Types of Employee Benefits: 10 Benefits HR Should Know

What are employee benefits?

Employee benefits are non-wage compensation in addition to salary provided to attract and retain employees in this intensely competitive environment. It enhances productivity, motivates, and nurtures teamwork.

Do you know?

As per The Impact of Employee Benefits on Job Satisfaction and Retention: Internship Report—2024 (at NHPC Limited, India), this survey-based study found a moderate positive correlation between employee benefits (as provided by the company) and overall job satisfaction among NHPC employees.

What are the 10 best employee benefits in India?

The 10 most significant employee benefits are

• Health Insurance Benefits
• Retirement and pension plans Paid time off and leave benefits
• Flexible work benefits
• Wellness and preventive burnout
• Family and caring support
• Financial benefits and allowances
• Learning and development benefits
• Employee recognition and rewards
• Sustainable lifestyle benefits

FAQs about Employee Benefits

What are the health insurance benefits for employees?

Health and insurance benefits are those benefits that provide different insurance coverage to employees and their families. It reduces sudden medical and financial risks and improves employee well-being, morale, and productivity. 

The most common are health insurance, accident and disability coverage, dental insurance, annual health checkups, and critical illness coverage.

Which retirement benefits are mandatory in India?

In India, retirement benefits are not perks; they are the legal rights of every employee. They are statutory and voluntary monetary benefit schemes designed to provide financial security to employees after retirement.

Do you know?

A major labour law reform, the Code on Social Security 2020, was implemented on 21st November 2025. It consolidates nine existing acts into one framework for all employees nationwide. Also read

https://www.pib.gov.in/FactsheetDetails.aspx?Id=150473&reg=3&lang=2

Mandatory Retirement Benefits

Employee Provident Fund (EPF)

The Employees’ Provident Funds & Miscellaneous Provisions Act, 1952, governs the Employee Provident Fund. It applies to all establishments with 20 or more employees and provides a lump sum after retirement. 

Calculation: Sum of the two below:

12% of (basic salary + DA by employee)

12% by employer(10% in case of specific industries)

Gratuity

Gratuity is an award for long-term service. It is in accordance with the Payment of Gratuity Act, 1972, which now falls under the new social security codes.  It applies to those employees who have five years of continuous service in an establishment. As per the code, a fixed-term employee can avail themselves of it after one year of service. 

Calculation: (Years of Service X Last Drawn Salary X 15) / 26

What Are Paid Time Off and Leave Benefits for Employees?

Paid time off and leave benefits are when employees get paid while on leave. It includes earned leave, sick leave, casual leave, public national holidays, or paid weekly offs that the employer provides to an employee.

Do you know?

Paid time off is not lost productivity; it is productivity protection.

What Are Flexible Work Benefits and Benefit Wallets?

Flexible work benefits are modern employee benefits that provide work flexibility.  Benefit wallets are a pool of optional benefits provided by the employer for employees to choose from.

Some work benefits are: 

• Remote and hybrid work options
• Work-from-anywhere policies
• Wellness wallets
• Compressed work weeks

Are you aware?

72% of Indian employees prefer flexible work arrangements (NASSCOM, Deloitte).

Example

SAP India introduced a dedicated FlexBen plan for its ~11,500 employees, allowing them to customise their benefits based on individual needs.

What Family and Caregiving Support Benefits do Employers Offer?

Family and caregiving support are productive strategies where the employer provides programs to assist employees with their family responsibilities. It supports parenthood, elder care, and family emergencies, enabling employees to stay productive while fulfilling their family responsibilities.

Some family and caregiving support benefits are

• Maternity leave
• Parental Leave
• Adoption/fertility benefits
• Backup care

What Are Wellness and Burnout Prevention Benefits for Employees?

Wellness and preventive burnout employee benefits are proactive employee benefits designed to protect the mental, physical, and social well-being of employees. These benefits support long-term workforce sustainability, reduce stress and fatigue, improve focus and productivity, and strengthen employer brand and trust.

