Employees in India value supplementary employer-sponsored benefits, the cornerstone of which is medical insurance, and in particular, the much-desired parental coverage, which is unique to India.  Employer-sponsored health, personal accident, and term life insurance are prevalent across white-collar industries and blue-collar organizations where income levels are above the wage ceiling for statutory benefits. Voluntary retirement savings through the National Pension Scheme have increased substantially since the scheme opened to the private sector in 2017, and the government introduced attractive tax incentives. Statutory benefits include Employees’ Provident Fund; Employees’ State Insurance Scheme; statutory leaves; Gratuity; and Maternity Leave. Common employee perks include vehicle or transportation allowance, meal vouchers or subsidized cafeteria, reimbursement of internet and mobile phone charges.

Asinta Partner
Alda Dhingra

Prudent Brokers

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Average Cost

A group medical plan at the 50th percentile for a group of 25 employees and their dependents (spouse and two dependent children) will average INR 500,000. Adding parents will add another 50% to the cost. The average cost for Group Personal Accident and Group Term Life insurance for 25 employees would be around INR 100,000 and INR 200,000, respectively.

Mandatory employee benefits in India include Employees’ Provident Fund, which includes Employees’ Pension Fund and Employees’ Deposit Linked Insurance; Employees’ State Insurance Scheme; statutory leaves; Gratuity; and Maternity Leave. Supplementary employee benefits include medical, accident, life, retirement, business travel insurance, and increasingly EAP. Common employee perks offered include vehicle or transport allowance, meal vouchers or subsidized cafeteria, and reimbursement of internet and mobile phone charges.


Mandatory Employee Benefits in India

There are six key statutory benefits:

  • Employees’ Provident Fund, Employees’ Pension Scheme, and Employees’ Deposit Linked Insurance come under the purview of Employees’ Provident Funds and Miscellaneous Provisions Acts, 1952. These are funded by matching employer and employee contributions.
  • Employee State Insurance Scheme is mandatory for employees earning up to INR 21,000 per month (or INR 25,000 p.m. for employees with disabilities). This is a comprehensive benefit scheme covering medical costs for the family, including parents and dependent siblings, disability compensation, STD and LTD benefits, widow’s and children’s pension, and other benefits. It is funded by employer and employee contributions as well as Government contributions.
  • Statutory leaves are regulated by each State’s Shops & Establishments Acts or by the Factories Act (depending on which Act the company has registered under). These cover sick leave, casual leave, privilege/earned leave, national holidays, State Founding Day, and other leaves such as bereavement leave.
  • Gratuity is a gratuitous payment due to an employee after 4 years 8 months continuous years of service, on termination, resignation, or retirement, or earlier in case of death or PTD.
  • Paid maternity leave of 26 weeks is mandatory. In addition, the Maternity Benefits (Amendment) Act, 2017, requires employers having more than 50 employees to provide a paid creche for children up to the age of 6 years.
  • Labor laws provide for compensatory days off for working on holidays and overtime pay of at least two (2) times wages.

Supplementary Benefits in India

Group employee benefits in India generally include medical, accidental death & disability, term life, business travel accident insurance, and a pension.

Group Medical Insurance

Group medical insurance provides hospitalization coverage with a waiver for waiting periods and pre-existing diseases exclusions, maternity benefits, newborn baby cover, and add-on hospitalization benefits such as new types of treatment for cancer, cyber-knife or robotic treatment, and infertility or fertility treatment.

The Group Mediclaim plan is usually extended to include dependent spouse/domestic partner, children, parents or in-laws, and sometimes dependent siblings. Most employers fully fund employee, spouse, and child/ren or sibling coverage but may require full or partial employee contribution towards parental coverage.

