HR & payroll glossary for India
Clear definitions of the terms Indian HR, payroll and finance teams use every month, each with a worked example and links to the calculators and guides that go deeper.
Basic salary
Basic salary is the fixed core component of pay. Many statutory calculations, including PF, gratuity and HRA exemption, are based on it.
CTCCost to Company
CTC is the total annual cost an employer incurs for an employee: gross salary plus employer contributions such as PF, and sometimes gratuity and insurance.
Employee self-serviceESS
Employee self-service (ESS) lets employees view and update their own HR information, apply for leave, see payslips and raise requests without going through HR.
ESIEmployees' State Insurance
ESI is a contributory health and social security scheme run by ESIC for employees earning up to ₹21,000 a month in gross wages.
Full and final settlementF&F
Full and final settlement is the last payment to a leaving employee: pending salary, leave encashment, gratuity and bonus, minus recoveries such as notice shortfall and loans.
Gratuity
Gratuity is a lump-sum benefit paid to an employee on leaving after at least five years of continuous service, calculated as 15/26 of last drawn wages for each completed year.
Gross salary
Gross salary is the total of all earnings paid to an employee in a period, before any deductions such as PF, ESI, PT or TDS.
HRAHouse Rent Allowance
HRA is a salary allowance for rented housing. Under the old tax regime part of it can be exempt: the least of actual HRA, 50% or 40% of basic, and rent paid minus 10% of basic.
HRISHuman Resource Information System
An HRIS is a system of record for employee information. In practice the term overlaps heavily with HRMS, which usually implies broader process coverage such as payroll and talent.
HRMSHuman Resource Management System
An HRMS is software that manages employee records, attendance, leave, payroll, recruitment, performance and HR reporting from one central system.
LOPLoss of Pay
LOP (loss of pay) is unpaid absence. Salary is reduced in proportion to the days of LOP, which also reduces PF, ESI and other wage-linked amounts.
LWFLabour Welfare Fund
Labour Welfare Fund is a state-level contribution, made by employees and employers in states that have an LWF Act, to fund welfare schemes for workers.
Net salary
Net salary (take-home pay) is what the employee actually receives: gross salary minus deductions such as employee PF, ESI, PT, TDS and loan recoveries.
PFEmployees' Provident Fund (EPF)
PF (EPF) is India's mandatory retirement savings scheme run by EPFO, funded by employee and employer contributions of 12% of PF wages each.
PTProfessional Tax
Professional Tax is a state-levied tax on employment, deducted from salary by employers in states that impose it, capped at ₹2,500 a year by the Constitution.