# The India Employee Benefits Stack for German companies

> German parents are used to a statutory system that covers health, pension, long-term care, unemployment and accidents through payroll. India's statutory layer is thinner: EPF, ESI below ₹21,000 a month, gratuity and employer-paid maternity leave. Above that line, health, accident and life cover are choices the employer makes.

By Akshay Golechha, Chief Business Officer at Plum (https://www.linkedin.com/in/akshaygolechha/). Published by Plum (https://www.plumhq.com). Canonical: https://www.plumhq.com/india-benefits-stack/germany. Updated 2026-10-05. Part of The India Employee Benefits Stack: https://www.plumhq.com/india-benefits-stack.

## In short

- There is no equivalent of German statutory health insurance (GKV) in India. Employees above ₹21,000 a month have no statutory health cover; employers buy Group Health Insurance, which candidates hired at ₹8 LPA and above expect.
- Pension insurance maps to EPF (12% employer plus 12% employee on basic), Berufsgenossenschaft accident insurance to the Employees' Compensation Act plus Group Personal Accident. Gratuity, a statutory lump sum after five years, has no German counterpart.
- Staff seconded from Germany can stay in German pension insurance for up to 48 months under the India–Germany social security agreement, in force since 1 October 2009, if they hold a certificate of coverage.

## Questions

### Is there an equivalent of German statutory health insurance (GKV) in India?

No. India has no statutory employer health insurance for salaried staff above ₹21,000 a month. Employees at or below that wage sit in ESI, the Employees' State Insurance scheme, funded 3.25% by the employer and 0.75% by the employee. Everyone else is covered only if the employer buys Group Health Insurance, which candidates hired at ₹8 LPA and above expect.

### Do German secondees have to contribute to EPF in India?

Not if they hold a certificate of coverage under the India–Germany social security agreement, in force since 1 October 2009. It keeps them in German pension insurance for up to 48 months, extendable by 12. Without the certificate, a foreign national employed in India is an International Worker and contributes to EPF on full salary, with no ₹15,000 ceiling, from day one.

### Who pays for maternity leave in India?

The employer. Under the Maternity Benefit Act a woman gets 26 weeks of full pay for her first two children and 12 weeks from the third, paid directly by the employer; ESI pays it for ESI members. There is no reimbursement like Germany's U2 levy and no statutory paternity leave under central law. Group Health Insurance covers the hospital bill, about ₹1 lakh for a normal delivery.

### Is gratuity the same as a German Abfindung?

No. An Abfindung is usually negotiated when employment ends. Gratuity is statutory: 15 days' last drawn salary per year of service, owed to every employee who leaves after five continuous years (one year for fixed-term staff under the 2025 Labour Codes), capped at ₹20 lakh. It applies to establishments with 10 or more employees, so provision it from the first payroll.

### What replaces Entgeltfortzahlung and Krankengeld in India?

For employees above ₹21,000 a month, only the sick and casual leave set by the state Shops and Establishments Act or the Factories Act, plus anything the employer's own policy adds. No insurer pays after six weeks. Employees at or below ₹21,000 a month are in ESI. Group Personal Accident covers accidental injury and disability, not illness.

### Is the employer's Group Health Insurance premium tax-deductible?

Yes. The employer's GHI premium is deductible under Section 36(1)(ib) of the Income-tax Act and is not a taxable perquisite for the employee under Section 17(2). 18% GST applies to group health premiums. Most insurers need a group of at least 7 people; India's median sum insured is ₹5 lakh, and global startups in India carry ₹10 lakh.

## What changes when you come from Germany

### Assignees from Germany and India's EPF

**The rule.** Foreign nationals employed in India are International Workers under EPF. They must join from day one, with contributions on full salary: the ₹15,000 wage ceiling does not apply.
**Germany and India.** India and Germany have a social security agreement in force since 1 October 2009, widened by a comprehensive agreement from 1 May 2017. Staff seconded from Germany with a certificate of coverage stay in German pension insurance and are exempt from Indian EPF for up to 48 months, extendable by 12. Get the certificate before the first Indian payroll run.

### Mapping German benefits to India

**At home.** Statutory health, pension, long-term care, unemployment and accident insurance through payroll, six weeks of employer-paid sick pay, and a company pension (bAV) the employer tops up by 15% when employees convert salary.
**In India.** EPF for pension, ESI below ₹21,000 a month and Group Health Insurance (GHI) for everyone else. Gratuity is a statutory lump sum with no German equivalent: fund it through an insured gratuity scheme rather than carrying it as an unfunded liability.

### Overlap between Frankfurt and India

**Time difference.** India is 3½ hours ahead of Frankfurt and Berlin during European summer time (late March to late October) and 4½ hours ahead in winter. India does not change its clocks, so 9:00 in Frankfurt is 12:30 or 13:30 in India.
**What to set up.** Agree who in India signs off endorsements, claims escalations and renewals, so nothing waits for headquarters' business hours.

### India–Germany tax treaty

**Treaty.** India and Germany have a double taxation avoidance agreement, in force since 26 October 1996. Short visits are usually exempt from Indian tax under the treaty's 183-day and employer conditions; check the exact article before relying on it.
**Secondments.** Long secondments can create a permanent establishment for the parent. Structure recharges and employment contracts with a tax advisor before staff move.

## What you call it in Germany, and what it is called in India

Germany's statutory health insurance (GKV) covers about 90% of the population, funded by a 14.6% payroll contribution that employer and employee split. India has nothing like it for salaried staff. Below ₹21,000 a month, employees sit in ESI, a government scheme. Above that line the employer's statutory health obligation is zero, and Group Health Insurance (GHI), voluntary in law, is what candidates hired at ₹8 LPA and above expect. That single gap explains most of the questions a German HR team asks in its first year in India.

| At home in Germany | In India | What changes for the employer |
| --- | --- | --- |
| Statutory health insurance (Gesetzliche Krankenversicherung (GKV)): Compulsory for employees earning up to €77,400 a year (2026). 14.6% general rate plus an average 2.9% Zusatzbeitrag, split equally; non-earning dependants co-insured free. | ESI for employees at or below ₹21,000/month; Group Health Insurance (GHI) for everyone else | No statutory cover above the ESI wage ceiling. GHI is voluntary in law and expected by candidates hired at ₹8 LPA and above. India's median sum insured is ₹5 lakh; global startups in India carry ₹10 lakh. Spouse, children and parents are covered only if the policy says so. |
| Company health insurance (Betriebliche Krankenversicherung (bKV)): Employer-funded supplementary health cover on top of GKV: dental, vision, hospital upgrades. Voluntary. | Group Health Insurance itself, plus optional add-ons | At home it tops up a universal base. In India GHI is the base, so spend the budget on the core sum insured and family cover before extras. Parents are the largest claims category by relationship, about 40% of claims in Plum's data. |
| Pension insurance (Gesetzliche Rentenversicherung): Statutory pension insurance: 18.6% of salary up to €8,450 a month (2026), split equally. | EPF and EPS (Employees' Provident Fund and Pension Scheme) | 12% employer plus 12% employee on basic wages, with 8.33% of the employer share going to EPS. Under the Labour Codes, in force 21 November 2025, allowances above 50% of total remuneration are added back into wages for EPF, which raises the bill for allowance-heavy structures. |
| Company pension (Betriebliche Altersversorgung (bAV)): Employees may convert up to 4% of the pension ceiling into a company pension; the employer adds 15% where it saves social contributions. | EPF on full basic; no separate statutory company pension | Most MNC subsidiaries contribute to EPF on full basic rather than the ₹15,000 statutory ceiling, which does the job a bAV top-up does at home. Gratuity is the other retirement-linked liability, and it is statutory. |
| Unemployment insurance (Arbeitslosenversicherung): 2.6% of salary up to €8,450 a month (2026), split equally. | No direct equivalent | Nothing to contribute. Exit costs in India sit in notice pay and gratuity rather than in an insurance scheme. |
| Long-term care insurance (Pflegeversicherung): 3.6% of salary up to €5,812.50 a month (2026), 4.2% for the childless; the employer pays 1.8%. | None | Nothing to contribute. Indian employees ask instead for parents to be covered under GHI; parents account for about 40% of claims by relationship in Plum's data. |
| Statutory accident insurance (Berufsgenossenschaft): Statutory accident insurance, funded by employers alone; the contribution depends on the industry's hazard class. Covers occupational accidents and diseases. | Employees' Compensation Act 1923 (or ESI where covered) plus Group Personal Accident (GPA) | There is no accident insurer to pay into. The Employees' Compensation Act covers employees not in ESI, and the employer insures that liability itself. Group Personal Accident is the usual voluntary top-up for injury and disability. |
| Sick pay (Entgeltfortzahlung im Krankheitsfall): Employer pays full salary for up to six weeks of illness; health insurance then pays sickness benefit (Krankengeld). | Sick and casual leave under state law; ESI for employees at or below ₹21,000/month | Leave days are set by each state's Shops and Establishments Act or the Factories Act, and no insurer takes over after six weeks. Above the ESI line, salary in a long illness is whatever the employer's leave policy says. |
| Paid leave (Urlaub (Bundesurlaubsgesetz)): At least 24 working days a year on a six-day week, which is 20 days on a five-day week. | Earned leave under the state Shops and Establishments Act (offices) or the Factories Act (factories) | Earned leave is typically 12 to 18 days a year, plus casual and sick leave, and varies by state. Public holidays also vary by state; only three are national. A German group standard of 30 days is a choice, not the Indian floor. |
| Maternity and parental pay (Mutterschutz und Elterngeld): Six weeks before and eight after birth at full net pay, the employer's share reimbursed through the U2 levy. Elterngeld: 65% of net pay, €300 to €1,800 monthly. | Maternity Benefit Act: 26 weeks of full pay for the first two children, 12 weeks from the third; no statutory paternity leave | The employer pays the salary directly, with no U2-style reimbursement, unless the employee is in ESI. GHI covers the hospital bill: a normal delivery costs about ₹1 lakh, a C-section about ₹1.25 lakh. A crèche is required at 50+ employees. |
| Severance (Abfindung): Severance, usually negotiated when employment ends; not a general legal entitlement. | Gratuity under the Payment of Gratuity Act 1972 | Gratuity is statutory, not negotiated: 15 days' last drawn salary per year of service after five continuous years (one year for fixed-term staff under the 2025 Labour Codes), capped at ₹20 lakh. Every qualifying leaver gets it, including those who resign. Provision it from day one. |
| Christmas bonus (Weihnachtsgeld): Year-end bonus under a contract or collective agreement; no statutory entitlement. | Statutory bonus under the Payment of Bonus Act (8.33% to 20%) plus any performance bonus | Statutory for employees earning up to ₹21,000 a month. A Weihnachtsgeld-style payment is fine for everyone else; check how it sits against the Labour Codes' 50% wages rule before fixing the salary structure. |