A typical Group Medical plan covers:

  • A family floater Sum Insured, which is an annual aggregate limit per family
  • In-patient hospitalization on a 24-hour basis for any disease/illness/accident, except excluded treatment and Day Care Procedures across India
  • Waive of 9 month waiting period for Maternity; Maternity coverage with a defined limit for normal and C-section delivery
  • Waiver of 9 month waiting period for newborn baby
  • Waiver of pre-existing diseases exclusion clause and other waiting periods
  • Room rent subject to a defined limit
  • Dental treatment arising from injury which requires hospitalization
  • Ambulance services
  • 30 days pre-and 60 days post-hospitalization expenses incurred on an outpatient basis
  • Psychiatric treatment on an in-patient basis

Add-on “New Age” hospitalization covers can include oral chemotherapy, Avastin/Lucentis/Macugen injections, Robotic surgery, Bariatric surgery, and Lasik surgery, among many others.

Employers with Diversity & Inclusion goals can have a domestic partner included in the plan. They can include benefits such as surrogate coverage, fertility/infertility treatment, gender reassignment surgery, and HIV/AIDS treatment.

Outpatient, dental, and vision benefits are offered by less than 10 percent of employers.

Outpatient benefits can include consultations, prescription medicines, diagnostics, vaccinations for adults and children, annual health check-ups, physiotherapy, and outpatient mental health counseling. This benefit can be customized.

Dental benefits usually include filling, scaling, and root canal. This benefit can be customized and expanded to include preventative as well as orthodontic treatment.

Vision benefits include examination by an ophthalmologist and the cost of either spectacle lenses or contact lenses. Frames are not covered. A few leading employers also cover corrective Lasik surgery.

Group Personal Accident Insurance

Over 80 percent of employers provide a fully-funded group personal accident policy. The plan covers accidental death, permanent total disability (TPD), permanent partial disability (PPD), double dismemberment (DM), temporary total disability (TTD: weekly partial income replacement up to 104 weeks), accident-related medical expenses, home and vehicle modification, child education expenses, funeral expenses, and other benefits.

This benefit is offered either as a fixed amount, on a graded basis, or as a multiple of salary, usually 2x to 3x annual salary.

Group Term Life Insurance

Over 80 percent of employers offer a fully-funded group term life policy. This benefit is provided either as a fixed amount, on a graded basis, or as a multiple of salary, usually 2x to 3x annual salary. Some add Critical Illness (CI) as a rider. This benefit can be given either on an Accelerated basis which reduces the Sum Assured (SA) available for the death benefit or on an additional basis as a separate limit over the GTL SA.


The Pension system in India has two pillars.

The first pillar is the Employees’ Pension Fund (1st Pillar), which is funded through the mandatory employer contribution to the Employees’ Provident Fund: 8.33 percent (INR 1,249.50) of the 12 percent employer contribution, subject to a Basic salary cap of INR 15,000 per month, is allocated to the Employees’ Pension and the remainder to the Employees’ Provident Fund.

The second pillar is purely voluntary and is comprised of Superannuation Funds, which the employer sets up through the establishment of a Trust with Trust Deed and Rules. The second pillar also includes the National Pension Scheme, which requires an employer to set up a Tier 1 account under NPS but does not require Trust formation to facilitate employer and employee contributions. An employer can set up either or both.

Superannuation funds usually restrict membership to senior employees, but some companies may provide this benefit for other grades of staff depending on defined factors. Employers may contribute up to 15% of Basic Salary + Dearness Allowance to a Superannuation Fund. Employer contribution above INR 150,000 is taxable to the employee. Employees typically do not contribute to Superannuation. Due to the ease of participating in the National Pension Scheme and the better tax treatment, this new program has become the preferred way for employers to facilitate pension savings.

The National Pension Scheme (NPS) is a voluntary, portable scheme that permits employees to contribute up to 10 percent of monthly Basic Salary to the NPS Tier 1 account, with no cap. Employee contributions are tax-exempt at the time of contribution, on returns, and on 60% of withdrawal at retirement; early withdrawals are not permitted with some exceptions. Employees may contribute another INR 50,000 per month towards the Tier 1 account and claim an additional exemption under Section 80 C of the Income Tax Act. However, employee contributions to their individual Tier 2 accounts, which permit discretionary withdrawals, are not tax-exempt.

