Employee benefits, insurance & workspace: What EORs provide in India
- Natia Gabarashvili
- Sep 23
- 11 min read
Table of contents:
Introduction: Why benefits and workspaces matter in India
Salary alone doesn’t close hires in India.
A candidate might like the number on the offer letter, but the first questions that follow are always the same:
Does this role include health insurance? What’s the leave policy? Will I get equipment if I’m remote?
That’s because in India, benefits and work setup are not “extras”; they’re part of the baseline expectation.
Statutory entitlements like Provident Fund, ESI, and gratuity are legally required, but the competition for talent means employers also need to provide health coverage, paid leave, and flexible workspace options to win and keep employees.
This is where an Employer of Record (EOR) steps in. The EOR isn’t just a payroll outsourcing; it’s the one making sure every hire gets the right benefits package, every statutory filing is on time, and every remote employee has the tools they need to work productively.
That combination of compliance + employee experience is what keeps global teams running smoothly in India.
Statutory benefits every EOR must provide in India
If you thought employee benefits aren’t optional perks in India, let me stop you right there,
They’re mandated by law.
Any company hiring locally, whether directly or through an Employer of Record (EOR), must provide a set of statutory benefits to every eligible employee. An EOR ensures these are calculated, filed, and delivered correctly so your business avoids compliance penalties and your employees receive what they’re legally entitled to.
Here are the key statutory benefits every EOR must manage in India:
Employees’ Provident Fund (EPF)
Governing Act: Employees’ Provident Fund Act, 1952
A retirement savings scheme funded by monthly contributions from both employer and employee.
Employers must contribute 12% of the employee’s basic salary.
Employee State Insurance (ESI)
Governing Act: Employees’ State Insurance Act, 1948
Provides medical benefits to employees and their dependents.
Applies to employees earning ≤ ₹21,000/month.
Employer contribution: 3.25% of wages.
Employee contribution: 0.75% of wages.
Gratuity Payment
Governing Act: Payment of Gratuity Act, 1972
A lump-sum payment for employees who complete 5+ years of continuous service.
Standard formula: Gratuity = (Last drawn salary × 15 × years of service) ÷ 26.
Employers typically provision ~4.81% of basic salary each month.
Maternity Benefit
Governing Act: Maternity Benefit Act, 1961
Women employees are entitled to 26 weeks of paid maternity leave.
Employers must guarantee job security and provide medical support during this period.
Payment of Bonus
Governing Act: Payment of Bonus Act, 1965
Employees earning less than ₹21,000/month are entitled to an annual bonus.
Bonus ranges from 8.33% to 20% of salary, depending on company performance.
Paid Leaves & Public Holidays
Governing Act: Shops and Establishments Act (varies by state)
Employees are entitled to paid annual leave, sick leave, and casual leave, along with national and festival holidays.
Minimum leave entitlements differ by state, but all employers must comply with the relevant state Act.
Minimum Wages & Overtime Payment
Governing Act: Minimum Wages Act, 1948
Employers must pay at least the minimum wage as defined by industry and location.
Overtime must be compensated at twice the standard wage rate.
Why it matters for EOR clients
An EOR in India takes responsibility for:
Calculating PF, ESI, gratuity, and bonus entitlements.
Filing monthly and annual returns with Indian authorities.
Ensuring paid leave and holidays match state-level laws.
Avoiding costly penalties for non-compliance.
With these statutory benefits handled correctly, you can focus on building your team while knowing your employees are legally protected and fully compliant.
Beyond Statutory: Voluntary benefits offered by EORs
Statutory benefits are the legal baseline in India, but they’re not enough to attract or retain top talent, especially in Tier 1 cities like Bengaluru, Mumbai, or Hyderabad. Skilled employees compare offers not only by salary but by the extras that signal long-term care and stability. That’s where voluntary benefits come in, and a good EOR will manage them just as smoothly as mandatory ones.
Group health insurance
Most Indian professionals now expect private health insurance beyond ESI. Coverage often extends to spouses, children, and sometimes parents. Typical corporate policies provide ₹300,000–₹500,000 in annual coverage per family, with options to top up.
