Every HR Term Explained
In Plain English, Indian Context

Software that manages the entire recruitment process — job posting, CV collection, candidate tracking, interview scheduling and offer management — in one dashboard. Most Delhi NCR IT and large companies use an ATS to manage high-volume hiring. Our recruitment module is a built-in ATS.

When an employee is absent from work without prior approval or any information to the employer. Under Indian labour law, AWOL can be grounds for disciplinary action including termination. Most companies send a show cause notice after 2–3 days of unexplained absence.

The percentage of employees who leave an organisation in a given period, typically measured annually. Formula: (Number of employees who left ÷ Average headcount) × 100. Delhi NCR IT sector attrition is typically 18–25%. HR software tracks attrition by department, tenure and reason.

Earned leave that accrues over time — typically at 1 day per 11 days worked or as specified in the company's leave policy. Also called EL (Earned Leave) or PL (Privilege Leave). Governed by the applicable Shops & Establishments Act for the state — Delhi, UP or Haryana for NCR companies.

A formal letter issued after the employee joins, confirming the terms of employment — designation, salary, reporting structure, probation period and notice period. Different from the offer letter which is issued before joining. Appointment letters are required for PF and ESIC registration.

The process of verifying a candidate's employment history, educational qualifications, identity documents and criminal record before or after joining. Required by most Delhi NCR IT companies and mandatory in regulated industries like BFSI and pharma. Typically takes 7–14 days.

The pool of qualified employees ready to step into key roles if needed. Strong bench strength means the organisation can handle attrition at senior levels without operational disruption. Succession planning builds bench strength.

Attendance tracking using fingerprint, face recognition or iris scan. Widely used in Delhi NCR factories (mandatory under some state rules), corporate offices and warehouses. Data from biometric devices syncs with HR software to calculate payable days, late marks and overtime automatically.

The annual bonus payable under the Payment of Bonus Act 1965 to employees earning up to ₹21,000 per month. Minimum bonus is 8.33% of annual wages (or ₹100, whichever is higher). Payable within 8 months of the close of the accounting year. Separate from performance or festival bonus.

The total annual cost an employer incurs for an employee — including basic salary, HRA, allowances, PF contribution (employer share), gratuity provision, health insurance premium and any other benefit. CTC ≠ take-home salary. A ₹12 LPA CTC typically results in ₹80,000–₹85,000 monthly take-home after PF, tax and deductions.

Short-duration leave for personal matters or emergencies. Typically 8–12 days per year under Delhi and UP Shops & Establishments rules. CL cannot usually be carried forward to the next year and lapses if unused. Delhi Shops & Establishments Act provides for 10 casual leaves per year.

The process of adhering to all applicable labour laws — PF, ESIC, PT, TDS, gratuity, minimum wages, Shops & Establishments Act and POSH. Non-compliance attracts penalties, back-dues and, in serious cases, criminal liability for directors. NCR companies must comply with Delhi, UP and Haryana rules depending on where employees are located.

Compensatory Off — a leave day given to an employee who worked on a weekly off day, public holiday or outside contracted hours. The earned CompOff typically has an expiry (30–90 days) after which it lapses. Some companies allow encashment of unused CompOff.

Workers hired through a contractor rather than directly by the establishment. Governed by the Contract Labour (Regulation and Abolition) Act 1970. Establishments engaging 20+ contract workers must register. Contractors must obtain a licence. Common in Delhi NCR factories, security, housekeeping and logistics.

An allowance paid to compensate for inflation — historically linked to the Consumer Price Index. Mandatory for government employees and central PSUs. Private sector companies in Delhi NCR are not required to pay DA but must factor it in minimum wage calculations where the state government specifies it.

A formal in-house enquiry conducted when an employee is accused of serious misconduct — theft, fraud, violence, or repeated policy violations. The enquiry follows a quasi-judicial process with charge sheet, reply, hearing and findings. Required before termination for misconduct in most cases.

Leave that accrues based on days worked — typically 1 day per 20 days worked, giving about 15 days per year. EL can be carried forward (up to a limit set by law or policy) and can be encashed on resignation or retirement. Also called Privilege Leave or Annual Leave. The Factories Act mandates EL for factory workers.

A statutory body providing medical, maternity, disability and dependent benefits to employees earning up to ₹21,000/month. Employee contribution: 0.75% of gross wages. Employer contribution: 3.25% of gross wages. Mandatory for establishments with 10+ employees (20 in some states). Delhi NCR companies with employees across states must register in each applicable state.

A structured conversation with an employee who is leaving, to understand their reasons for resignation. Exit interview data helps identify attrition trends — poor management, compensation gap, growth ceiling or work-life balance. HR software captures exit interview data and generates attrition analysis reports.

