HR Glossary: 100 Essential Terms Every Professional Should Know
Whether you are a seasoned CHRO, a first-time HR manager, or a business leader trying to decode your offer letter, the language of Human Resources can feel like a specialised dialect. This glossary cuts through the jargon with 100 essential HR terms — alphabetically organised, plainly defined, and grounded in the Indian professional context.
Section 1: A - D
1. Absenteeism Rate
Measures the percentage of scheduled workdays lost due to unplanned absences. Calculated as (Absent days / Total scheduled days) x 100. A leading indicator of disengagement or burnout.
2. Annual Performance Review (APR)
Formal yearly evaluation of achievements, competencies, and development areas against pre-set goals. Influences increments, promotions, and variable pay.
3. Applicant Tracking System (ATS)
Software automating recruitment — job posting, resume parsing, interview scheduling, offer management. Popular in India: Keka, Darwinbox, Zoho Recruit, Greenhouse.
4. Attrition Rate
Percentage of employees leaving over a period. India IT sector historically reports 20-30%. Distinguish voluntary (resignations) from involuntary (layoffs).
5. Background Verification (BGV)
Validating a candidate's employment history, education, identity, and criminal records. Mandatory in BFSI, pharma, and government contracting in India.
6. Bell Curve
Forced-ranking performance distribution: top 10-15%, average 70-75%, low 10-15%. Still used by many Indian conglomerates and MNC subsidiaries.
7. Bench Period
Time an IT services employee spends without a billable client project. A critical cost lever for firms like TCS, Infosys, Wipro. Often used for upskilling.
8. Blended Learning
Combines instructor-led training with digital/self-paced e-learning. Post-COVID default for corporate L&D in India.
9. Bonus
Performance Bonus: Discretionary, tied to results (10-30% of CTC). Statutory Bonus: Mandatory under Payment of Bonus Act 1965, minimum 8.33% for employees earning up to Rs.21,000/month.
10. HR Business Partner (HRBP)
Senior HR professional embedded in a business unit to align people strategy with business objectives. Acts as strategic advisor to business heads.
11. Campus Recruitment
Recruiting fresh graduates directly from colleges. Tier-1 institutions (IITs, IIMs, BITS) command premium packages.
12. Capability Building
Systematic process of developing skills, knowledge, and mindsets an organisation needs. In GCCs, AI and cloud capability building is a competitive differentiator.
13. Career Pathing
Structured framework outlining progression routes — both vertical (promotions) and lateral (role changes). A key retention tool for millennials and Gen Z.
14. Contract Staffing
Engaging workers for a defined period through a staffing agency. India's Industrial Relations Code 2020 formalised fixed-term employment with proportionate statutory benefits.
15. Cost to Company (CTC)
Total annual employer expenditure on an employee — gross salary, employer PF, gratuity accrual, insurance, perquisites. CTC is NOT take-home pay; the gap can be 20-35%.
16. HR Dashboard
Visual reporting tool consolidating workforce metrics — headcount, attrition, time-to-hire, payroll costs — for real-time decision-making.
17. Diversity, Equity & Inclusion (DEI)
Commitment to building a workforce reflecting diverse identities while ensuring equitable access. Shaped by SEBI BRSR mandates, RPwD Act 2016, and POSH compliance in India.
18. Dual Reporting
Matrix structure where an employee reports to both a functional and a business/geography manager. Common in MNCs and GCCs.
Section 2: E - H
19. Employee Engagement
Emotional commitment and discretionary effort employees bring to work. Gallup shows India engagement at 20-25% — a massive opportunity.
20. Employee Provident Fund (EPF)
Mandatory retirement savings. Both employer and employee contribute 12% of basic wages. Employer's 12% split: 8.33% to EPS, 3.67% to EPF. Covers 70M+ active members.
21. Employee State Insurance (ESI)
Social security for workers earning up to Rs.21,000/month. Employer contributes 3.25%, employee 0.75%. Provides medical care, sickness, maternity, and disability benefits.