Life and accident insurance
Companies often add life and personal accident coverage to ensure employees and their families are financially protected. These plans are relatively low-cost for employers but high-value for employees, making them a popular add-on.
Meal vouchers and transport allowances
On-site staff may receive meal cards, vouchers, or canteen subsidies, as well as transport allowances for commuting. In cities with long commutes, these perks play a big role in job satisfaction.
Performance bonuses and ESOPs
Bonuses tied to performance or company results help retain employees in a competitive job market. Startups in particular use Employee Stock Option Plans (ESOPs) to attract talent, giving employees a stake in future growth.
Why employers offer voluntary benefits
Retention in Tier 1 cities: Skilled professionals expect comprehensive packages. Without them, your offer looks weak next to competitors.
Employer brand: A solid benefits package signals stability and care, which matters to candidates weighing multiple offers.
Productivity and morale: Health cover, allowances, and recognition programs reduce stress and boost engagement.
An EOR in India makes these benefits easy to implement, folding them into compliant payroll structures so your team enjoys a market-standard package without you managing vendors, insurers, or extra filings.
Insurance in India: Health and risk coverage for employees
In India, insurance isn’t just an optional perk, it’s a legal and cultural expectation.
Since 2020, employers have been required to provide group health insurance to employees, and statutory schemes like ESI and workers’ compensation are tightly enforced.
For companies hiring in India, this makes insurance one of the most important parts of the total employment package. An EOR ensures these obligations are met without you needing to manage multiple insurers or state filings.
Health insurance for employees in India
Group Health Insurance is Mandatory: Since April 2020, the Insurance Regulatory and Development Authority of India (IRDAI) requires employers to provide group health insurance to all employees, including contractual and part-time staff.
Coverage: Standard plans include hospitalization, daycare procedures, pre- and post-hospitalization costs, maternity cover, and increasingly, mental health and preventive care. Many companies extend this coverage to dependents.
Cashless Treatment: Employees get access to thousands of network hospitals across India for cashless treatment.
Cost: Employers usually pay an annual premium of ₹10,000–₹30,000 per employee, depending on coverage level.
Customization: Plans can include wellness add-ons, health checkups, and extended family coverage.
Risk coverage for employees
Employee State Insurance (ESI): Mandatory for employees earning up to ₹21,000/month. Provides medical, maternity, sickness, and disability cover funded by employer (3.25%) and employee (0.75%) contributions.
Workmen’s Compensation Insurance: Required under the Employees’ Compensation Act, 1923. Covers compensation for work-related injuries, disabilities, or death.
Personal Accident Insurance: Often added as a voluntary benefit for accidental death or disability cover, particularly in high-risk industries like manufacturing or logistics.
Key points for employers
Compliance with group health insurance rules is non-negotiable. Failure to provide coverage risks penalties.
Most companies use group policies with reputed insurers to manage costs while offering broad protection.
To remain competitive, many employers add voluntary insurance such as term life, travel cover, or wellness programs.
State-level rules may impose additional obligations for contractual staff in industries like construction or shipping.
Workspace options for employees hired via EOR in India
Workspace matters too.
Whether your employees work onsite, remotely, or in hybrid setups, the EOR is responsible for ensuring compliance and a proper work environment.
That means contracts, equipment, allowances, and labor law obligations are all covered.
Onsite hires
For employees based in offices, an EOR ensures the company complies with the Shops & Establishments Act in the relevant state. This law governs:
Working hours and overtime
Mandatory breaks and rest intervals
Paid leave and public holidays
Rules for termination and notice periods
Onsite employees may also receive allowances like transport or subsidized meals, which an EOR can manage as part of payroll.
Remote hires
Remote work has become standard in India’s IT and support sectors. An EOR manages:
Equipment policies (laptops, monitors, headsets)
Internet or home office stipends for connectivity and setup
Policies for equipment ownership, returns, and security compliance
Employees stay legally recognized as full-time staff, even if they never set foot in a physical office.
