HR terms, explained
50 definitions of the HR and payroll terms Indian teams actually use — what each one means, and the statutory context that applies to it.
A
Absenteeism Rate
Absenteeism rate is the proportion of scheduled working time lost to unplanned absence, measured as absent days over total scheduled days for a period.
Appointment Letter
An appointment letter is issued after an employee joins and confirms the terms of employment — the document that governs the relationship, where the offer letter only proposed it.
ATS (Applicant Tracking System)
An ATS is the system that manages hiring — job postings, applications, candidate pipelines, interview stages and offers — from requisition to accepted offer.
Attendance Regularisation
Attendance regularisation is the process of correcting an attendance record after the fact — a missed punch, a forgotten check-out, or time worked away from the usual place — through a request the manager approves.
Attrition Rate
Attrition rate is the proportion of employees who leave over a period, expressed as separations divided by average headcount for that period.
B
Basic Salary
Basic salary is the fixed core of an employee's pay, before allowances — and the figure most statutory calculations in India are computed on.
Biometric Attendance
Biometric attendance records a punch against a physical characteristic — a fingerprint, face or iris — rather than a card or PIN that can be shared.
C
Casual Leave
Casual leave is short-notice paid leave for unplanned personal reasons, usually limited to a few days at a time and typically neither carried forward nor encashed.
Comp Off (Compensatory Off)
Comp off is a paid day off granted in exchange for working on a weekly off, holiday or rest day, rather than paying overtime for that work.
Cost Per Hire
Cost per hire is total recruiting spend over a period divided by the number of hires made in it — the standard measure of what filling a role actually costs.
CTC (Cost to Company)
CTC is the total annual cost an employer bears for an employee — salary, allowances, employer contributions and benefits combined — not the amount the employee receives.
E
Earned Leave (Privilege Leave)
Earned leave is paid time off accrued through service — typically credited monthly or annually, carried forward within limits, and usually encashable on exit.
Employee Referral
An employee referral is a candidate recommended by a current employee, usually through a formal programme that pays a bonus if the hire is made and stays.
Employee Self-Service (ESS)
Employee self-service is the part of an HR system employees use directly — viewing payslips, applying for leave, updating details and raising requests without going through HR.
EPF (Employees' Provident Fund)
EPF is India's statutory retirement savings scheme, funded by matching monthly contributions from the employee and the employer on basic salary plus dearness allowance.
ESI (Employees' State Insurance)
ESI is India's statutory health and social security scheme for employees earning below a wage threshold, funded by contributions from both the employee and the employer.
Exit Interview
An exit interview is a structured conversation with a departing employee about why they are leaving and what the organisation could have done differently.
Experience Letter
An experience letter certifies that a person worked for an organisation — the dates, the role held, and sometimes a brief note on conduct — for use with future employers.
F
Form 16
Form 16 is the certificate an employer issues each year summarising the salary paid to an employee and the tax deducted from it, used to file an income tax return.
FTE (Full-Time Equivalent)
FTE expresses staffing as the equivalent number of full-time people — someone working half the standard hours counts as 0.5 FTE — so capacity can be compared regardless of contract type.
Full and Final Settlement (F&F)
Full and final settlement is the closing calculation when an employee leaves — everything still owed to them, less everything they owe, paid as one amount after the last working day.
G
Geofencing
Geofencing restricts an action to a defined geographic area — in attendance, allowing a punch only when the employee is physically within a set radius of a site.
Gratuity
Gratuity is a lump sum an employer pays an employee who leaves after five or more completed years of continuous service, calculated as fifteen days' wages for every year served.
Gross Salary
Gross salary is total earnings for a period before any deductions — basic, allowances and any other earnings added together, but before PF, tax or recoveries.
H
Headcount
Headcount is the number of people employed at a point in time, counted as individuals regardless of how many hours each works.
HRA (House Rent Allowance)
HRA is a salary component paid towards rented accommodation, part of which is exempt from income tax under the old regime if the employee actually pays rent.
HRMS (Human Resource Management System)
An HRMS is the system of record for an organisation's people data and the processes that run on it — employees, attendance, leave, payroll inputs, performance and documents in one place.
L
Leave Encashment
Leave encashment is payment for unused paid leave — converting a remaining balance into money, either annually or when an employee leaves.
LOP (Loss of Pay)
LOP is an unpaid absence — a day an employee did not work and had no paid leave balance to cover, so the corresponding salary is deducted from that month's pay.
M
Maternity Leave
Maternity leave is paid leave for childbirth and recovery, granted as a statutory entitlement to eligible women employees under the Maternity Benefit Act.
Multi-Location HR
Multi-location HR is running one workforce across several offices, sites or states, where holiday calendars, attendance rules and statutory obligations differ by where each employee works.
Muster Roll
A muster roll is the statutory register of who attended work on each day, maintained by the employer and produced during a labour inspection.
N
Net Salary (Take-Home)
Net salary is what actually reaches an employee's bank account — gross earnings for the period less every deduction and recovery.
Notice Period
Notice period is the time an employee must continue working after resigning, or that an employer must give before terminating, as set by the employment contract.
O
Offboarding
Offboarding is the process of closing out an employment — notice, handover, asset return, access revocation and final settlement — from resignation to the last payment.
Offer Letter
An offer letter is the document proposing employment — role, compensation, start date and key conditions — issued before the employee accepts and joins.
Onboarding
Onboarding is the process of turning an accepted offer into a working employee — collecting documents, creating accounts and access, and getting the person productive.
Overtime (OT)
Overtime is work done beyond an employee's scheduled hours, usually paid at a premium rate rather than at the ordinary hourly wage.
P
Payroll Cycle
A payroll cycle is the recurring period a payroll run covers, together with its cut-off dates for attendance, changes and approvals before the run is processed.
Payslip
A payslip is the statement issued each pay period showing what an employee earned, what was deducted and what was paid — the record of a single salary payment.
Performance Review
A performance review is a periodic, documented assessment of how an employee has performed against agreed objectives, usually feeding pay, promotion and development decisions.
Probation Period
Probation is an initial period of employment during which both sides assess the fit, usually carrying a shorter notice period and reduced access to some benefits until the employee is confirmed.
Professional Tax (PT)
Professional tax is a state-levied tax on employment income, deducted monthly by the employer from an employee's salary and paid to the state government.
S
Shift
A shift is a defined block of working hours assigned to an employee — its start and end times, breaks and grace period — against which their attendance is measured.
Sick Leave
Sick leave is paid leave for illness or medical treatment, often requiring a medical certificate beyond a set number of consecutive days.
Statutory Bonus
Statutory bonus is a share of profits payable to eligible employees under the Payment of Bonus Act, calculated as a percentage of wages and subject to minimum and maximum rates.