22. Employer Branding
Positioning as employer of choice via LinkedIn, Glassdoor, AmbitionBox. Great Place To Work certification widely used in India.
23. Employee Value Proposition (EVP)
Unique set of benefits, opportunities, culture, and values offered in exchange for skills and commitment. Goes beyond compensation.
24. Exit Interview
Structured conversation with departing employees to understand reasons for leaving and gather candid feedback.
25. Fixed Pay vs. Variable Pay
Fixed = guaranteed (basic + HRA + allowances). Variable = performance-linked (bonuses, commissions). Ratio varies: BFSI sales 60:40, IT 80:20.
26. Flexible Benefits Plan (FBP)
Employees customise salary structure from tax-advantaged allowances — LTA, food coupons, book allowances — within a budget. Optimises tax liability.
27. Form 16
TDS certificate issued by employer under Section 203 of Income Tax Act. Primary document for filing ITR. Must be issued by June 15 annually.
28. Full and Final Settlement (FnF)
Settling all financial dues on exit — unpaid salary, leave encashment, bonus, gratuity, advance recovery. Target: 30-45 days post last working day.
29. Global Capability Centre (GCC)
Offshore subsidiary of an MNC for high-value functions — technology, analytics, R&D. India hosts 1,700+ GCCs employing 1.9M professionals.
30. Gratuity
Statutory lump-sum on 5+ years of service. Formula: Last basic x 15/26 x Years. Tax-exempt up to Rs.20 lakh. Governed by Payment of Gratuity Act 1972.
31. Grievance Redressal
Formal process for employees to raise workplace complaints and receive fair resolution. Mandated by Industrial Disputes Act.
32. Headcount Planning
Forecasting employee numbers by function, level, location, and skill to meet strategic objectives.
33. HR Analytics
Data science applied to workforce data — attrition prediction, diversity benchmarking, learning ROI. Tools: Visier, One Model, Workday.
34. HRIS
Centralised software managing core HR data. India platforms: Darwinbox, Keka, greytHR. Global: SAP SuccessFactors, Oracle HCM.
35. Human Capital Management (HCM)
Strategic framework treating employees as assets — integrating HRIS, payroll, performance, and learning into one suite.
Section 3: I - L
36. In-Hand Salary
Net amount after all deductions — PF (12%), ESI (0.75%), professional tax, TDS. Always lower than CTC. Bridging the gap through tax-efficient structuring is key HR service.
37. Increment
Annual salary increase, typically 6-12% in IT and 8-15% in BFSI for high performers. Peak season: April-June.
38. Industrial Relations (IR)
Relationship between employers, employees, unions, and government. Reformed by the four Labour Codes 2020.
39. Induction Programme
Structured process integrating new employees — company values, policies, org structure, role clarity. Reduces 90-day attrition by up to 82%.
40. Job Description (JD)
Formal document outlining title, responsibilities, qualifications. Skills-based JDs focused on outcomes increasingly preferred.
41. Job Evaluation
Determining relative worth of jobs for equitable pay. Methods: Hay Group, point-factor systems. Conducted every 3-5 years.
42. Key Performance Indicator (KPI)
Quantifiable metric evaluating progress toward goals. Should be SMART. Poorly designed KPIs drive gaming, not performance.
43. Labour Codes 2020
India's landmark reform: 29 laws into 4 codes — Wages, Industrial Relations, Social Security, Occupational Safety. Key: revised wage definition affecting PF/gratuity, fixed-term employment norms, gig worker social security.
44. Lateral Hire
Recruiting experienced professionals from external market into mid-to-senior roles. Dominant mode in IT, consulting, BFSI.
45. Learning Management System (LMS)
Platform to create, deliver, and track training. India: Moodle, TalentLMS, Docebo. Shift toward mobile-first microlearning.
