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Employee Benefits in India: All You Need To Know

May 7, 2025
 
Employee Benefits in India: All You Need To Know

Table of Contents

    Modified On:

    May 7, 2025

    Explore all major employee benefits in India, including PF, gratuity, ESI, insurance, leaves, and more. Get acquainted with all the employee benefits you are entitled to.

    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. 

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

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

    Statutory Benefits for Employees in India

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

    1. Employee Provident Fund (EPF)

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

    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)

    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.

    3. Gratuity

    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. 

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

    4. Maternity Benefits

    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.

    5. Employee Pension Scheme (EPS)

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

    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.

    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).

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

    Discretionary Benefits for Indian Employees

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

    1. Flexible Work Policy

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

    2. Health Insurance

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

    3. Life Insurance

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

    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.

    Check out these top 14 insurtech companies in India.

    4. Wellness Programs

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

    5. Child-Care Support

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

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

    6. Professional Development

    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.

    Who is entitled to employee benefits?

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

    • 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.

    • 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.