Employee benefits play a significant role in the company’s growth, as it attracts and helps in retaining top talents/skilled employees. These benefits not only help companies in showing appreciation for an employee's contributions, but also improve employee morale, productivity, and loyalty. Employee benefits basically help to increase the overall well-being of employees and create a positive work environment.
There are various types of employee benefits offered in India, including medical insurance, paid leave, retirement benefits, training, and development programs. Besides these, workplaces have been slowly evolving with time and adapting new ways initiatives as part of employee benefits. These include offering flexible work arrangements, employee recognition programs, and sponsoring upskilling programs for employees.
What are the statutory employee benefits in India?
Statutory employee benefits are a set of legally mandated benefits that employers in India must provide to their employees. These benefits are established and regulated by various government acts, including the Employees’ Provident Fund and Miscellaneous Provisions Act, the Employees’ State Insurance Act, and the Payment of Bonus Act.
The most common statutory employee benefits in India include contributions to the Employee Provident Fund (EPF), which provides a retirement savings scheme for employees, and Employee State Insurance (ESI), which provides employees with health insurance coverage. Employers must also provide paid leave for sickness, holidays, and maternity, and maintain records of employees' salaries and income taxes.
What are the discretionary employee benefits in India?
In India, discretionary employee benefits refer to additional perks and advantages that employers offer to their workforce beyond the mandated statutory benefits. These benefits are not legally required but are provided at the discretion of the employer as part of their efforts to attract and retain talent. Common discretionary benefits include bonuses, stock options, wellness programs, flexible work arrangements, and professional development opportunities.
By offering such benefits, companies aim to create a more attractive and competitive compensation package, enhance employee morale, and foster a positive work environment, ultimately benefiting both the organization and its employees.
Types of employee benefits in India
Here are some of the most offered employee benefits in India.
Health insurance
Health insurance for employees stands out as an essential employee benefit in India. It helps employees and their families access quality healthcare service at time of medical emergency. Many employers cover their employees under group health insurance plans. These medical insurance plans cover various medical expenses like routine check-ups, hospitalisation, medicines, and more. It ensures the employee, and the family has a financially backup to get the best treatments.
Employee provident fund (EPF)
Employee provident fund is the most common employee benefit offered. In this, 12% of the employee's basic pay gets deducted every month and saved in the PF account. The company contributes an equal amount in the employee’s PF account. This ensures employee’s financial stability upon retirement or if discontinued work at any point. Companies with over 20 employees can register with the Employees' Provident Fund Organisation (EPFO) to start availing the benefits.
Gratuity
Gratuity is an amount that the employer gives to their employees in return for their service. It is usually provided when they leave the organisation. You get to withdraw the gratuity amount after completing five years in the company/organisation.
Bonuses
Employers offer bonuses over and above employee’s salary as reward. Employers usually give bonuses for employee’s achievements, contributions, or for completing long tenure.
Encashment benefit
In simple words, employers allow the employees to get cash against the entitled leaves if not availed. Employers usually set a limit on the number of leaves for which an employee will receive the encashment.
Work from Home (WFH) benefit
After the pandemic, companies offering work from home benefits have emerged as a popular employee benefit. Due to the pandemic, many companies adopted a remote work model to continue their operations, and this trend is likely to continue. WFH benefits provide employees with the flexibility to work from a location of their choice, which helps improve work-life balance. This benefit also reduces commuting time, which in turn increases productivity. Also, the leave policy for employees in India must be reviewed.
Superannuation (retirement plans)
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.
Employee perks and benefits have become an integral part of the modern workplace. Many companies prefer investing in creating robust employee benefits plans that cater to the needs of their employees. This encourages healthy work culture and ensuring you get top talents.
Read more: Section 80D: Deductions Under Medical and Health Insurance
Need for leave policy for employees in India
- Legal compliance: Adhering to labor laws and statutory requirements is crucial.
- Employee rights: Ensures employees are aware of their entitlements and rights regarding leaves.
- Fairness: Establishes a fair and uniform system for all employees.
- Clarity: Provides clear guidelines on types of leave, accruals, and approval processes.
- Attendance management: Facilitates better attendance tracking and control.
- Employee well-being: Recognises the need for time off for physical and mental health.
- Work-life balance: Contributes to a healthy work-life balance for enhanced productivity.
- Emergency situations: Allows for unforeseen circumstances and emergencies.
Discretionary benefits of employee in India
Given below are the employee benefits in India which are considered as discretionary benefits:
- Health insurance: Many companies provide comprehensive health insurance coverage for employees and their families, covering hospitalisation, medical expenses, and sometimes even preventive healthcare.
- Employee Stock Options (ESOPs): Some companies offer ESOPs as a part of the compensation package, allowing employees to become shareholders in the company and benefit from its growth.
- Transportation allowance: Reimbursement or allowances for commuting expenses, such as fuel or public transport, help ease the financial burden of daily travel.
- Flexible work arrangements: Flexitime and work-from-home options enhance work-life balance and promote employee well-being.
- Performance bonuses: In addition to fixed salaries, performance-based bonuses are often provided to reward exceptional contributions.
- Training and development: Support for skill development and opportunities for professional growth through workshops, courses, and certifications.
- Childcare facilities: Some organisations provide on-site daycare services or childcare allowances to support working parents.
- Wellness programs: Initiatives like gym memberships, wellness workshops, and stress management programs promote employee health.
Also, read about the common benefits of health insurance policy. This will enable you to make a wise decision while opting for a health insurance policy, if not covered by your employer.
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