HR and payroll glossary

Short definitions of the terms you meet in Indian HR, attendance and payroll. For current rates and limits, see the guides and the free calculators.

Biometric attendance

Biometric attendance records when employees arrive and leave by identifying them with a fingerprint, face or similar trait on a device, instead of a register or card.

CTC

CTC (Cost to Company) is the total yearly amount an employer spends on an employee, including salary, employer contributions such as PF, and other benefits. It is higher than take-home pay.

EPS

The Employees’ Pension Scheme (EPS) pays a pension after retirement. It is funded from part of the employer’s PF contribution, not from the employee’s share.

ESIC

The Employees’ State Insurance Corporation (ESIC) runs a social security scheme that gives covered employees and their families medical care and cash benefits for sickness, maternity and employment injury.

Form 16

Form 16 is the certificate an employer gives an employee showing the salary paid and the tax deducted at source in a year. Form numbers changed under the Income-tax Act, 2025, so check the current name.

Full and final settlement

Full and final settlement is the last payment to a departing employee, adding pending salary, leave encashment, gratuity and other dues, and subtracting recoveries such as unserved notice.

Gratuity

Gratuity is a lump sum paid by an employer to an employee in recognition of long service, normally after 5 years of continuous service. It is based on last drawn wages and years of service.

HRMS

An HRMS (Human Resource Management System) is software that manages employee records, attendance, leave, payroll and related HR work in one place.

Leave encashment

Leave encashment is the payment an employee receives in place of unused leave days, as per company policy, often when leaving the company or at year end.

LOP (Loss of Pay)

Loss of Pay is the salary deducted for days an employee was absent without paid leave. It is usually the monthly salary divided by a days basis, multiplied by the LOP days.

Notice period

The notice period is the time an employee or employer must give before ending employment, as set in the employment contract. Any part not served may be recovered or paid in lieu.

Payslip

A payslip is the monthly statement given to an employee that shows earnings, deductions and the net pay for the month.

PF / EPF

The Employees’ Provident Fund (EPF) is a retirement savings scheme run by EPFO, to which the employee and the employer contribute a percentage of the PF wage every month.

Probation

Probation is an initial period after joining during which an employer assesses a new employee before confirming the job. Its length and rules are in the appointment letter and company policy.

Professional Tax

Professional tax is a tax on employment levied by state governments, usually deducted from salary by the employer. Rates, slabs and due dates differ from state to state.

Shift roster

A shift roster is the schedule that says which employee works which shift on which day. Attendance rules such as late marks are checked against it.

Statutory bonus

Statutory bonus is a yearly payment to eligible employees, set by law (earlier the Payment of Bonus Act, 1965, now covered by the Code on Wages), calculated as a percentage of wages within a minimum and a maximum rate.

TDS on salary

TDS (tax deducted at source) on salary is the income tax an employer estimates for the year and deducts from the employee’s pay each month, then deposits with the government.

UAN

The Universal Account Number (UAN) is a unique number given to a PF member by EPFO. It stays the same when the member changes employers.

ZKTeco / ADMS

ZKTeco is a maker of biometric attendance devices. ADMS is the method many ZKTeco devices use to push punch records to a server over the network.