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Knowledge of employee benefits is paramount to all the salaried employees in India. The title PF, ESI, Gratuity: Worker Benefits Explained appears to be disorienting as every scheme is associated with financial, health, and retirement issues. In this article, the three large benefits are dissected into simplified language so that employees will have a clear picture of their rights and long-term benefits. You are either making your first steps in the professional environment or you are organizing your finances, understanding how PF, ESI, and Gratuity operate helps to make sure that you can be more secure and make more informed choices about your compensation. This PF, ESI, Gratuity: Worker Benefits Explained guide deals with benefit, eligibility and contributions. For in-depth stories and updates on worker protections, visit our Labour Rights coverage.
PF, ESI, Gratuity: Worker Benefits Explained – Introduction
Indian employment system has a number of social security schemes which cover workers against the financial risks. The main ones are PF, ESI, Gratuity: Worker Benefits Explained, which all guarantee retirement savings, medical coverage, and loyalty-related financial incentives against the staff. These benefits are legally mandated to be provided by employers under certain circumstances and hence are a significant component of any payroll program.
1. What Is Provident Fund (PF)?
Provident Fund is a long term savings plan that is set up in accordance with the EPF act. It enables the employees to save their retirement money by making monthly payments. The employer and the employee pay 12 percent of the basic salary. The interest is generated on the money each year and it grows up to a considerable amount of retirement savings.
Read also: PF / ESIC Forms Download Guides in India: Simple, Clear and Updated
Key Features of PF
- Assists employees in saving regularly.
- Emergencies were permitted in partial withdrawals.
- Complete withdrawal was allowed in case of retirement or unemployment.
- PF is to be offered by employers with 20 or more employees.
PF system is a significant component of PF, ESI, Gratuity: Worker Benefits Explained because it is financially safe in the long term.
2. What Is Employee State Insurance (ESI)?
Employee State Insurance is a medical and disability protection scheme. It provides healthcare Employee State Insurance is a disability insurance and medical insurance. It offers healthcare benefits to employees whose earnings are below the threshold salary limit (as indicated by ESIC periodically).
Benefits of ESI
- Employees and dependants can receive free medical treatment.
- Benefits in maternity of female employees.
- Remuneration during sick leave.
- Work related injury cover.
ESI, which has a robust health support system, is a hugging pillar of PF, ESI, Gratuity: Worker Benefits Explained.
3. What Is Gratuity?
Gratuity is a financial reward given by an employer to employee that has served in the company at least five years and also fulfilled continuous service. It has been regulated by the Payment of Gratuity Act, 1972.
Key Points About Gratuity
- Computed as: Gratuity = ((15 x Last Drawn Salary x Years of Service)/ 26).
- Income Tax rules allow a tax exemption.
- To be paid upon resignation or retirement or death.
- Serves as a reward of long-term service.
Finally, gratuity is the third step described in PF, ESI, Gratuity: Worker Benefits Explained, which guarantees the workers of being financially dignified after a long service.
Importance of PF, ESI, and Gratuity
The set of these benefits guarantees it financial and health security in general. Knowing PF, ESI, Gratuity: Worker Benefits Explained will enable the workers to negotiate more favorably, plan well and be aware of their rights.