Key benefits are:

• Employee Assistance Programs (EAPs)
• Counselling & Therapy Access
• Preventive Health Screenings
• Fitness & Activity Programs
• Ergonomic & Workplace Safety Support

What financial benefits and allowances are available to employees?

Financial benefits and allowances are monetary benefits that provide economic security, cost-of-living support, and long-term wealth creation.

These include performance bonuses, reallocation allowance, interest-free loans, emergency allowance, telephone and internet expenses, and travel allowance. 

Are you aware?

According to a 2025 report by ADP India, 46% of firms are now linking pay and payroll management with financial well-being objectives, indicating a strategic shift in employer priorities.

What Learning and Development Benefits Help Employees Grow?

Learning and development benefits make employees future-ready. It helps employees learn new skills, enhance competencies, and create eligibility for future roles. 

These can be:

• Higher Education Sponsorship (MBA, PG programs)
• Tuition Reimbursement & Education Allowances
• Access to courses
• AI-Powered Personalised Learning Paths
• Mentorship & Coaching Programs
• Succession Planning & Internal Mobility
• AI, Data, Cloud & Cybersecurity Training

What Employee Recognition and Rewards Programs Improve Retention?

An employee recognition and rewards program rewards and acknowledges employees, fosters a culture of gratitude, and motivates all.

Do you know?

People don’t leave companies—they leave cultures that don’t appreciate them.

Some key rewards and recognition schemes that improve retention are

• Peer-to-peer recognition
• Public Shootouts
• LinkedIn Endorsements
• Wellness Rewards
• Gift cards, vouchers, and cash rewards

What Are Sustainable Lifestyle Benefits for Employees?

Sustainable lifestyle benefits are programs that help employers understand their responsibility towards Mother Earth. It is about incorporating and encouraging a lifestyle that is environmentally friendly and focuses on waste reduction. These benefits encourage responsible consumption and overall well-being. It attracts Gen Z and millennial talent.

Types of sustainable employee benefits are

• Public transport allowances
• Cooling and cycle incentives
• Solar Power Subsidies
• Paperless and digital flows
• Carbon offset and tree plantation drives

How Can HR Build a Competitive Employee Benefit Strategy?

A competitive employee benefit strategy is a comprehensive step-by-step approach to offering the best employee benefits to your employees. 

Step 1: Understand Workforce Needs & Expectations

The priority in building a competitive employee benefit strategy is to assess workforce needs and expectations. The HR team should conduct surveys, analyse expectations, study attrition reports, and draw comparisons with industry standards.

Step 2: Specify comprehensive goals and targets

Specifying comprehensive goals and targets is a step towards a contented workforce and an improved bottom line.

Step 3: Create a holistic and effective portfolio

A completely integrated and competitive benefits portfolio can meet the needs and desires of all employees, aligning with the goals and targets set in the second step.

Step 4: Adherence to local and global standards

The strategy must comply with the local and global standards

Step 5: Offer a customised Benefits package

Today, every employee has a unique set of needs and desires, and to fulfil all, a customised employee benefits package should be provided to employees.

Step 6: Communicate Benefits Clearly and Consistently

The best benefits fail if not communicated precisely to employees. Clear communication improves the effectiveness and efficacy of employee benefits strategy.

Step 7: Measure Effectiveness and Continuously Improve

Periodic review and measurement of employee satisfaction is a necessity. Employee engagement scores, retention and turnover rates, and benefit utilisation data are well-accepted key metrics to measure the effectiveness of the plan. 

AI in HR

AI has automated the process flows of every industry to achieve the best results. It reduces guesswork and subjective decision-making. It supports accurate compensation planning. It ensures competitive industry standards are followed, decreases bias, and advocates equal pay. It studies individual preferences and creates a personalised benefits plan.

Which company offers the best competitive employee benefits strategy suite in India?

Pluxee India (formerly Sodexo BRS) offers a strong, digitally focused employee benefits suite with integrated meal, fuel, telecom, and wellness cards, providing high tax savings and a vast network for employees, positioning itself as a leading provider for companies seeking comprehensive, modern, and tech-driven solutions for employee engagement and retention in India.