Wages and Benefits

Wages and fringe benefits vary considerably by industry, company size and region. Wages have two components: the basic salary and an allowance ("dearness allowance") linked to the cost-of-living index. The allowance, paid as part of the monthly salary, may be at a flat rate or on a scale graduated by income group; it often adds 60% or more to base pay. A mandatory bonus supplements wages.

Companies use both time and piece rates. The former is more common in organised-factory industries, such as engineering, chemicals, cement, paper and glass. Rates may be per hour, day, week or month. Piece rates, which the government has encouraged in order to boost productivity, are usually paid monthly, although casual workers are paid on a daily basis. Some industries (especially metal extracting, metal rolling, electrical machinery and glass) pay production premiums.

In the organised sector, wages are often set by settlements reached between trade unions and management.

The central government sets a general floor minimum wage and sets other, higher minimum wages for different industries. The state governments set different minimum wages for other industries, but these are not bound by the central government's floor wage.

Fringe benefits normally add 40-50% to base pay. By law, women are entitled to remuneration equal to that of men for performing equivalent work. Mandatory fringe benefits include the following:
Bonus for workers earning Rs3,500 or less per month (minimum of 8.33% and maximum of 20% of annual wages in factories employing ten or more). The minimum bonus payable is Rs2,500 and the maximum bonus actually payable is Rs6,000.
Dearness allowance (based on cost-of-living index) for all levels below management in firms employing 50 or more workers.
Provident fund at 10% of wages (12% for a large number of industries and business establishments) for all workers earning Rs6,500 or less per month.
One day of paid vacation for every 20 days worked (granted to every worker who has worked in a factory for a period of 240 days or more).
Health insurance (employer contributes 4.75% of total wage bill) for those who earn Rs6,500 or less per month.
Severance pay of 15 days of average salary for each complete year of continuous service.
Sick leave of seven days annually at full pay; half pay for those covered under the Employees' State Insurance Act.
Casual leave of seven to ten days for unforeseen circumstances.
Maternity leave of 12 weeks at full pay.