Hybrid setups
Many companies blend the two, offering coworking allowances or shared workspace access in Tier 1 cities while keeping remote-first teams elsewhere. An EOR can structure these allowances cleanly in payroll, ensuring they are both compliant and tax-efficient.
Compliance obligations
Regardless of where employees work, Indian labor law still applies. The EOR ensures:
Working hours, breaks, and overtime comply with state labor codes
Leave entitlements are tracked and enforced
Contracts reflect whether the role is onsite, remote, or hybrid
This keeps employees protected and companies compliant, without adding complexity for the employer.
Equipment policies for employees hired via Employer of Record in India
When hiring remote employees in India, salary and benefits aren’t enough, you also need to think about tools.
A developer without a reliable laptop or a support rep without a proper headset can’t deliver. That’s why equipment policies are now a core part of employment packages, and why EORs in India manage them as carefully as payroll and benefits.
What employers are expected to provide
Remote employees typically expect:
Laptops and monitors that meet role-specific requirements.
Secure VPN access and licensed software for compliance and data security.
Headsets, webcams, or accessories for roles that require regular client interaction.
These aren’t perks, they’re essentials that make remote work possible.
Internet stipends and ergonomic allowances
To support productivity at home, many employers also provide:
Internet stipends to cover broadband or mobile data costs.
Home office allowances for ergonomic chairs, desks, or lighting.
Wellness stipends for employees expected to work long hours from home.
These small additions make a big difference in retention and job satisfaction, particularly in competitive sectors like IT and finance.
How EORs handle ownership and compliance
An Employer of Record provider in India takes responsibility for:
Ownership and tracking of company-issued devices.
Policies for return and reuse of equipment when an employee resigns or a contract ends.
Maintenance and repair coordination with vendors.
Data security compliance, ensuring devices are encrypted and aligned with company IT policies.
By handling these details, the EOR ensures remote employees are equipped to succeed while protecting the company’s assets and data.
How EORs support remote employee engagement
If you still think that keeping remote folks engaged in India is all about Zoom backgrounds and free snacks.
Let me do the favor and warn you: NO
It’s about building connection, fairness, and trust, especially when “work” happens from homes tucked behind traffic jams, power cuts, or epic chai breaks.
Here are what works and what an EOR can do:
What Indian remote employees really need
Belonging, not just belonging to Wi-Fi. Surveys show remote engagement in India is sagging—ADP found remote workers have just ~8% engagement compared to onsite at ~21%.
Predictable routine even when remote. Culture values routine: set start/end hours, clear boundaries. Too much “always-on” kills morale.
Visible growth & recognition. Gen Z and millennials in India want frequent feedback—“good job” once a quarter won’t cut it.
What great EOR does to solve these
Onboarding that gives “I’m part of the squad.”
Virtual orientation across time zones that includes not just paperwork (PF, ESI, etc.) but real people.
Mentors or buddies to break isolation.
Solid digital tools with local grace.
Transparent payroll tools in INR. No surprises.
Feedback & leave tracking apps that work even when the internet is spotty.
Platforms supporting multilingual communication (when needed).
Trust & flexibility baked in.
Stipends for stable internet or power backup (these are real problems in many cities).
Encouraging real breaks. Infosys warns employees for exceeding ~9h15m/day remotely. Indiatimes
Perks that actually matter in India.
Wellness programs: mental health support or mindfulness apps.
Festival bonuses or small gifts on Diwali/Holi/festival of local importance.
Performance incentives + ESOPs: Ownership feels good when recruiting developers from Bengaluru or Hyderabad.
Community + culture remotely.
Virtual chai rounds, team storytelling, and remote game hours.
Recognition programs that allow peer-to-peer shoutouts. In India, being seen by your peers matters.
Local meetups, if possible—“meet your remote coworkers” events.
What happens if you ignore this (and yes, I’m being dramatic)
Turnover goes up. Remote or hybrid workers leave faster than on-site ones when they feel forgotten.
Productivity dips, not because the work isn’t done, but because motivation, trust, and communication suffer.