Business Travel Accident

Group Business Travel Accident policies provide accidental medical, death, personal liability, travel inconvenience benefits to employees traveling on business. A Certificates of Insurance is issued to each employee for each trip, the duration of which must not exceed 180 days. These policies are a must to obtain a visa from some embassies and are one means of carrying out the duty of care obligations towards employees.

Employee Perks

Employers offer various fringe employee benefits in India to the staff since the labor market is quite competitive.

The IT industry, Banking, and Financial Services, and Consulting, where competition for talent can be fierce, tend to constantly innovate on upping the ante on perks.

We head the list below with some of the most common perks:

Subsidized transportation is offered in cities that now have better connectivity with the new metros; prior to the metro system having been built, employers had to provide cabs to bring employees to work and take them back home. Last-mile connectivity is still a problem in most cities, and employers in the BPO and tech sectors usually provide some transport, especially for women working the night shift.

Company cars are provided to employees by about two-thirds of employers. This benefit is usually offered to senior management or employees in a sales role. It is also common to provide a paid chauffeur.

Subsidized cafeterias have long been a part of employers’ offerings. Subsidized cafeterias and free snacks ensure employees have everything they need to get through long workdays without worrying about at least one meal a day.  This benefit is common with larger employers and particularly in industrial facilities and in BPOs and tech companies. Food is provided at a subsidized rate and can include two meals or a meal and a snack. Employers may also offer meal vouchers instead of a canteen.

Meal Allowance is a typical benefit due to its tax advantages to the employee. The current tax-free limit is up to INR 50 per day if the employee chooses to continue with allowances as per the old tax regime. No meal allowance is available if an employee chooses a flat deduction under the new tax regime. Where an employee can provide a subsidized cafeteria, meal vouchers may be less common.

Education Assistance Partial or full education reimbursement after successfully completing a course/program, especially if it is related to one’s work, is provided by some employers.

Internet and Mobile Phone Reimbursement Tech and other white-collar employees may be offered a specified internet or mobile phone reimbursement if they work from home or use their device for professional calls. About two-thirds of employers provide mobile connection, and about half pay for a handset.

Voluntary Benefits Large and mid-sized employers will often provide employees with a range of voluntary insurance benefits such as health, life, accident, or homeowners insurance that can be provided at rates negotiated by the employer.

Flexible Benefits Employees can select several types of benefits from a menu. About 29% of employers offer modular flex or flexible benefits to accommodate employees’ need for individualized benefits.

Marketplace Employers are providing online marketplaces which offer discounted products and services to employees. These can be part of a flexible benefits program or can be offered on a stand-alone basis.

Loans About 20% of employers offer loans for housing, automobile purchase, education, marriage, medical expenses, and other necessities. However, changes in tax structure and easier market access to loans may make these less attractive.

Recognition & Awards Most employers offer rewards and recognition programs to recognize star performers.

Service Awards Employers offer jubilee awards on designated tenure anniversaries and upon retirement.

Company credit cards Corporate credit cards may be offered to senior management, especially those who travel extensively on business.

Well-being Wellness encompasses many support systems provided by the employer. The list is continually expanding to include:

  • Mental Health Support
  • Financial Literacy
  • Spiritual Growth
  • On-site health check-ups and vaccination camps are typical among over 50% of our clients.
  • Health coaches for high-risk employees and family members (e.g., to remind them to take medicines or exercise or stick to a diet) are critical to the success of Wellness initiatives.
  • Preventative health programs have become more common, with more employers providing on-site annual flu vaccinations and vaccination coverage for children. Around Women’s Day, many employers organize programs on cervical cancer, including discounts on cervical cancer vaccinations. Healthy Mother/Pregnancy Programs are offered to support mothers-to-be in maintaining good health throughout their pregnancy and be better prepared to choose a natural delivery over a scheduled Caesarian delivery, which can lead to more complications.
  • Sleeping and meditation rooms, desk-side neck, and shoulder massage to support employees in getting needed rest and relaxation.
  • Recreational areas within the office/campus – indoor and outdoor sports facilities including a gym, computer gaming rooms, table tennis, pool/billiards – are standard offerings.
  • Subsidized gym membership is aligned with Wellness goals. New national fitness chains have emerged all over the country. They provide electronic ID cards that track attendance; thus, employers can easily track utilization to see whether their benefit is being used.
  • EAPs have been in the market for many years. Both MNC and Indian EAP vendors provide a wide range of services through personal consultations and online modes. Employers consider it essential to support their employees’ access to mental and emotional health programs.
  • Telemedicine The pandemic has forced most employers to consider offering telemedicine as employees wish to avoid going to hospitals or other healthcare providers.

