Imagine this: you go to work in the morning, and at the end of the day, your boss gives you a cheque. But wait – that’s not all! You’re also given a magical ticket to free healthcare, a financial safety net, and the assurance the place you spend a third of your day is as secure as Fort Knox. Oh, you mean that telling me it is sweet music sounds like something I would hear in heaven itself, right? However, in India, these benefits are not farce – they are statutory, and every employer has to provide them to its employees.
This blog will go through the statutory employment benefits required of every employer, with a touch of levity, because the law doesn’t have to be boring, does it? It is now time to explore some of those workplace perks that let workers know that they are not just working to earn wages but for stress-free lives, too!
Employee Benefits in India: More Than Just a Paycheck!
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Provident Fund (PF)
EPF (Employee Provident Fund) is one of the basic employee benefits which are statutory in India. It is a retirement savings plan whereby both the employer and the employee pay a fraction of the employee’s salary on a monthly basis. It is saved in an EPF account whereby the money earns interest in the long run.”
Eligibility and Contribution: According to the Employees ‘Provident Funds and Miscellaneous Provisions Act 1952, every factory or establishment which employs 20 or more persons shall be liable to contribute to the Employees ’Provident Fund. Both the employer and the employee make contributions to the EPF account in proportion to 12% of the employee’s basic pay scale.
Purpose: The built-up fund is designed to offer an employee financial cushion when he/she is out of service due to old age. The employee may also withdraw the funds in certain circumstances, including marriage, medical bills, or when he or she is buying a house.
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Employees’ State Insurance (ESI)
The Employees’ State Insurance (ESI) scheme can be described as a health insurance program that administers medical, sickness, and disablement benefits. This scheme is designed to guarantee properly that workers can avail proper medical relations and receive enough wages when they get sick, injured, or anything that can make him/her incapable of working.
Eligibility and Contribution: The ESI Act 1948 hold that any place carrying 10 or more employees engaged in a salary not exceeding Rs. 21,000 per month in some areas is a necessitating contribution to ESI. Employers and employees also pay a certain proportion of the wages as a contribution to the scheme. The employer deducts an additional 4.75% while the employee affords an additional 1.75%.
Benefits: It offers some or all of the following: medical attendance and treatment for them and their dependents, married women, sickness, funeral, compensation for injuries or death arising from employment, and expectant mothers. It also contains unemployment benefits, though under conditions that offer reasonable provisions for the employees.
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Gratuity
Gratuity is a one-off cash payment made to employees for their loyalty to service delivery. The payment is usually made to a worker when he or she retires or resigns after working for not less than five years with the employer in question.
Eligibility and Contribution: According to the Payment of Gratuity Act of 1972, it was compulsory to pay gratuity to the employees of the organization where 10 or more persons were employed. Employers pay an amount towards the gratuity fund, and the employee qualifies for gratuity after five years of consecutive service.
Calculation: Gratuity is 15 days’ wages for each year of completed service, with limitations as pronounced by the government. The payment is made when the employee either retires, resigns, or if the employee dies.
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Maternity Leave and Benefits
Maternity leave and benefits are still another advantage of the Statutory benefit that guarantees women employees the support they need when pregnant or after giving birth. This provision is contained in the Maternity Benefit Act of 1961.
Eligibility: Maternity leave in the company is extended to any female employee, provided she has worked for the company for at least 80 days in the twelve months preceding her delivery.
Benefits: Women employees are allowed 26 weeks’ maternity leave, which may be taken in two admissible broken periods. This leave incorporates paid leave, and the employer is obliged to pay the wages during such leave.
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Bonus
The Payment of Bonus Act 1965 largely manifested the payment of annual bonuses to employees for the fiscal year in establishments that employed twenty or more employees. This is one that ranges from the salary that was paid to the employee as well as the overall profits registered by the business.
Eligibility: This means that employees stand to benefit from the bonus provided they have served the company for not less than 30 days in the year. The maximum amount that a company can offer an employee for the bonus is equivalent to 20 percent of the total amount of his or her salary.
Calculation: Like most incentives, the bonus is derived from a percentage of the wages earned by the benefit recipient and is generally awarded at the end of the year during the holiday season.
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Leave Benefits
Paid Leave or privileged leave is meant to allow employees to take some time off work in order to rest from work, recover from an illness and also attend to personal business. There are casual/sick leave, earned or privileged leave for employees on a roll and sick leave for employees in India.
Eligibility: Such benefits include sick leave, leave of absence to attend to personal and civil matters, Casual leave, dear each annum, and annual leave and other leave.
Benefits: Employees may be granted any of the following types of leave, among others:
- Casual Leave: Leave that is given for a short period and can be for personal business.
- Earned Leave: Paid time off that is finite and does not replenish periodically, given to an employee for a particular year.
- Sick Leave: Permission to be absent in case of sickness.
Conclusion
Employer’s liability for mandatory employee benefits is a cardinal feature of the labour laws governing the workforce in India to protect the interest of these employees. In this way, by accepting those benefits, the government and employers perform the duties for employees’ protection and job satisfaction, which will positively affect the productive capacity of society. As long as these regulations are in force, it is important that employers and employees remain abreast with the current laws.
Awareness of these statutory remunerations safeguards responsible business operations with the employee stability they need.
