What are Employee Benefits in India and Why are They Important?
Employee benefits are a great tool to boost productivity and keep employees focused. They help attract talented job seekers and can be effective in employee retention. Employee benefits, as the term suggest, can be anything over and above the salary, that can benefit employees.
For example, during the COVID-19 pandemic, many employers undertook vaccination drive campaigns for their employees and families. This is one of the most recent, common, and practical employee benefits offerings. A robust employee benefits program can:
- Positively impact talent retention strategy
- Inculcate loyalty
- Help reduce absenteeism
- Promote employee wellness
- Help stay competitive
Common Employee Benefits in India
Employee benefits are intended to make the employees feel appreciated. In India, these benefits plans can be mandatory (required by law) or willingly offered by the employer.
Mandatory Benefits or Social Security Benefits
These benefits are provided as a part of social security benefits and are governed by various legislations. Some of the common mandatory employee benefits in India are:
- Employees Provident Fund (EFP): Governed by the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, the employer and the employee contribution equally towards this plan.
- Gratuity: If an employee completes 5 years of service with an organization, he is eligible to receive gratuity. Gratuity is managed by the Payment of Gratuity Act 1972.
- Employee State Insurance (ESI): This scheme is mandatory for employees earning up to Rs 21,000 per month. (or Rs 25,000 per month for specially-abled employees). ESI is a comprehensive benefits scheme that covers medical costs for the employee’s family. Contributions towards this scheme are made by the employer, the employee, and the Government.
- Maternity Leaves: Paid maternity leaves for 26 weeks are mandatory in India.
Benefits Willingly Offered by Employer
- Employee Group Insurance: In India, there are various types of group insurance schemes for employees, like group health insurance, group personal accident cover, group travel insurance etc. Employers offer group insurance plans to their employees based on the needs of the employee and the type of business it indulges in.
- Group Health Insurance: Corporate health policy or group health insurance policy for employees is extremely beneficial as they cover medical costs in case of emergencies and in many cases, dependents are also added to this plan. This makes employees relaxed as the company takes care of the medical costs and helps the employees financially.
- Wellness programs: Many organizations now provide health and wellness programs to their employees. These programs typically include teleconsultations, and physical and mental well-being programs like meditation sessions, fitness sessions etc.
- Work flexibility: More and more companies are now shifting towards hybrid work, work-from-home models, and flexible work schedules. This acts as an added advantage for the employees as they can manage the work-life balance in a better manner.
- Fringe benefits: These benefits may include food or restaurant coupons, travel facilities, bonuses etc.
Employee satisfaction directly affects the productivity of an organization. There are multiple employee benefits in India that employers can provide for their employee's social security and general well-being. The range of benefits offered by an employer goes a long way in retaining and attracting talent, thus, employers should choose these benefits wisely.