46. Leave Policy
Types: Earned Leave (15-21 days), Casual Leave (7-12), Sick Leave (7-10), Maternity (26 weeks). Governed by state-specific Shops & Establishments Acts.
47. Long-Term Incentive (LTI)
ESOPs, RSUs, Performance Shares designed for retention and alignment. Standard in India's startup ecosystem.
Section 4: M - P
48. Manpower Planning
Anticipating future HR needs — hiring, redeployment, upskilling, succession. Integrates supply and demand analysis.
49. Maternity Benefit Act
26 weeks paid leave for first two children. Creche mandatory for 50+ employees. 12 weeks for adoptive mothers. Violations attract imprisonment.
50. Mentoring vs. Coaching
Mentoring: long-term developmental guidance. Coaching: structured, goal-directed, time-bound intervention. Both distinct from training.
51. Minimum Wages Act
Mandatory minimum pay by state and industry (Rs.8,000-25,000/month). Will be superseded by Code on Wages with universal floor wage.
52. Moonlighting Policy
Secondary employment without disclosure. 2022 IT controversy prompted formal policies. Most contracts include exclusivity clauses.
53. Notice Period
Duration before termination — 1-3 months mid-senior, up to 6 months CXO. A major friction point in job switching.
54. Notice Period Buyout
Prospective employer compensates current employer for unexpired notice. Widespread in tech/BFSI. Typically 1-3 months' gross.
55. OKRs
Objectives and Key Results — quarterly goal framework. Widely adopted by Indian startups. Tools: Perdoo, Lattice, Profit.co.
56. Offer Letter
Formal written communication specifying role, CTC, joining date. Legally binding in India. Must be signed before candidate's last working day to reduce reneging.
57. Onboarding
All activities from offer acceptance to 90-day mark. Structured onboarding reduces new hire attrition by up to 82%.
58. Organisation Design
Aligning structure, roles, and governance with strategy. Triggered by mergers, digital transformation, or leadership transitions.
59. Outplacement
Support for departing employees — resume coaching, interview prep, job search. Gained focus during 2022-23 tech layoffs.
60. Payroll Processing
Computing and disbursing salaries including PF, ESI, PT, TDS deductions. Platforms: greytHR, Razorpay Payroll, Keka.
61. Performance Improvement Plan (PIP)
Formal 30-90 day document for underperformers. Often perceived as termination precursor in India. Requires legal rigour.
62. POSH Act
Sexual Harassment of Women at Workplace Act 2013. Mandates Internal Committee for 10+ employee orgs. Annual training required. Fines up to Rs.50,000 for non-compliance.
63. Professional Tax
State-level tax on income, capped at Rs.2,500/year. Levied by Maharashtra, Karnataka, WB, TN. Not all states levy it.
64. Provident Fund (PF/EPF)
Cornerstone of India's retirement savings. Includes EPF, EPS (pension), EDLI (life insurance), VPF (voluntary extra). UAN enables portability across employers.
Section 5: Q - T
65. Quiet Quitting
Doing bare minimum without formally resigning. Response to burnout or misalignment. Manifests differently in India's hierarchical culture.
66. RPO (Recruitment Process Outsourcing)
Outsourcing recruitment to external provider. Growing with GCC expansion. Providers: Randstad Sourceright, Cielo, Allegis.
67. Redundancy
Role elimination due to restructuring. Retrenchment compensation: 15 days' wages per year of service. Government approval required above thresholds.
68. Retention Bonus
One-time payment to retain key employees for 12-24 months. Taxable, with clawback clause if employee leaves early.
69. Right to Disconnect
Right to switch off from work communications outside hours. Not yet law in India but gaining corporate adoption post-pandemic.
70. Role Clarity
Clear understanding of responsibilities, authority, metrics. Lack of clarity is a top driver of disengagement and early attrition.
71. Salary Band
Defined compensation range (min, mid, max) for a job grade. Based on internal equity and external benchmarking (Aon, