Quick answer: Statutory benefits in India are the ones the law makes you provide: EPF, EPS and EDLI, ESI for lower earners, gratuity, statutory bonus, maternity benefit, paid leave and holidays. Non-statutory benefits are your choice, such as group health insurance, term life, accident cover, NPS and meal benefits. Most of the statutory set now sits under the Labour Codes.
- EPF runs at 12% from each side, with mandatory coverage up to ₹25,000 a month in wages since 17 September 2026.
- ESI applies to wages up to ₹21,000 a month, with 3.25% from you and 0.75% from the employee.
- Gratuity is 15 days’ wages per completed year, after five years of service (one year for fixed-term staff).
- No central law requires group medical, life or accident cover for staff above the ESI ceiling.
Which benefits does Indian law make compulsory?
Seven groups, and each comes with a filing, a register or a payout date.
| Statutory benefit | Governing law | Who pays |
|---|---|---|
| EPF, EPS and EDLI | Code on Social Security, EPF Schemes 2026 | You and the employee |
| ESI | Code on Social Security | You 3.25%, employee 0.75% |
| Gratuity | Code on Social Security | You |
| Maternity benefit and crèche | Code on Social Security | You (ESIC for insured women) |
| Statutory bonus | Code on Wages | You, for wages up to ₹21,000 |
| Annual leave | OSH Code | You |
| Casual leave and festival holidays | State Shops and Establishments Act | You |
The four codes took effect on 21 November 2025, as PIB’s Labour Codes release confirms. Late dues now carry 12% a year simple interest.
That’s the floor. Your Employees’ Provident Fund and ESI filings run monthly, while gratuity waits for the exit.
What counts as a non-statutory benefit?
Anything you offer above the legal floor. Typical examples are group medical cover, group term life, personal accident insurance, employer contributions to the National Pension System, meal cards and wellness budgets.
Tax shapes the menu. Under the Income-tax Rules, 2026, free meals are tax-free up to ₹200 a meal (up from ₹50), and gifts up to ₹15,000 a year.
Here’s the trap. Health cover feels compulsory to a US or UK founder, so many assume Indian law requires it. It doesn’t, outside ESI. Leave it out, though, and your offer looks thin next to local employers. Our guide to employee benefits in India shows what candidates expect.
What does the statutory layer cost on one salary?
Around 5% of gross pay for a typical mid-level hire.
Let’s say a Pune engineer earns ₹1,20,000 a month gross, with wages of ₹60,000 under the 50% rule. PF is restricted to the ceiling.
| Your monthly cost line | Amount |
|---|---|
| EPF and EPS (12% of ₹25,000) | ₹3,000 |
| EDLI (0.5%) | ₹125 |
| EPF admin charge (0.5%) | ₹125 |
| Gratuity accrual (4.81% of ₹60,000) | ₹2,886 |
| ESI and statutory bonus | Nil (wages above ₹21,000) |
| Total statutory cost | ₹6,136 |
Everything you add on top is a choice. Price it as one.
How does Remunance set up benefits for your India team?
Remunance runs the statutory layer as the legal employer: EPF, ESIC, gratuity, bonus and leave, filed on time. We also arrange group insurance through our benefits administration team and pass premiums through at cost. More than 150 international clients from 22 countries use our employer of record services this way. If you want both layers priced before you hire, get a costed benefits plan for India.
What else do people ask about statutory benefits?
Is health insurance mandatory for employers in India?
Only through ESI. Employees with wages up to ₹21,000 a month must be enrolled. Above that, group health cover is your choice.
Is gratuity a statutory benefit?
Yes. The Code on Social Security makes it payable after five years of continuous service, or one year for fixed-term employees.
Can you replace statutory benefits with a higher salary?
Not for the core items. You can’t contract out of ESI, gratuity, maternity benefit or statutory leave. The one opening is EPF, where an employee earning above ₹25,000 can be an excluded employee.