India Payroll and Benefits Benchmark guide

Minimum wages in India differ according to the governing state and workers skill set.

Employees are entitled to 15 paid annual vacation days. A maximum of 30 vacation days can be carried over to the next year.

Employees are allowed a maximum of 15 paid sick leave days a year and receive 70% of their average daily wage.

Employees receive 100% of their average wage in the six months prior to childbirth. The amount of fully paid time leave depends on the number of children an employee has.

• First 2 children – 26 weeks paid

3 or more children – 12 weeks paid

The private sector does not have mandatory leave, but it is common that 15 days leave is given to male government employees.

Casual leave: provided for urgent and unexpected matters. Typically companies have a strict maximum of three days a month, and 6 yearly. Casual leave is not encashable. At the end of the year unused leave lapse automatically.

Work related injury leave: Work injury benefits come from the contributions made towards the employees’ compensation and employees state insurance. Temporally disabled workers receive 50% compensation monthly.

There are 3 national holidays where businesses must be closed; Republic Day, Independence Day, and Ghandi Jayanti.

In addition to this, each region has their own public holidays that are observed.  

A full-time work week is 48 hours. 

Overtime is paid double the rate of the normal pay.

VAT is 5% standard rate.

Pension is comprised of a pension scheme and a provident fund.

Contributions are made by the employee, employer and government.

• Employee - (Provident Fund) 12% of basic wages
• Employer – 8.33% of monthly payroll. (Provident Fund) 3.67% of monthly payroll and .5% of monthly payroll for administrative cost. 8.33% of monthly payroll is contributed for employees 58 or older.
• Government – 1.16%of basic wages.

India’s social security is comprised of the Employees Provident Fund (mandatory if the company has over 20 employees), the Miscellaneous Provisions Act, Employees State Insurance and a pension scheme. It covers pension, health, injury and unemployment.

Healthcare is made of contributions by the employee, employer and government.

• Employee – 1.75% of wage
• Employer – 4.75% of payroll

Government – 12.5% of medical bill costs

Employees must be paid by the last day of the month, however, it is customary to pay employees from the 28^th of the month onward. 

If termination isn’t specified in a contract, an employer must give 30 days’ notice or payment in lieu to an employee who has worked for at least 3 months. No notice is required for termination due to misconduct.

A 30 days’ notice period should be given.

Severance payment is given to workers who have been continuously employed for 2 years and are terminated for redundancy. Severance payment reflects duration of employment, performance and salary.