## What German companies get wrong when they set up in India

1. **Everyone is on statutory health insurance, so health cover is handled.** Only employees earning up to ₹21,000 a month are, through ESI. Above that line India has no statutory health obligation at all. Group Health Insurance is voluntary in law and expected by candidates hired at ₹8 LPA and above.
2. **Health cover costs a share of salary, split with the employee.** GHI is priced per person by age and sum insured, and the employer usually pays for the employee's own cover. The premium is deductible under Section 36(1)(ib) and is not a perquisite under Section 17(2). 18% GST applies on top.
3. **Six weeks' sick pay, then the health insurer takes over.** Above the ESI line there is no Krankengeld. Sick leave is a set number of days under state law, and nothing statutory replaces salary in a long illness. Write the long-illness rule into the leave policy before the first case, not during it.
4. **Maternity pay is reimbursed, as through the U2 levy.** The employer pays 26 weeks of full salary directly under the Maternity Benefit Act, with no reimbursement unless the employee is in ESI. GHI covers only the hospital bill: about ₹1 lakh for a normal delivery and ₹1.25 lakh for a C-section.
5. **Severance is negotiated at exit, so there is nothing to provision.** Gratuity is statutory: 15 days' last drawn salary per year of service after five years, one year for fixed-term staff, capped at ₹20 lakh. It applies to establishments with 10+ employees and must be provisioned from the first payroll.
6. **A local payroll provider's CTC template will be compliant.** Since 21 November 2025, if allowances excluded from wages exceed 50% of total remuneration, the excess is added back into wages for EPF, gratuity and other statutory calculations. Older templates built on a low basic understate both.
7. **Seconded engineers stay on German social security automatically.** Only with a certificate of coverage under the India–Germany social security agreement, and only for up to 48 months, extendable by 12. Without it, a German national employed in India is an International Worker and contributes to EPF on full salary from day one.
8. **Parents are not dependants, so the policy need not cover them.** Parents are the largest claims category by relationship in India, about 40% of claims in Plum's data. Whether to cover them, or offer a voluntary parental top-up, is a decision to make at policy design, not at the first renewal.

