What are Statutory Benefits in India: All You Need to Know

What are Statutory Benefits?

Statutory benefits in India can be defined as mandatory employee benefits specified by Indian labour laws. Every employer in the country is legally bound to provide the listed benefits to their employees.

These mandatory employee benefits in India are designed to protect workers' rights, promote workplace fairness, ensure job satisfaction, and help them earn a decent standard of living. These perks include - pension benefits, health insurance, paid leaves, and benefits for new mothers.

Statutory vs Non-Statutory Benefits

Refer to the following table to find the key differences between statutory and non-statutory benefits in India:

Key Statutory Benefits in India

Here is a list of Statutory Benefits in India:

• Provident Fund (PF): This retirement savings plan is one of the mandatory employee benefits in India. In this, both employers and employees contribute a portion of their salaries to an investment fund. This deposited fund helps employees after retirement.
• Employee State Insurance (ESI): It is a social security scheme. It offers medical benefits to employees and their families, including hospitalisation, maternity care, and other medical expenses.
• Gratuity: It is a lump-sum payment paid by an employer after an employee's resignation or retirement. The amount of payment depends on the latter's length of service.
• Statutory Maternity Pay Benefits: It includes paid leaves and other perks for working mothers, such as 26 weeks of maternity pay leave and nursing breaks, etc.
• Bonus Payment: It is usually given during festive seasons. It is an extra payment made to employees within their salary thresholds.
• Leave Benefits: It includes paid leaves, namely - earned leave, company statutory sick leave pay, and casual leave.
• Minimum Wages and Payment of Wages Act: It ensures that employees are paid reasonable wages and that their salaries are disbursed on time.

Other Benefits Mandated by Law

Let's take a look at some other benefits -

• Workers Compensation Act: It provides financial aid to employees if they are injured or disabled on the job.
• Equal Remuneration Act: It ensures that both men and women get the same salaries for the same work.
• Childcare and Crèche Facilities: According to the Maternity Benefit Act, companies with more than 50 employees must offer childcare facilities for their working mothers.

Challenges in Implementing Statutory Benefits

The following are the challenges in executing statutory benefits in India:

• Lack of awareness among employees: Many employees may not be familiar with the statutory benefits they are eligible to avail of. So, they may unknowingly miss out on benefits. It is likely to affect their financial security and overall well-being.
• Difficulties in compliance for small businesses: Smaller companies are likely to face issues in adhering to the statutory benefit laws. There can be a number of reasons behind this. It includes limited resources, a lack of HR expertise, and the intricacy of regulations.
• Penalties for non-compliance: Non-compliance with statutory benefits in India can lead to unwanted consequences, including penalties, legal action, and even damage to reputation.

Advantages of Statutory Benefits for Employers

Here are the plus points of statutory benefits for employers:

• Enhances employee loyalty and morale: When employers ensure that their crew is getting all the statutory benefits, it shows that the former values the latter and their well-being. Moreover, it boosts employee morale and productivity while ensuring they are happy. It creates a positive work and organisational culture.
• Strengthens the company's reputation as an ethical employer: Compliance with labour laws helps a company maintain a strong reputation in the market. This, as a result, is likely to attract and retain the top talent of the industry.
• Reduces employee turnover and improves overall productivity: By offering attractive benefits, employers can reduce employee turnover and form a more stable workforce while improving overall productivity.

Role of HRs in Implementing Statutory Benefits

The Human Resources (HR) department plays a critical role in ensuring that statutory benefits are successfully enforced. The main responsibilities of an HR professional include the following:

• HR professionals are responsible for educating employees about their statutory rights. They should tell the employees about their entitlements and how to avail of them.
• It is one of the duties of HRs to ensure that payroll processing is accurate and in line with labour laws.
• HR professionals must stay up-to-date with any changes in labour laws. Moreover, in case of any amendments, they should implement these proactively within the organisation.
• They should conduct regular audits to pinpoint and address any gaps in compliance with statutory benefits.
• HR professionals must act as a bridge between management and employees to settle any concerns or disputes related to statutory benefits.

Conclusion

Statutory benefits in India play a vital role in safeguarding employees' well-being while ensuring businesses remain compliant with labour laws. When employers provide these benefits, they commit to their workforce, fostering a positive and productive work environment. Prioritising statutory benefits today paves the way for a more secure, motivated, and thriving workforce tomorrow.