A Comprehensive Guide to Statutory and Supplementary Employee Benefits in India

A Comprehensive Guide to Statutory and Supplementary Employee Benefits in India


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India is a great place to hire remote workers who speak English. But, because of complicated employment laws in India, companies need to know about employee benefits to follow the rules and stay competitive. This guide explains Indian employee benefits to help companies grow their business in India.

What are the Different Kinds of Employee Benefits Available in India?

In India, there are two types of employee benefits: statutory and supplemental. Statutory benefits are compulsory, and supplemental benefits are offered to attract and retain talent. The government enforces statutory benefits such as state insurance, gratuity payments, and provident funds. Supplemental benefits like personalized health insurance and disability coverage are additional.

Here are some detailed Statutory and Supplemental benefits.

Mandatory Employee Statutory Benefits in India

Statutory benefits are mandatory, legally required benefits that employers must provide to employees, such as medical insurance and paid time off. Employers can also offer supplemental benefits to enhance existing benefits, and fringe benefits to provide additional compensation. These benefits help attract and retain top talent.

Understanding Social Security Benefits

Indian employment law mandates two types of social security benefits – Employees’ State Insurance (ESI) and Employees’ Provident Fund (EPF). The EPF scheme covers retirement funds, pension, and life insurance and is a mandatory savings scheme for employees, requiring contributions from both employers and employees. The scheme aims to ensure financial security for retired employees. Understanding social security benefits is crucial for both employers and employees.

Employees’ State Insurance (ESI) Medical Insurance Benefits

The Employees’ State Insurance (ESI) Act in India applies to businesses with at least 10 employees earning less than INR 21,000 per month. Employers contribute 4.75% of their employee’s wages to the ESI fund, while employees contribute 1.75% of their wages. This entitles employees to medical benefits, including hospitalization, maternity, disability, and sickness benefits, among others. The ESI Act ensures that employees have access to medical benefits and financial support during challenging times. Employers must adhere to the ESI Act and contribute to their employees’ ESI fund to comply with Indian employment law. This ensures to cover the dependent family members of the employee.

Employees’ Provident Fund (EPF) Retirement Fund Benefits

The Employees’ Provident Fund (EPF) Act was established under The Employees’ Provident Fund and Miscellaneous Provisions Act of 1952. Employees working for companies with 20 or more employees and earning less than INR 15,000 per month must contribute 12% of their wages monthly, while employers contribute their part additionally. Upon retirement, employees receive a payout from the EPF, including interest.

Employees’ Pension Scheme (EPS) - Eligibility and Benefits

The Employees’ Pension Scheme (EPS) in India collects a percentage of an employee’s income to provide a pension after the age of 58. When employers contribute 12% of the employee’s salary to the Employees’ Provident Fund (EPF), 8.33% goes to the EPS. The scheme provides pension payments for life, and in case of the member’s demise, their nominee will receive the pension. The scheme carries no investment risks for employees as the Indian government sponsors the EPS and guarantees returns.

Employees’ Deposit Linked Insurance Scheme (EDLI)

Employees’ Deposit Linked Insurance Scheme (EDLI) in India: An automatic life insurance policy offered by the EPF scheme where the registered nominee receives a lump-sum payment in the event of the insured person’s death. The scheme is funded by 0.5% of the employer’s 12% salary contribution towards EPF.

Exploring the Benefits of Gratuity

Gratuity benefits are available to employees who have worked for their employer for over five years and retire, resign, or become disabled. The gratuity payment is equivalent to 15 days of wages for every year of employment. This scheme applies to employees working in establishments with 10 or more employees, including factories, mines, and ports.

Supplemental Benefits for Employees in India

Supplemental benefits are extra perks that employers provide to enhance the medical, retirement, and insurance coverage of their workers. These benefits often extend to the employees’ families and offer a higher level of coverage than the mandatory benefits. Examples of supplemental benefits include dental and vision insurance, retirement contributions, and extended leave. With workers worldwide seeking employers who prioritize their well-being and that of their families, a robust supplemental benefits package has become essential in attracting and retaining top talent. As such, employers are increasingly offering such packages to make their companies more attractive to prospective employees and keep their current workforce satisfied.

Supplemental Medical Coverage for Employees Benefits

Supplemental Medical Coverage is a common benefit offered by employers to their management-level employees, providing additional coverage beyond their basic medical insurance plans. This type of coverage often includes maternity care, cancer treatments, and fertility treatment, and may also extend to dependents and partners.

Supplemental Life and Accidental Death & Dismemberment (AD&D) Coverage Benefits

Employers often offer supplemental life and accidental death and dismemberment (AD&D) coverage to employees as an additional benefit. This type of coverage provides employees with peace of mind, knowing that their families will be taken care of in the event of an unexpected tragedy.

Supplemental life insurance typically covers an employee’s beneficiaries in the event of their death, with the payout amount determined by the employee’s salary and chosen coverage level. AD&D coverage provides additional benefits to an employee or their beneficiaries in the event of a serious injury or death resulting from an accident.

Offering supplemental life and AD&D coverage can set a company apart from other employers in the eyes of job seekers. It shows that the company values the well-being of its employees and their families and is willing to go above and beyond to provide them with additional protection and support.

Providing Compliant and Competitive Employee Benefits Packages in India

Global companies that want to hire employees in India attract and retain top talent by offering comprehensive and compliant benefits that exceed the market standard. Still, ensuring your benefits packages are competitive and legally sound is complicated. Instead, work with an experienced global partner like IMC Group to create market-specific rewards packages on your behalf.

Our Global Benefits solution helps employers gain a competitive edge in the hiring process by offering locally competitive benefits packages that go beyond statutory requirements and ensure your talent feels valued. Plus, you gain peace of mind knowing that your benefits offerings always comply with local labor laws.

If you’re looking to attract top-tier talent in India, IMC Group is your solution.

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