Statutory Employment Benefits in India

With the rapid increase in remote work post-COVID, India stands as a dynamic hub for Global Companies seeking to harness talent from afar. As this trend increases, understanding and navigating the intricacies of Indian Labour Laws and Statutory Employment Benefits become paramount.

Here is a guide to understanding statutory employment benefits for remote employees in India and discovering how to implement them in your benefits package.

Mandatory Benefits

Indian Labour Laws are very detailed and designed to safeguard Employee rights and provide them with amazing benefits. India is a vast country with over 28 states and 8 Union territories and each of them has its own set of Labour laws, Let’s just focus on the most relevant ones required for your Indian Remote Team.

There are 2 main categories of Social Security benefits in Indian law:

Employees’ State Insurance (ESI) and
Employees’ Provident Fund (EPF)

EPF comprises 3 subcategories:

Retirement fund
Pension and
Life insurance

Employees State Insurance (ESI)

The ESI scheme offers benefits to both the workers and their dependents in case of any unfortunate eventualities at work.
Employees can also take medical benefits from their ESI
Under the ESI Act, employees or workers employed in the above-mentioned categories earning wages up to ₹ 21,000 per month are entitled to this social security scheme.

Employees Provident Fund (EPF)

EPF has been set up under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (“Act”), applicable pan-India.
EPF is a welfare scheme implemented to ensure a better future for employees.
This is a statutory, mandated benefit that becomes available to employees upon retirement or termination of employment.
In the event of the death of an employee, their dependents will be eligible for benefits.
An employer must register for the EPF scheme if the company has more than 20 employees in India.
Companies can register for this scheme even if they have less than 20 employees.
The minimum amount for EPF contributions, both from employer and employee is ₹1800
Employers and employees are required to contribute 12% of the basic salary simultaneously (subject to a maximum limit of ₹15,000) to the fund under the EPF scheme.
This is apportioned as 3.67% to the EPF account, 8.33% (up to a maximum of ₹ 1250) to the EPS, and 0.50% (up to a maximum of ₹75) to the EDLI account

Employees’ Pension Scheme (EPS)

EPS was set up under the Act to offer a post-retirement benefit for employees or their legal heirs in case of death, employed under an establishment to which this Act applies.

Employees’ Deposit-linked Insurance Scheme (EDLI)

EDLI was framed to provide insurance benefits to the employees of an establishment or a class of establishments to whom this Act applies in case of death while in service.
Both EPS and EDLI contributions are covered in the EPF deduction

Gratuity Benefits

Employees who have completed a minimum of 5 years in a company and who retire, resign, or become disabled are eligible for gratuity benefits.
Gratuity payments are equivalent to 15 working days of the last drawn salary for every year of employment.
Gratuity Calculation Formula: (15 * last drawn salary * tenure of working) / 26.

Working Hours

Daily working hours in India range from 8-9 hours a day and are 48 hours weekly in all the states.
There should be a rest of 1 hour after every 5 hours of work.

Overtime

It is the time worked more than one’s regular working hours.
Though it varies slightly from state to state, it ranges from 3-8 hours per week, with 6 hours being the common weekly overtime limit for most of the states.
The rate of overtime must be twice the rate of his normal remuneration, calculated by the hour.

Spreadover Hours

This is the total number of hours an employee continuously works in a day, including overtime and breaks.
It must be around 10.5 hours in any commercial establishment and 12 hours in any shop.

Paid Leaves

Employees can apply for a certain number of leaves annually, apart from holidays and days off. Again, this varies slightly in each state, but generally, these 3 types of leaves are mentioned under the Shops and Establishments Act i.e.,

Earned/ Privilege leave
Sick leave and
Casual leave.

Earned Leave

Every employee is granted these additional leaves annually, which, if not used, can be carried forward to the next year or encashed at the end of the year or after leaving the company.
How earned leave transforms next year depends on the Leave Policy of the company.
In the case of carry forward, the maximum number of earned leaves that can be carried forward is 45 days

Casual Leaves

These are the leaves that a candidate can apply for in case of some unforeseen event or when the employee is not able to attend the office due to an emergency.
These leaves are neither cashable nor can be carried forward

Sick Leaves

As the name suggests, an employee is entitled to sick leave if they can’t work because of illness.
These leaves are sometimes clubbed with casual leaves.

Women’s Benefits

Maternity Leave

The Maternity Benefit Act 1961 states that a woman should have worked with her employer for at least 80 days in the 12 months preceding the date of her expected delivery.
All women who are pregnant (surrogate or commissioning mothers) or experiencing a miscarriage are eligible for maternity leave in India.
First and second-time mothers can take 6 months, or 26 weeks, off. With every subsequent child, the mother can take 3 months, or 12 weeks, off for her maternity leave, which is a paid leave wherein her employer needs to pay her salary in full.
It also has a provision to extend the leave by an additional 4 weeks in case of medical complications or other specified circumstances.
During the maternity leave period, it is illegal for employers to dismiss or discharge a woman or give notice of dismissal.

Adoption Leave

Adoptive mothers legally adopting a child below three months (12 weeks) will be entitled to a maternity benefit period of 12 weeks from the date the child is handed over to the mother.

Holidays

Holidays in India are regional, which means every state has its own set of holidays.
There are only 3 national (public) holidays:
- Republic Day (January 26)
- Independence Day (August 15) and
- Gandhi Jayanti (October 2)

Add-on Employee Benefits

These are supplementary benefits offered to candidates on top of mandatory statutory benefits, especially in the corporate sector.

Paternity Leave

Though not mandatory, many private sector companies have started offering Paternity to their male employees.
Government Employees in India are entitled to a leave of 15 days within six months of the birth or adoption of a child.

Medical Insurance

Medical insurance is the most common supplemental benefit companies provide to employees.
Many employer-sponsored medical insurance plans offer coverage for maternity care, cancer treatments, and fertility treatments.

Mobile & Data Reimbursements

All the companies that hire remote employees offer mobile and data reimbursement monthly.
There’s a fixed amount for internet coverage that is paid to employees in their salary or Employees update their invoices in the company’s dedicated portal and receive the bill amount

Employee Wellness Program

With the increased awareness of Mental Health, some organizations have also started organizing wellness programs for their employees.
They also provide subscriptions to counseling sessions with experts.

How to get Started

This is an overview of the benefits that Indian employees are offered as part of their salary package.

As a global company looking to hire talent in India, we employ the talent on your behalf, so you don’t have to think about the salary structure, instead you pay a flat monthly rate and we manage the rest for you.

As a talent looking to work for foreign entities, as you are employeed by Elphe, you will be offered employment benefits as part of your package. This article is an overview of employment benefits in India, for specific benefits offered to you please check you offer letter or write to hr@elphe.net.