The complete settlement of all dues when an employee leaves — unpaid salary, leave encashment, gratuity (if eligible), any pending expense reimbursements, less any loans or advances. Must be completed within the timeframe specified by the applicable Shops & Establishments Act. Delhi Shops Act requires FFS within 2 days of the last working day for resigned employees.

A TDS certificate issued by the employer to the employee at year end (by 15 June), showing total salary paid, TDS deducted and PF contributions. Required by employees to file their Income Tax Return. Part A comes from TRACES, Part B is prepared by the employer. HR software generates Form 16 automatically.

A lump-sum payment made to an employee who has completed 5 or more years of continuous service, on resignation, retirement or death. Formula: (Last drawn basic salary + DA) × 15/26 × years of service. Governed by the Payment of Gratuity Act 1972. Maximum taxable gratuity is ₹20 lakh.

Total salary before deductions — basic salary + HRA + all allowances + any variable pay. Gross salary is the base for ESIC deduction. Different from CTC (which includes employer's PF contribution and other benefits) and net/take-home salary (which is after all deductions).

An allowance paid to employees to cover rental accommodation costs. Tax-exempt up to the least of: (a) actual HRA received, (b) 50% of basic salary (in Delhi, Mumbai, Chennai, Kolkata) or 40% elsewhere, (c) actual rent paid minus 10% of basic salary. Delhi NCR employees often receive 40–50% of basic as HRA given high rental costs.

Software that manages all HR processes — payroll, attendance, leave, recruitment, performance and compliance — in one platform. Also called HRIS (Human Resource Information System). Replacing manual HR processes with an HRMS is the single biggest productivity improvement for a growing Delhi NCR business.

An increase in salary, typically given annually after the performance appraisal cycle. The increment percentage is usually linked to the performance rating. Delhi NCR IT sector increment averages 8–15% for "meets expectations" ratings and 18–25% for top performers. HR software generates increment letters automatically post-appraisal.

The GST paid on business expenses that can be offset against GST collected on sales. Relevant for expense management — companies can claim ITC on vendor bills for business travel, client entertainment, telecom and other eligible categories. Requires GSTIN and invoice details to be captured on every expense claim.

A written document specifying the title, responsibilities, required qualifications, reporting structure and compensation range for a role. A good JD attracts the right candidates and filters out mismatches before they apply. For Delhi NCR job portals like Naukri and LinkedIn, keyword-rich JDs rank higher in candidate searches.

The documentation and administrative steps completed on an employee's first day — ID verification, offer letter signing, PF and ESIC form submission, bank account details, emergency contact form and access provisioning. HR software automates joining formality collection before Day 1 through digital onboarding.

A measurable target assigned to an employee or team for a defined period — quarterly or annually. KPIs are the foundation of the performance appraisal cycle. Examples: sales revenue target, customer satisfaction score, project delivery on time, hiring TAT. SMART KPIs (Specific, Measurable, Achievable, Relevant, Time-bound) are most effective.

The primary areas of responsibility for a role — the broad domains in which the employee must perform. KRAs are broader than KPIs. Example KRA: "Customer Acquisition" with KPIs "10 new clients per quarter" and "₹50 lakh revenue from new accounts". Delhi NCR companies typically set 4–6 KRAs per role.

The rate at which employees leave and are replaced in a period. High turnover increases recruitment and training costs and reduces institutional knowledge. Delhi NCR average attrition: IT 20–30%, manufacturing 10–15%, retail 25–35%. Monthly attrition is calculated as (leavers in month ÷ average headcount) × 100.

A deduction from salary for days on which an employee was absent without approved leave. LOP days reduce the employee's payable days for the month. Formula: (Monthly gross ÷ working days in month) × LOP days. HR software calculates LOP automatically from the attendance record.

Leave approved by the manager and HR but for which the employee is not paid — either because their paid leave balance is exhausted or by mutual agreement. LWP reduces gross salary for the month but the employee retains their employment. PF is still deducted on the reduced salary.

The minimum pay mandated by law for different skill categories. In Delhi, notified by the Delhi government twice a year. Current rates (Oct 2025): Unskilled ₹19,846/mo, Semi-Skilled ₹21,813/mo, Skilled ₹23,905/mo, Highly Skilled ₹26,273/mo. Paying below minimum wage is a criminal offence under the Minimum Wages Act 1948.

A policy governing whether employees are permitted to work for other employers or run businesses outside their contracted hours. Many Delhi NCR IT companies introduced moonlighting policies post-2022. The policy typically prohibits working for competitors but may allow other work with prior disclosure to HR.

