[Updated March 20, 20204] 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. Mandatory employee benefits in India include the Employees’ Provident Fund (which includes Employees’ Pension Fund and Employees’ Deposit Linked Insurance), the Employees’ State Insurance Scheme, statutory leaves, gratuity, and maternity leave. Supplementary employee benefits include medical, accident, life, retirement, business travel insurance, and, increasingly, EAP.

Asinta Partner
Anusha Jaiswal

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 have an average sum insured of  INR 500,000 and cost from INR 18,000 to INR 24,000 per employee/per family. Adding parents will add approximately another 75% to the cost. The average rate for group personal accident and group term life insurance for 25 employees would be around 0.30 to 0.70 per mille (depending on the industry) and 1.20-1.70 per mille, respectively. Industries like Manufacturing, construction, or mining, which are considered more risky due to potential accidents or injuries, often attract a higher rate compared to less risky industries like office-based work or retail).

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 benefits 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. The Government of Karnataka on 10th January 2024 enacted Compulsory Gratuity Insurance Rules, 2024, ensuring legislative approval for compulsory insurance, approved Gratuity Trust creation, mandatory registration, full Gratuity coverage, and governance via a Board of Trustees. With this, Karnataka has become the second state to issue rules on compulsory Gratuity insurance after the Andhra Pradesh Compulsory Gratuity Insurance Rules issued in 2011. If an employer has multiple offices or branches spread out in multiple states, then the current rule will be out of scope as it will fall under the Central Government rules and regulations. However, similar rules may be implemented in other states as well.
  • Paid maternity leave of 26 weeks is mandatory. In addition, the Maternity Benefits (Amendment) Act of 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. These benefits 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.  Common employee perks include vehicle or transportation allowance, meal vouchers or subsidized cafeteria, and reimbursement of internet and mobile phone charges.

Group Medical Insurance

Group medical insurance provides hospitalization coverage with a waiver for waiting periods and pre-existing disease exclusions, maternity benefits, newborn baby cover, and add-on hospitalization benefits such as new types of cancer treatment, 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
  • Waiver of a 9-month waiting period for Maternity; Maternity coverage with a defined limit for normal and C-section delivery
  • Waiver of a 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 that 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 and inclusion goals can include a domestic partner in their plans. The plan 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 fillings, scaling, and root canals. However, this benefit can be customized and expanded to include preventative and orthodontic treatment.

Vision benefits include examination by an ophthalmologist and the cost of either spectacle lenses or contact lenses. Frames are not covered. Lasik treatment is covered above a specific vision defect (beyond +/- 7.5 Diopter) under most group health policies.

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 100/104 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 their 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 permitted up to 25% of the subscriber’s total contribution with some exceptions, and after completion of 3 years enrollment in the NPS. 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, and travel inconvenience benefits to employees traveling on business. A Certificate 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.

Short-Term Disability (Employee Income Protection Plan)

Prudent introduced a short-term disability, or employee income protection plan, in the Indian market in October 2021. This plan provides an aggregate limit of 3 months’ pay per employee who faces pay loss due to defined medical contingencies leading to hospitalization. For leaves opted due to a spouse’s illness, the monthly payment is restricted to 50% of the eligible amount. A minimum group size of 1,000 lives is required to offer this plan.

Employee Perks

Employers offer various fringe employee benefits in India since the labor market is quite competitive. The IT industry, Banking, Financial Services, and Consulting, where competition for talent can be fierce, tend to constantly innovate and up the ante on 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 part of employers’ offerings. These 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, particularly in industrial facilities, 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 allowances are a typical benefit due to their 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.

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

Internet and mobile phone reimbursement for a specified internet or mobile phone reimbursement for tech and other white-collar employees who work from home or use their devices for professional calls. About two-thirds of employers provide a mobile connection, and about half pay for a handset.

Voluntary benefits are offered by large and mid-sized employers and include health, life, accident, or homeowners insurance at rates negotiated by the employer.

Flexible benefits are generally feasible in groups with 2,000 plus employees and a minimum medical insurance premium spend of INR 50,000,000. About 32-35% of employers offer modular flex or flexible benefits to accommodate employees’ need for individualized benefits.

Online marketplaces 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 for housing, automobile purchases, education, marriage, medical expenses, and other necessities are offered by about 20% of employers. However, changes in tax structure and easier market access to loans may make these less attractive.

Recognition and awards programs recognize star performers.

Service awards and jubilee awards can be given on designated tenure anniversaries and upon retirement.

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

Well-being 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, and 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. This trend continues with employers looking for digital solutions to employees’ healthcare needs.

Fun activities are perks that include discount movie tickets, shopping vouchers, and dining cards to 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 employee’s life.

Various in-house clubs include LGBTQ+ clubs, and opportunities to engage in hobbies during working hours at the office, allows 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 such as birthdays, anniversaries, and other special days can be recognized with gifts such as paid dinners, which is seen as the ‘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 offering 15 days of paternity leave. Close to 50% of organizations offer some paternity leave.

Family care leave is offered by about 29% of employers as a paid benefit. Forty-three percent provide unpaid leave, while the remaining 29% provide a combination of paid and unpaid leave.

Additional paid leaves for birthdays, anniversaries, and other special days are common, and so are gifts such as paid dinners, which are seen as a “best-in-class” practice.

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

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

Parent daycare/home visits are offered by leading employers to support employees’ parents who need medical attention.

Various in-house clubs (including LGBTQ+ clubs) give employees the opportunity to engage in hobbies during working hours at the office to 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 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.

Mental health cover (as per the Mental Healthcare Act 2017) has a guideline issued by the IRDAI (Insurance Regulatory Development Authority of India) to all insurance companies for Psychiatric Ailment coverage. The insurers tend to offer a small limit of Psychiatric cover on an IPD basis under the medical insurance policy; however, the coverage can be customized under the group medical cover subject to a sum insured limit or sub-limit, and the benefit can be extended on Outpatient (OPD) basis as well. Around 44% of Companies offer this benefit on an IPD basis under Group Medical cover, and 7-8% of companies offer this on both an IPD & OPD basis (as per our in-house client database).

Work from home as a perk was accelerated by the COVID-19 pandemic, but many employers are now keen to have employees return to the office. Many companies are re-evaluating their remote work policies. Some are indeed asking employees to return to the office, while others have adopted a hybrid model, allowing a mix of remote and in-office work.

Flexible working arrangements include working hours, place of work, type of work, and intensity (how much work is to be done). These 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.

Cashless Everywhere is an initiative announced by the General Insurance Council (GIC) on January 24, 2024. Under this initiative, policyholders will be eligible to be treated in any hospital they choose, and the insurance company will make a cashless facility available even if the hospital is not in its network. To use the facility, the policyholder needs to notify the insurance company at least 48 hours before admission. In the event of emergency care, the policyholder should contact the insurance company within 48 hours of admission. It’s important to note that the specifics of the initiative, including participating insurers, network providers, and procedures, may evolve over time. Low consumer awareness about cashless hospital facilities, lack of standardized rates, and disagreements between hospitals and insurers about treatment costs are some of the challenges faced by the “Cashless Everywhere” initiative of GIC.


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

Nothing on this country page is intended to be legal, financial, or tax advice, and readers are advised to consult with their appropriate advisors regarding any legal, financial, or tax implications this information may address.

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