Fun Activities – Discount movie tickets, shopping vouchers, and dining cards keep employees engaged outside working hours. If those aren’t enough, special screenings of Hollywood and Bollywood movies, theme days, rock band performances, and team outings to major sports events all add excitement to an employees’ life.

Various in-house clubs – Includes LGBTQ+ clubs and opportunities to engage in hobbies during working hours at the office allow employees to pursue their passions and other life purposes.  The employee is seen as a whole person with multiple interests whose pursuits nourish her soul and enable her to devote herself to her work fully.

Additional paid leaves – For birthdays, anniversaries, other special days with gifts such as paid dinner are seen as a “best in class” practice. Bereavement leave can also be included.

Parental Leave – Outside of mandatory Maternity Leave, parental leave is not prevalent, but some leading employers provide up to 6 months of parental leave. A Paternity Benefits Bill, 2017, proposes to offer 15 days of paternity leave. Close to 50% of organizations offer some paternity leave.

Family Care Leave – About 29% of employers provide paid family care leave; 43 provide unpaid leave; and 29% provide a combination of paid and unpaid leaves (Source: Mercer Global Parent Leave India 2018)

Additional paid leaves – For birthdays, anniversaries, other special days with gifts such as paid dinner thrown in are seen as a “best in class” practice.

Housing Senior executives may be given paid housing, especially in major metros like Mumbai, where housing is scarce and expensive.

Relocation Allowance The cost of moving household goods, train or airfare for the employee and family, and temporary stay in a hotel are reimbursed up to a specified amount

Parent Day Care Leading employers offer parent daycare or home visits by health care workers to support parents who need medical attention.

Various in-house clubs, including LGBTQ+ clubs, and opportunities to engage in hobbies during working hours at the office allow employees to pursue their passions.

In-house crèche for children up to age 6 years is mandatory under the Maternity Benefits (Amendment) Act and state-level guidelines pertaining to it. The Paternity Benefits Bill proposes the same benefit for working fathers. Leading employers will likely make this facility (either on-site or off-site) available to both female and male staff, even if the Paternity Bill is not enacted. Doing so will tick off the statutory compliance box and the “best in class” employer box. It will also be non-discriminatory and nudge equality in parenting responsibilities.

Retiree health insurance policy, paid for by the employee, is valued by the older population because obtaining comprehensive coverage that includes pre-existing conditions post-middle-age is challenging.

Surrogacy and adoption benefits/infertility counseling are becoming more important to employees who have postponed having children in part to focus on their careers.  These benefits are increasingly being offered by leading employers who offer these benefits at the Corporate Office level.

Work from Home COVID-19 has accelerated the option of telecommuting or working from home. Employers provide various WFH enablers such as Internet reimbursement, office desks and chairs, occasional pick-me-up gift hampers, ergonomics consultations, and other benefits.

Flexible working arrangements: working hours, place of work, type of work, intensity (how much work is to be done) are all new experiments to accommodate a workforce that wants and needs the flexibility to fulfill other responsibilities, such as child and parental care.

Clearly, the trend is for employers to consider every request from employees as a potential opportunity to stand out as a market leader in offering innovative benefits. They are more willing to invest time with their consultant to understand whether and how a particular new benefit could be offered.


This information about employee benefits in India is provided by Prudent Insurance Brokers, Asinta’s employee benefits consulting Partner in India.

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