Glossary
Statutory terms from India's Four Labour Codes and the Income-tax Act 2025, explained in simple English.
C
Certificate of Coverage (CoC)
A document under a Social Security Agreement that exempts a posted worker from host-country social security — in India, it makes them an "excluded employee" for PF purposes.
Code on Wages
One of the four Labour Codes (9 chapters, 69 sections), defining "wages" (§2(y)) and the 50% deeming rule, and setting the floor wage, minimum wages, overtime and bonus.
Cost to Company (CTC)
The total annual employer cost per employee — cash pay, benefits and statutory contributions — that the wages-deeming rule now reshapes into a different statutory wages base.
E
Employees' Provident Fund (EPF)
India's mandatory retirement-savings scheme, still administered under the 1952 Act with a ₹15,000/month wage ceiling for domestic employees — pending a separate Code-based scheme notification.
Employees' State Insurance (ESI)
A mandatory health and cash-benefit insurance scheme for lower-wage employees, still running on its own ₹21,000/month coverage ceiling under the pre-existing ESI Act, pending Code-based notification.
Employer of Record (EOR)
A third party that formally employs a worker on a client's behalf, handling payroll, statutory compliance and local employment law so the client needs no local entity.
F
Fixed-term employment (FTE)
A direct, time-bound contract under the Industrial Relations Code, with the same pay, benefits and protections as a permanent employee — including 1-year gratuity vesting.
Floor wage
A national wage baseline that state minimum wages cannot fall below, set by the central government under the Code on Wages to reduce regional wage disparity.
Form 16
The annual TDS certificate an employer issues, showing salary paid and tax withheld; under the Income-tax Act 2025 the TDS provision moves from old §192 to new §392.
Full and final settlement (F&F)
The reconciliation of dues an employer owes a departing employee — unpaid salary, leave encashment, gratuity if eligible, notice pay or recovery, bonus — closed out at exit.
G
Global Mobility Services (GMS)
The function — internal team or external advisor — that manages cross-border employee assignments: immigration, tax equalisation, shadow payroll, social security and compliance for inbound and outbound moves.
Gratuity
A lump-sum statutory benefit paid on separation after 5 years' continuous service (1 year pro-rata for fixed-term employees), now computed on deemed wages under Social Security Code §53.
Gross-up
The employer practice of raising an expat's gross pay so intended net survives tax — common in tax-equalised assignments, sheltered under Income-tax Act 2025 Schedule III S.No. 10.
H
House Rent Allowance (HRA)
A CTC component compensating for rented accommodation, excluded from the statutory wages definition, and partially tax-exempt under the Income-tax Act 2025 based on city and rent paid.
Hypothetical tax (hypo tax)
An estimated home-country tax withheld from a tax-equalised assignee's pay, standing in for tax they'd have paid had they stayed home — counterpart to the gross-up calculation.
I
Inbound assignment
A cross-border assignment where the employee is posted into India from abroad — the scenario most affected by International Worker PF rules, shadow payroll, and deemed-wages recalculation.
Industrial Relations Code (IR Code)
One of the four Labour Codes, covering trade unions, standing orders and dispute resolution — 14 chapters, 104 sections — source of the 100→300 thresholds for retrenchment.
International Worker (IW)
An EPFO classification for foreign nationals in India (and some Indians on a foreign SSA posting), facing PF on full, uncapped wages unless a Certificate of Coverage applies.
L
Labour Welfare Fund (LWF)
A state-administered welfare fund financed by small, periodic employer and employee contributions, governed by state-specific LWF Acts that sit outside the four central Labour Codes.
Leave encashment
Payment for unused earned leave, annually or on separation, computed on wages — subject to the 50% deemed-wages floor, exempt to ₹25 lakh under Income-tax Act 2025 §19.
P
Para 83
The EPF Scheme paragraph requiring 12%+12% employer/employee PF on an International Worker's full, uncapped wages — no ₹15,000 ceiling, no exemption without a Certificate of Coverage.
Perquisite
A non-cash benefit from an employer — housing, employer PF/pension above a cap, stock options — taxable as salary income under the Income-tax Act 2025.
Professional Tax (PT)
A state-levied tax on salaried income and professions, deducted by the employer and remitted to the state government, separate from the central Labour Codes and unaffected by them.
S
Shadow payroll
A parallel, non-paying payroll record run in the host country (India) to track tax and social-security obligations for an assignee actually paid from the home country.
Social Security Agreement (SSA)
A bilateral treaty letting posted workers pay social security in only one country, usually home, via a Certificate of Coverage. India has roughly 20 active SSAs.
Social Security Code (SS Code)
One of the four Labour Codes, covering EPF, ESI, gratuity, maternity benefit and gig worker welfare — 14 chapters, 164 sections — source of the social security framework.
Standing orders
Mandatory workplace conduct and service-condition rules under the Industrial Relations Code, now required for establishments with 300+ workers, up from the earlier 100-worker threshold.
Statutory bonus
An annual bonus mandated by the Code on Wages, between 8.33% and 20% of wages, based on establishment profitability — successor to the Payment of Bonus Act.