## Germany vs India, benefit by benefit

| Benefit | Germany | India |
| --- | --- | --- |
| Statutory health cover | Universal. GKV is compulsory up to €77,400 a year (2026); higher earners may choose private insurance (PKV). | ESI for employees earning up to ₹21,000 a month. Nothing above that line. |
| Employer health cost | Half of 14.6% plus half the Zusatzbeitrag (2.9% on average in 2026), on pay up to €5,812.50 a month. | 3.25% of wages into ESI below the line. Above it, a voluntary GHI premium per person. |
| Family cover | Non-earning spouse and children co-insured in GKV at no extra cost. | Spouse, children and parents covered only if the GHI policy includes them; parents are about 40% of claims by relationship. |
| Pension | Statutory pension insurance at 18.6%, split equally, on pay up to €8,450 a month. | EPF and EPS at 12% employer plus 12% employee on basic pay. |
| Company pension | bAV salary conversion, with a 15% employer subsidy where social contributions are saved. | No statutory equivalent. Most MNC subsidiaries contribute to EPF on full basic rather than the ₹15,000 ceiling. |
| Lump sum on leaving | No statutory lump sum. Severance (Abfindung) is usually negotiated. | Gratuity: 15 days' last drawn salary per year of service after five years, capped at ₹20 lakh. |
| Sick pay | Six weeks of full pay from the employer, then Krankengeld from health insurance. | Sick leave days under state law. Above the ESI line, nothing statutory beyond that. |
| Maternity | Six weeks before and eight after birth at full net pay; employer share reimbursed through U2. Elterngeld from the state. | Employer pays 26 weeks of full salary. GHI covers the hospital bill. No statutory paternity leave. |
| Paid leave | At least 24 working days on a six-day week, 20 on a five-day week. | Earned leave typically 12 to 18 days plus casual and sick leave, set by state law. |
| Accident cover | Berufsgenossenschaft, funded by employers, contribution set by hazard class. | Employees' Compensation Act, insured by the employer; Group Personal Accident bought voluntarily. |
| Unemployment insurance | 2.6% of salary, split equally, on pay up to €8,450 a month. | None. Exit costs sit in notice pay and gratuity. |
| Long-term care | Pflegeversicherung at 3.6%, 4.2% for the childless; the employer pays 1.8%. | None. Employees ask for parental health cover instead. |

## What headquarters is used to

Germany's statutory layer covers almost everyone and is funded through payroll, so the employer's job at home is mostly to top it up. That is the expectation headquarters brings to India, where the statutory layer stops at ₹21,000 a month.

- **≈90%** of Germany's population is covered by statutory health insurance (GKV)
- **14.6%** of salary is the general GKV contribution rate, with the employer paying half
- **€10** co-payment per day in hospital; non-earning dependants are co-insured at no cost
- **3.6–4.2%** of salary goes to long-term care insurance, depending on family status

Source: Benefits Beyond Borders 2025, Plum's report on benefits in the economies investing in India (Germany chapter, citing the European Observatory on Health Systems and Policies and BMJ Public Health). https://www.plumhq.com/benefits-beyond-borders

## Staff seconded from Germany

Seconded staff often keep a German or international health policy, but an India-admitted GHI is still worth adding: it gives cashless admission at network hospitals without an advance deposit. Under the India–Germany social security agreement, a secondee with a certificate of coverage stays in German pension insurance and is exempt from EPF for up to 48 months, extendable by 12. Without the certificate, EPF applies on full salary from day one, so apply before the posting starts.

## Where German companies set up in India

- **Pune and Chakan, Maharashtra.** Mercedes-Benz and Škoda Auto Volkswagen build cars at Chakan, surrounded by German suppliers and engineering centres. Plants follow the Factories Act; office staff Maharashtra's Shops and Establishments Act.
- **Chennai and Oragadam, Tamil Nadu.** BMW's assembly plant and Daimler India Commercial Vehicles at Oragadam anchor a German manufacturing belt. Tamil Nadu has its own Shops and Establishments leave rules for office staff.
- **Bengaluru, Karnataka.** Bosch's Indian headquarters, SAP Labs India and Mercedes-Benz Research and Development India. Engineering hiring sits well above ₹8 LPA, where candidates treat Group Health Insurance as standard.
- **Mumbai and Thane, Maharashtra.** Siemens, BASF and Bayer run their Indian headquarters here, and Deutsche Bank its India business. Mostly corporate, finance and sales staff above the ESI line.
- **Delhi NCR, Haryana and Uttar Pradesh.** Sales, service and regional offices of German groups in Gurugram and Noida. Haryana and Uttar Pradesh have separate Shops and Establishments rules, so one NCR leave policy may need two versions.

German companies with operations in India include Siemens, Bosch, SAP, Mercedes-Benz, BMW, Volkswagen, BASF, Bayer, Allianz, Deutsche Bank, Continental, Schaeffler, ZF, Daimler Truck.

