Social Security
The key legislation governing employees’ benefits in India include:
Employees’ State Insurance Act, 1948: benefits extend to establishments where 10 or more employees are engaged (subject to any State rules), and to all employees earning less than INR 21,000 (~USD 286) per month.
Employees’ Provident Fund and Miscellaneous Provisions Act, 1952: benefits extend to establishments where there are 20 or more employees. Employees earning less than INR 15,000 per month (~ USD 204) have to compulsorily contribute to schemes under this Act, whereas those earning above this limit may opt out, subject to certain conditions. In light of the COVID-19 crisis, the Government of India temporarily reduced the rate of contribution from 12% to 10% for the months of May, June and July 2020 (for both employer and employees), to decrease the financial liability of the employer and also to increase the take home salary of the employees.
Payment of Gratuity Act, 1972: this Act contemplates payment of gratuity to all employees (workmen and non-workmen alike) engaged in establishments (factories, shops and other commercial enterprises) in which 10 or more persons are employed; if he/she has rendered continuous service for not less than 5 years (except in the case of death or disability) under superannuation, retirement or resignation, or death or disablement due to accident or disease; the gratuity is calculated at 15 days’ wages multiplied by the number of years of service).
Healthcare and Insurances
The main legislation applicable to the private sector contemplates medical benefits for employees in contingencies such as sickness, maternity, disablement, and death due to employment injury and provides medical care to insured persons and their families. Employers are further required to pay compensation in cases of death/disablement of employees owing to injuries sustained at the workplace. The Government also launched an ambitious universal health scheme to ensure that the poor and vulnerable populations are provided health insurance coverage up to INR 5 lakh (~ USD 6818) per family, per year, for secondary and tertiary hospitalisation. In addition, most large employers in the private sector provide medical insurance benefits to their employees and their immediate dependents, and bear the costs in this regard.
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Required Leave
Holidays and Annual Leave
Across India, there are certain national holidays namely: Republic Day (26th January); Independence Day (15th August); and the birth anniversary of Mahatma Gandhi (2nd October). In addition to these, every employee would be entitled to other holidays, as may be declared by the concerned State Governments. In case an employee is required to work on any of these holidays, he/she will be entitled to twice the wages and also a compensatory off day. Establishments shall remain closed on at least 1 day of every week (this is typically Sunday). However, the S&E Acts of certain States (e.g., Maharashtra, Karnataka and Tamil Nadu) contemplate that some establishments may remain open on all days of the week, subject to them allowing every worker a weekly holiday of at least 24 consecutive hours (and other conditions being satisfied).
Maternity and Paternity Leave
With respect to maternity leave, female employees who have been in service for 80 days are entitled to paid maternity leave of 26 weeks. In case of a miscarriage or medical termination of pregnancy, female employees are entitled to leave with wages for a period of 6 weeks, immediately following the day of the miscarriage or medical termination of pregnancy. Leave requirements are also specified for women having undergone tubectomy operations, or in case of any illness arising out of pregnancy, premature birth, delivery, miscarriage or medical termination of pregnancy. There is no separate category of paternity leave recognised under Indian law, though a bill has been introduced in this regard seeking paternity leave of 15 days across all sectors. Currently however, some corporate and public sector departments provide paternity leave to their employees, as prescribed in the concerned leave policy/rules.
Sickness and Disability Leave
Typically, sick leave cannot be carried forward or encashed and is not subject to any minimum service requirements. However, in certain States (e.g. Gujarat, Andhra Pradesh, Telangana) employees could be eligible to encash their sick leave at the time of their discharge from employment. No specific category of disability leave is recognised in India.
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Other Required or Typically Provided Leave(s)
Casual leave can be availed by employees in unforeseen situations, subject to the approval of an organisation. This category of leave is also not typically carried forward or encashed.
Pensions: Mandatory and Typically Provided
Employees who fall within the purview of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 will be entitled to a monthly pension, as per the rules of the Pension Scheme. Other than that, employees in the public sector will be entitled to such pension(s) as prescribed in their service rules.
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Other Required Or Typically Provided Benefits
In addition to the above, various employers provide other benefits to employees (which also have certain tax benefits) such as food coupons, a conveyance allowance and reimbursement of mobile phone and Internet expenses. There are also specific benefit programs and labour welfare funds prescribed for certain sectors.