Employee Benefits Under Indian Labour Laws: Every country in the world has reserved some rights for their working class. Indian labour laws work with certain benefits for their salaried employees too. These benefits are different for the private and government employees of the country. Employee benefits are also known as fringe benefits, perks, and perquisites. Employee benefits are the various types of non-wage compensation given to the employees. These are an add-on to normal wages and salaries. An employee receives these benefits at no extra cost to the company. Employee benefits depend on the laws and regulatory requirements of the country.
In a simple language, employee benefits make a salaried employee work better. It provides him the safety in case of any uncertain condition. The employee benefits work in a similar way for all the salaried employees. These work under the employer’s discretion applicable under the law and mandatory.
The Different Types Of Employee Benefits In India
There are four main types of employee benefits in India. These include medical insurance, life insurance, disability insurance, and retirement plans. These are then categorized and divided.
It is a scheme that covers the social security and the health insurance of the Indian workers. It is a self-financing scheme for the employees. The Employees’ State Insurance Corporation (ESIC) manages the funds. The execution takes place under the rules and regulations given in the ESI Act of 1948.
The ESIC works under the Ministry of Labour and Employment, Government of India. Under the ESI, for all the employees earning INR 21,000 or less as the monthly wages, the employee contributes 1.75%. The employer, on the other hand, contributes 4.75%. The total share is 6.5%. This notes to the provision of medical and cash benefits to the employees and their family.
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2. Employee Provident fund (EPF)
This includes a lump sum of money paid to the employees when they exit from their place of employment. It differs from pension funds. Pension funds also include monthly pension payments along with the lump sum money. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 governs the Provident Fund. In a provident fund, the employees contribute a part of their savings each month. With time, this amount accumulates as their provident fund. An employee can withdraw it at the end of their employment or at the time of retirement.
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3. Public Provident Fund (PPF):
It came into force by the National Savings Institute of the Ministry of Finance in 1968. It is a type of savings cum tax saving instrument in India. A person who is a resident of the country is eligible to open an account under the Public Provident Fund. It aids in mobilizing small savings by offering an investment.
It also provides income tax benefits along with reasonable returns. A person needs to deposit INR 500 to open a PPF account. He/she can deposit a total of INR 1.5 lacs in their PPF account in a financial year.
Gratuity in India is a type of retirement benefit for employees. The intention behind this was to help an employee on a monetary basis after retirement. It came into force in the year 1972 under the Payment of Gratuity Act. The Indian Parliament passed the act for the betterment of the employees. A gratuity is a form of retirement benefit for an employee who has completed a long period of work. But, there is a clause in the payment of the gratuity. But, the employee should have completed a continuous period of service for 5 years in a company. It is payable to an employee only after the termination of the employment. This termination can be in the form of superannuation, retirement, resignation or death.
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These are different in a different company. The laws and regulations of the company govern the bonuses received by the employee. It can be in the form of incentives, tickets, coupons, and all other sorts. Generally, there is a pay hike given in the annual package to an employee at the beginning of the financial year. It depends on the performance of an employee. The better the performance means the higher the bonus. These are complementary to the service of the employee. Its execution happens in accordance with the laws of the company.
6. Maternity Benefits:
These are applicable to expecting working mothers in the country. For any women, who is pregnant she can enjoy the benefits of the Maternity Benefits Act, 2017. After the delivery of the child, the duration of the maternity leave is 26 weeks. This is for mother of two surviving children. In case the women have more than two children, the maternity leave is for 12 weeks. There are various provisions in the Maternity Benefit Act, 2017. If a woman adopts a child for fewer than three months, she is applicable for 12 weeks. She has a provision to work from home. She can also go for on-site day care services for an establishment of more than 50 employees.
7. Paternity benefits:
Like the mothers, even the fathers of a newborn child can apply for paternity leave in India. Paternity leaves apply to work males so that he can take care of his wife and new-born child. According to the act, a male who has less than two surviving children can apply for paternity leave. Paternity leaves have a tenure of 15 days. Males can apply for paternity leave within 6 months from the date of delivery of the child. If not availed, they lapse after a period of six months.
8. Earned and sick Leaves:
Every organization gives its employees some earned and sick leaves in a month. An employee applies for the same. They accumulate over a period of time but lapse at the start of a New Year.
All the employee benefits function under the labor laws established by the government. They provide benefits to the employees who work in government and private organisation.