Lesson: HR Statutory Benefits with Calculations
This lesson covers the key statutory benefits under Indian labour laws that HR
professionals must ensure for employees. It also provides illustrative calculations to help
understand the application of these benefits in real-world scenarios.
1. Provident Fund (PF)
The Provident Fund is a retirement benefit scheme regulated by the Employees' Provident
Fund Organisation (EPFO). Both employer and employee contribute 12% of the
employee's basic salary + dearness allowance each month.
Employee Basic Salary ■25,000
Employee Contribution (12%) ■3,000
Employer Contribution (12%) ■3,000
Total Monthly PF Contribution ■6,000
2. Employee State Insurance (ESI)
The ESI scheme provides medical, disability, maternity, and unemployment benefits to
employees earning up to ■21,000 per month. Contributions are made as a percentage of
gross salary.
Employee Gross Salary ■18,000
Employee Contribution (0.75%) ■135
Employer Contribution (3.25%) ■585
Total ESI Contribution ■720
3. Gratuity
Gratuity is a lump sum benefit paid to employees who complete at least 5 years of
continuous service. The formula is: (15/26) × Last Drawn Salary × Years of Service.
Last Drawn Salary (Basic + DA) ■30,000
Years of Service 10
Formula (15/26) × 30,000 × 10
Gratuity Payable ■1,73,076
4. Bonus Act
The Payment of Bonus Act mandates employers to pay an annual bonus to employees
earning up to ■21,000 per month. The bonus ranges between 8.33% and 20% of annual
