India Payroll and Benefits Benchmark guide

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

Depending on the company, the expat benefits include matching the salary of their home country,adjusting the cost of living and other personal allowances. Assistance with children’s education fees is also a common benefit for expats.

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.

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.  

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

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 are paid monthly.

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. 

A full-time work week is 48 hours.    

Overtime is paid double the rate of the normal pay. 

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.