Reputation takes a hit. In India’s tight job market, reviews spread fast on Glassdoor and LinkedIn.
Cost implications of benefits, insurance & workspace
Hiring in India isn’t “salary + done.” Every role carries hidden costs that quickly stack up if you’re not budgeting for them. An Employer of Record (EOR) costs are predictable, but you still need to understand what’s inside the total.
Benefits → The Mandatory Layer
Provident Fund (PF): 12% of basic salary. For a mid-level developer earning ₹100,000/month, that’s ₹12,000 added cost.
ESI: ~3.25% employer share, but only for employees earning under ₹21,000/month.
Gratuity: Provisioned at 4.81% of basic pay — another ₹4,810 on a ₹100,000/month salary.
Professional Tax: State-specific, max ₹200/month.
Statutory benefits alone usually push costs 15–20% above gross salary.
Insurance → The competitive layer
Since 2020, group health insurance has been mandatory.
Standard family cover (₹300,000–₹500,000/year) costs ₹10,000–₹30,000 per employee annually.
Many employers add accident or life cover for another ₹3,000–₹5,000.
Skip this and you’ll lose candidates in Tier 1 cities, where health insurance is viewed as non-negotiable.
Workspace → The practical layer
Onsite hires: Transport allowance (₹2,000–₹5,000/month), meal subsidies, plus compliance costs under the Shops & Establishments Act (leave policies, working hours).
Remote hires: Laptop (~₹60,000 one-off), internet stipend (~₹1,000–₹2,000/month), ergonomic allowance (~₹10,000 one-off).
Hybrid hires: Coworking memberships average ₹8,000–₹15,000/month in Bengaluru, Mumbai, and Delhi.
Putting it together → A real example
Base salary: ₹120,000/month
Statutory benefits (PF + gratuity + tax): ~₹22,000
Health insurance: ~₹2,000/month (annualized premium)
Workspace (remote: laptop + internet stipend): ~₹3,000/month (amortized)
Total employer cost: ~₹147,000/month
Add the EOR fee (Team Up: €199/month) and you get a transparent, predictable number, no surprises when scaling your team.
Why companies use an EOR to manage benefits in India
When you hire in India, you’re not just paying salaries; you’re stepping into a maze of labor codes, insurance mandates, and workspace expectations. Miss a filing, cut corners on benefits, or delay onboarding, and the risks pile up fast. That’s why companies lean on an Employer of Record (EOR) in India: it turns the messy parts of compliance and employee management into one clean, predictable service.
Risk Protection
An EOR guarantees statutory compliance. PF, ESI, gratuity, paid leave, Shops & Establishments registration, every rule is followed and filed. No scrambling for state-by-state requirements, no risk of penalties, no last-minute legal bills.
Employee Satisfaction
Top talent in India expects more than a salary slip. An EOR delivers competitive benefits, faster onboarding, and clear HR processes. From day-one insurance coverage to transparent payroll portals, the EOR becomes the safety net that makes employees feel looked after, critical in Tier 1 cities where offers are plenty.
Cost Clarity
With an EOR like Team Up, costs aren’t hidden in % of salary models. Everything, benefits, insurance, compliance, payroll, is bundled into one flat monthly fee (€199/employee). That gives CFOs a number they can trust when planning budgets, instead of chasing variable costs that scale with senior salaries.
Conclusion
In India, benefits, insurance, and workspace aren’t “nice-to-haves.” They’re hardwired into compliance law and baked into employee expectations. Skip them, and you don’t just risk fines, you risk losing the very talent you’re trying to hire.
That’s why smart companies don’t gamble. They work with an EOR that handles the statutory layer (PF, ESI, gratuity, maternity leave), the competitive layer (health insurance, allowances, ESOPs), and the practical layer (remote equipment, coworking solutions).
With TeamUp, you get all of that for a flat €199 per employee/month. No hidden markups, no scaling fees, just cost clarity and employees who feel supported from day one.
Ready to hire in India with full compliance and zero guesswork? Talk to TeamUp today.