In India, the formal job sector comprises only 13% of all firms. The other 87% of firms are purely informal in orientation. These research numbers show that they are outside the tax and social security brackets. So, as an employer in India, you need to be aware of the benefits your employees are entitled to. Providing fair compensation to employees who serve or have served your company and are now retired is a must and legally binding too.
With the points given below, you can understand how to abide by government mandates and, at the same time, provide employees with superior benefits. When you incentivise employees, they are more likely to better their performance and pledge their loyalty to you instead of another company. Besides, such incentives also promote job satisfaction and increase retention, directly affecting your company's growth.
Employee provident fund
Employee Provident Fund (EPF) is the most known and basic benefit that you can offer. Here, a part of the employee's salary is kept aside to increase their stability upon retirement or if they are unable to continue working in the future. You, as an employer, have to match their contribution and deposit it in their EPF account as well. As per government rules, if you employ over 20 employees, you can register with the Employees' Provident Fund Organisation. Once done, you will have to make contributions each month.
Superannuation
In a nutshell, superannuation is an organisational pension programme structured to offer employees retirement benefits. The upper limit of the contribution towards superannuation is 15% of the employee's basic, plus dearness allowance. Upon resignation, an employee may withdraw the amount or choose to preserve the amount until retirement if the employee's new workplace doesn't have a superannuation scheme in place.
Gratuity
Gratuity is an amount the employer gives to their employees in return for their service to the company when they leave the company. The employee is eligible to demand the amount after completing 5 years of service. The reason for leaving could be retirement, resignation or getting a better opportunity elsewhere. You are liable to pay gratuity if you have more than 10 employees, according to the payment of the Gratuity Act of 1972. There are many forms that an employee needs to fill to collect the gratuity amount, capped at Rs. 10 lakh.
Statutory bonuses
This is a bonus you are liable to pay if you employ more than 20 people. It is calculated by taking into account the employee's salary and the employer's profits, which is issued basis on the Payment of Bonus Act of 1965. A minimum of 8.33% and a maximum of 20% is payable on an employee's salary if lower than Rs. 21,000 per month.
Employee state insurance
Employee State Insurance Act, 1948 aims at financially securing employees in case of any health issues such as illness, disablement or sudden death. It is designed to safeguard the financial needs of employees in the organised sector due to an injury during employment. An employee is eligible for insurance if they earn a salary less than Rs. 21,000 per month.
However, to truly prioritise the interests of your employees, offer them a comprehensive insurance policy. Consider taking an employee or group health insurance policy from a trusted insurance provider such as Bajaj Finserv. You can purchase coverage from Rs. 1.5 lakh to Rs. 50 lakh per person, and offer coverage to employees' families as well. In addition, you can buy this policy and benefit from discounts and waivers. Also, you have the option to customise the policy's tenor as per the group size.
Encashment benefit
This benefit allows employees to cash the leaves that they are entitled to take but have not taken. With regards to this benefit, you do have the flexibility to determine if a specific leave can be cashed or not. The tax rate varies according to the type of organisation you run. This is important to know as a certain amount can be exempted when filing your company's returns.
When your employees feel cared for and know that you pay attention to their future, they are more likely to perform well. Apply online for group health insurance from Bajaj Finance for customised premiums and other added benefits.
DISCLAIMER:
While care is taken to update the information, products, and services included in or available on our website and related platforms/websites, there may be inadvertent inaccuracies or typographical errors or delays in updating the information. The material contained in this site, and on associated web pages, is for reference and general information purpose and the details mentioned in the respective product/service document shall prevail in case of any inconsistency. Subscribers and users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/service document and applicable terms and conditions. In case any inconsistencies observed, please click on reach us.
*Terms and conditions apply