## Benchmarks: what MNCs and GCCs offer in India

From [The Standard of Employee Benefits 2026–27](https://www.plumhq.com/standard-of-employee-benefits), Plum's report on 15,312 benefit plans, 5,20,100 claims and 74,543 checkups from Plum's FY26 book.

- **1.6×** MNC and GCC benefits spend per employee in India, against a funded Indian startup (nearly 3× a local Indian business). ([source](https://www.plumhq.com/standard-of-employee-benefits#s2-3))
- **43%** of MNCs and GCCs in India are Holistic Leaders: deep insurance plus real breadth of healthcare beside it. ([source](https://www.plumhq.com/standard-of-employee-benefits#s2-3))
- **₹7,50,000** median MNC/GCC sum insured, covering parents or in-laws, with ₹1,00,000 maternity cover and no copays or sub-limits. ([source](https://www.plumhq.com/standard-of-employee-benefits#s2-3))
- **~2%** of payroll buys India's top-quartile plan, against roughly 15% in the US, 10–25% across Europe and 8–15% across APAC. ([source](https://www.plumhq.com/standard-of-employee-benefits#s2-3-coverage))

### India's top-quartile plan against Germany, France and the Netherlands

| | India | Germany, France and the Netherlands |
|---|---|---|
| Benefits budget, share of payroll | ~2–3.5% (2% typical), plus 13% PF and 4.81% gratuity | ~20–25% (10–25% band); German employer health ~7.3% of gross |
| What the employee still pays | Nothing: no deductible, no copay or coinsurance, no room-rent limit, no waiting period | Germany: $12 a hospital day and $12–24 outpatient. France: a $23 daily hospital charge and $9–12 outpatient |
| Who is on the policy | Employee, spouse, up to 4 children, 2 parents or in-laws, LGBTQ+ and live-in partners | Germany: dependants without income at no extra cost. France: the employer pays at least 50% of the mutuelle for the family |

India's top-quartile plan is the only one of the seven that includes parents, and treatments cost 60–90% less than in the US, Europe or Australia. Source: https://www.plumhq.com/standard-of-employee-benefits#s2-3-coverage

## Further reading on plumhq.com

- [How MNCs structure health insurance for Indian subsidiaries](https://www.plumhq.com/blog/mnc-health-insurance-india-subsidiary-structure): Global programmes, local policies and who signs what.
- [Do you need to match headquarters' benefits in India?](https://www.plumhq.com/blog/gcc-match-headquarters-benefit-standards-india): Where to mirror the parent plan, and where India needs its own design.
- [Insurance for expatriate employees in India](https://www.plumhq.com/blog/insurance-coverage-expatriate-employees-gcc-india): Covering seconded staff alongside the local plan.
- [Group insurance vs ESI: a guide for employers](https://www.plumhq.com/blog/group-insurance-vs-esi-employers-guide): Who must be in ESI, and where group health insurance takes over.
- [How to calculate gratuity in India](https://www.plumhq.com/blog/how-to-calculate-gratuity): Formulas, worked examples and a free calculator.
- [The Standard of Employee Benefits 2026–27](https://www.plumhq.com/standard-of-employee-benefits): Benchmarks from 4,500+ Indian employee health plans.

Sources: Bundesministerium für Gesundheit, Beiträge zur gesetzlichen Krankenversicherung 2026 (allgemeiner Beitragssatz 14.6%, durchschnittlicher Zusatzbeitrag 2.9%) and Pflegeversicherung 2026; Deutsche Rentenversicherung, Sozialversicherungsrechengrößen 2026 and Änderungen in der Rentenversicherung zum 1. Januar 2026; Bundesurlaubsgesetz §3, Entgeltfortzahlungsgesetz §3, Mutterschutzgesetz §3 and Betriebsrentengesetz §1a (gesetze-im-internet.de); Deutsche Gesetzliche Unfallversicherung (DGUV), financing of statutory accident insurance; Bundesministerium für Bildung, Familie, Senioren, Frauen und Jugend, Elterngeld; Agreement between India and Germany on Social Insurance (in force 1 October 2009) and Deutsche Rentenversicherung, Arbeit und Rente in Deutschland und in Indien (comprehensive agreement in force 1 May 2017); India–Germany Double Taxation Avoidance Agreement, Notification S.O. 836(E), 29 November 1996 (incometaxindia.gov.in); Code on Social Security 2020 and Code on Wages 2019, in force 21 November 2025; Benefits Beyond Borders 2025, Plum (Germany chapter).