India’s employment laws don’t just exist to complicate payroll — they’re designed to protect employees and encourage fair practices. But even with the best intentions, companies can slip up by missing one crucial detail: mandatory employee benefits. As an HR decision-maker or business owner, you’re not just responsible for disbursing salaries. You’re accountable for ensuring every statutory benefit is properly provided, documented, and reported. Miss a step, and you could face legal penalties, employee grievances, or worse — a damaged reputation.
Let’s explore the seven employee benefits that are legally required in India. These aren’t perks. They are statutory, non-negotiable responsibilities that define compliant, people-first workplaces.
The Employees’ Provident Fund (EPF) is a must for organizations with 20 or more employees. Both employer and employee contribute 12% of the employee’s basic salary into the fund. This benefit creates financial security for employees and ensures long-term savings.
Failing to contribute correctly or missing deadlines can lead to penalties. That’s why many companies turn to experts like Team Management Services for help with compliance.
If your company employs 10 or more people earning ₹21,000 or less per month, ESI is mandatory. It covers medical expenses, maternity leave, and even disability benefits. Timely ESI contributions show that your organization values its people — not just their productivity.
Gratuity becomes payable once an employee completes five years of continuous service. It’s calculated based on the last drawn salary and years of service. While it might feel like a distant obligation, not budgeting for gratuity payouts can affect cash flow later. Staying prepared is smart HR.
The law mandates certain paid leaves — including annual leave, sick leave, and public holidays. Each state has its own rules, so staying updated is key. Offering paid time off isn’t just a rule. It’s a reflection of a company culture that respects work-life balance.
Under the Maternity Benefit Act, eligible women employees can take 26 weeks of paid leave. This law ensures job protection and health benefits during a crucial time. Organizations that support parental benefits signal care, inclusivity, and long-term thinking.
Companies with 10 or more employees are required to pay an annual bonus to those earning ₹21,000 or less per month. The minimum bonus is 8.33% of the salary. Even if your profit margins are tight, bonus compliance isn’t optional. It’s a statutory duty and also a tool for motivation.
The Factories Act and Shops & Establishments Acts regulate working hours and mandate overtime pay. Employees should not work more than 9 hours a day or 48 hours a week without proper compensation. Transparency around time policies protects your business and builds accountability across the board.
Statutory benefits aren’t just rules — they’re the basic building blocks of responsible business. Employees notice when they’re missing. So do government inspectors. Getting these wrong can cost you in the form of audits, back-payments, or brand damage.
But doing them right strengthens your company’s credibility and stability. In fact, outsourcing your statutory compliance to experts like Team Management Services helps reduce risk while giving you room to focus on core business goals. Explore their statutory compliance services here.
So, are you offering what the law requires? If you’re unsure, it might be time for a quick compliance check — before someone else checks it for you.
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