with external vendors for exclusive offers

Tie-ups with external vendors for exclusive offers are a valuable part of employee benefits programs, as it provide employees with access to discounted products and services from a wide range of providers.

9.3) Employee Referral Programs

Employees can earn financial rewards for successful referrals, providing an opportunity to earn extra income. By referring qualified candidates, employees can also help ensure the company’s success and their job security, offering a valuable benefit in uncertain economic times.

9.4) Recognition of long-term employees with special perks

Recognising long-term employees with special perks not only shows appreciation for their loyalty but also motivates them to continue their contributions to the organisation. These gestures can enhance employee morale, job satisfaction, and overall engagement, fostering a positive and supportive work environment.

Conclusion

Employee benefits in India are a critical component of the overall compensation package, serving as a key factor in attracting and retaining top talent. The Indian job market is highly competitive, and offering a comprehensive benefits program can give employers a significant advantage.

By permitting a well-rounded benefits program that goes beyond the statutory requirements, employers in India can create a positive work environment, boost employee morale and engagement, and position themselves as an employer of choice in the competitive talent landscape.

FAQs:

1. What are the mandatory benefits of an employee in India?

In India, there are several mandatory employee benefits that employers are required to provide to their employees as per various labour laws and regulations. Some of these include ESI, PF, gratuity, maternity leave etc.

2. What are employee benefits in a company?

Employee benefits are additional perks and compensation provided by employers to their employees beyond their regular salary or wages. These benefits can include a wide range of offerings that support employees’ financial security, health and well-being, work-life balance, and professional development.

3. Which company provides best employee benefits in India?

Determining the “best” employee benefits provider in India can be subjective and depends on various factors including the size of the organisation, industry, employee preferences, and individual needs.

4. What are employee benefits under Labour law?

Some of the employee benefits under the Labour Law include ESI, PPF, Maternity Leave and Gratuity.

5. Can employees in India opt out of the Employees' State Insurance (ESI) scheme?

An employee covered by ESI benefits can choose to opt out of ESI Scheme after submitting documentary proof of having obtained medical coverage from another source.

6. What is the maximum limit for gratuity payments to employees in India?

The maximum limit for gratuity payments to employees in India is Rs. 20 lakhs.

7. Are employers in India required to provide health insurance benefits to their employees?

No, employers in India are not legally required to provide health insurance benefits to their employees. However, there are certain scenarios where employers may be mandated to provide health insurance coverage.

8. How does the Maternity Benefit Act apply to female employees in India?

The Maternity Benefit Act in India provides essential maternity benefits to female employees, ensuring their well-being, job security, and support during the crucial period of pregnancy and childbirth.

9. What are the tax implications of employee benefits in India?

Tax implications of employee benefits in India involve considerations of exemptions, deductions, and taxable components based on the specific benefit provided.

10. Are there any specific benefits or allowances mandated for employees working in specific industries in India?

Yes, there are specific benefits or allowances mandated for employees working in certain industries in India. These benefits are governed by various labour laws and regulations, including the Employees’ State Insurance Act, 1948, the Maternity Benefit Act, 1961, and the Payment of Gratuity Act, 1972.

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