The time an employee or employer must give before ending the employment relationship. Commonly 30, 60 or 90 days in Delhi NCR companies. The payment in lieu of notice (buy-out) allows either party to pay the equivalent salary instead of serving the period. Notice period buy-out is the employer paying the joining employee's notice period.

A contractual clause prohibiting an employee from joining a competitor for a defined period after leaving. In India, post-employment non-compete clauses are largely unenforceable under Section 27 of the Indian Contract Act 1872. Courts have consistently held that restricting a person's right to livelihood post-employment is void.

Work performed beyond the standard working hours. Under the Factories Act, OT is paid at twice the ordinary wage rate. Under the Delhi Shops & Establishments Act, OT is limited and must be paid at 1.5x the rate. OT calculation requires accurate clock-in/out data from biometric or timesheet systems.

The structured process of integrating a new employee into the organisation — document collection, system access, induction training, buddy assignment and first 30/60/90 day goals. Effective onboarding reduces early attrition. Delhi NCR IT companies with digital onboarding reduce time-to-productivity from 6 weeks to 2–3 weeks.

A retirement savings scheme under the Employees' Provident Fund and Miscellaneous Provisions Act 1952. Employee contributes 12% of basic salary + DA. Employer contributes 12% — of which 8.33% goes to EPS (pension) and 3.67% to EPF. Mandatory for establishments with 20+ employees. Administered by EPFO.

A formal documented plan issued to an employee whose performance is consistently below expectations. Specifies improvement targets, timelines, support provided and consequences of non-improvement. PIP typically runs 60–90 days. If targets are not met, the employer has documented grounds for termination. Must be fair and non-retaliatory.

A state-level tax on salaries, collected by the employer and remitted to the state government. Delhi does not levy Professional Tax. But NCR companies with employees in Haryana must deduct PT at ₹200/month for salaries above ₹20,001. Maharashtra and Karnataka have higher PT slabs. HR software applies the correct PT by employee state.

The Sexual Harassment of Women at Workplace Act 2013 (POSH Act). Mandatory for all establishments with 10+ employees. Requires: constitution of an Internal Complaints Committee (ICC), written POSH policy, annual employee training and annual report filed with the District Officer. Non-compliance can result in cancellation of business licence.

A letter issued by the employer on the employee's last working day confirming they have been relieved of all duties and obligations. Required by the new employer before the joining date. Different from the experience certificate which states the period of employment and nature of work. Both are typically requested by the departing employee.

Termination of an employee's service due to redundancy — not as a punishment for misconduct. Under the Industrial Disputes Act 1947, establishments with 100+ workmen must seek government permission before retrenching. Must pay retrenchment compensation of 15 days' average pay per year of service plus 1 month's notice.

Leave for medical illness or injury. Typically 10 days per year under Delhi Shops & Establishments rules. Many companies require a medical certificate for SL beyond 3 consecutive days. SL usually cannot be carried forward and does not accumulate year to year, unlike earned leave.

The breakdown of CTC into individual components — basic salary, HRA, special allowance, medical allowance, LTA, employer PF, gratuity provision. The structure affects tax liability, PF computation and statutory dues. A higher basic salary increases PF contribution and gratuity but reduces take-home. HR software manages salary structure templates.

The income tax deducted by the employer from the employee's monthly salary and remitted to the government. The employer is responsible for computing the correct TDS, deducting it monthly, depositing by the 7th of the following month and issuing Form 16 annually. Wrong TDS computation is one of the most common payroll compliance failures.

The time taken to complete a process — most commonly used in recruitment as Time-to-Hire (offer accepted) or Time-to-Fill (position filled). Delhi NCR IT recruitment average TAT is 30–45 days. ATS systems reduce TAT by automating screening and scheduling, cutting it to 12–18 days in high-performing recruitment teams.

A 12-digit number allotted by EPFO to every PF member, which stays the same across employers throughout the employee's career. The UAN makes PF portability possible — employees can transfer or withdraw their PF balance using the UAN. New employers must activate the UAN or generate a new one if the employee was not previously PF-enrolled.

The portion of compensation that varies based on performance — also called incentive, bonus or commission. Typically expressed as a percentage of CTC (e.g., "15% variable"). Variable pay is usually paid quarterly or annually after performance review. Not included in PF computation if it is truly variable and not guaranteed.

Arrangement where employees work from home or a location other than the office. Post-2020, Delhi NCR companies have formalised WFH through written policies. WFH employees still accrue leave, must mark attendance and are subject to the same performance expectations. HR software tracks WFH attendance through mobile GPS or portal check-in.