This guide gives all the information on Employee Benefits in India for Global Hiring managers
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Navigating employee benefits in India is critical for the U.S.-based companies aiming to secure and nurture talent overseas. India’s job market is unique, where tradition and modern work values merge. For employees, job stability and benefits often weigh as much as the salary. The younger crowd is shifting gears, valuing work-life balance and job satisfaction, too.
This guide provides a concise overview of the employee benefits landscape in India and how leveraging an EOR can streamline the benefits administration for your international team members.
In India, companies are legally required to provide certain benefits to their employees. These mandatory benefits are designed to offer workers financial security during their employment and into their retirement. Here's a closer look at each:
The Provident Fund is a government-mandated retirement savings scheme where employees contribute a portion of their salary, and employers must match this contribution.
This fund is accessible to employees upon retirement or under certain conditions such as buying a home or funding medical treatments.
The ESI provides health insurance and medical benefits to employees earning up to a certain limit, which is periodically revised.
It covers medical expenses, disability benefits, and maternity leave, offering employees a safety net against health-related financial burdens.
Gratuity is a lump-sum payment made to employees who have been in continuous service for five years or more with the same employer.
It's a gesture of gratitude, calculated based on the last drawn salary and the number of years of service.
The NPS is a voluntary long-term retirement savings account aimed at effectively providing for post-retirement life.
While it's optional for employees, employers who offer NPS benefit from tax incentives.
Contributions can be flexibly managed, and upon retirement, individuals can withdraw a lump sum and receive the remaining as annuity payments.
Learn more about statutory benefits of employees in our guide to Payroll Compliance in India.
In India, employees are typically entitled to a minimum of 12 to 18 days of paid annual leave, depending on the state laws and the company's policy.
Some companies offer more generous leave policies as part of their benefits package to attract top talent.
Sick leave entitlement can vary, but generally, employees can avail around 10-15 days per year as per the discretion of the employer and state regulations.
Certain sectors, like the manufacturing sector under the Factories Act, have their own set stipulations, which might differ from state-specific acts.
Maternity leave in India is governed by the Maternity Benefit Act, which provides for 26 weeks of paid leave for women for the first two children and 12 weeks for the third child.
Some companies may choose to offer additional benefits like flexible working hours upon return to work.
Paternity leave is not mandated by federal law and is left to the discretion of individual employers.
Certain progressive companies and government entities provide paternity leave ranging from 15 days to a month.
It's essential to note that the provision of leave is subject to the rules of the specific state’s Shops and Establishments Act, or the national laws in the case of maternity leave.
The standard work hours in India are typically 9 hours a day, with a 48-hour workweek being the norm across various sectors.
However, these hours can vary based on the applicable state laws. IT and technology companies often adopt a 5-day workweek, summing up to 45 hours, including lunch breaks.
Overtime is paid at double the rate of regular pay as per the Factories Act, which is a common baseline, even though specific rates may differ by state legislation.
Moreover, some states have special provisions for certain types of employees, such as those in supervisory or managerial positions, who may not be eligible for overtime in the same way as other employees.
An Example of a Payslip in India:
Supplementary benefits can distinguish a company as an employer of choice in India's competitive talent market. These benefits are not mandated by law but are offered by employers to attract and retain high-quality employees.
For example, a tech startup in Bangalore might provide its employees with health insurance that covers advanced medical treatments and wellness programs that go beyond the ESI's scope.
An IT firm in Hyderabad, for example, might offer a superannuation fund that matches employee contributions up to a certain percentage as a way to secure their post-retirement life.
A multinational corporation in Mumbai may offer its employees stock options after a certain period of employment, incentivizing them to contribute to the company's long-term success.
Flexible working hours allow employees to start and end their day at times that suit them better, which can lead to increased productivity and job satisfaction.
Remote work policies have become increasingly popular, especially after the COVID-19 pandemic, with companies offering full or partial remote work options.
Offering such supplementary benefits can greatly enhance an employer's attractiveness, particularly to the top-tier talent in India who may have multiple employment options.
Amazon offers a supportive work environment with unique benefits that extend beyond the norm. Its comprehensive mental health support includes an Employee Assistance Program that provides confidential counseling and resources, such as the Twill Therapeutics platform for 24/7 mental health tools. Children of employees also benefit from specialized pediatric mental health services.
Additionally, Amazon's 'Amazon Extras' gives employees access to exclusive discounts on health and wellness apps and services, while the 'Svasthya' initiative offers holistic wellness programs focused on emotional, physical, and financial health. The 'Ramp Back' program offers birth parents eight consecutive weeks of flexibility and partial work hours as they readjust to work schedules as new parents, demonstrating Amazon's commitment to the well-being of its workforce and their families.
With a diverse regulatory landscape, understanding localized benefits is not just about legal compliance—it’s about building a motivated and stable workforce. Employers that partner with an Employer of Record can effectively structure and manage these benefits, ensuring they are tailored to the needs and expectations of the Indian workforce while also aligning with the company's global policies.
An Employer of Record (EOR), like Wisemonk, can simplify this complexity. By managing mandatory and supplementary benefit schemes, an EOR becomes your on-ground partner, ensuring your employment practices in India align with local norms and laws, freeing you to concentrate on core business functions.
Leave the hassle of entity establishment and focus on what you do best—running your business. Reach out to us, and we will be happy to assist you.
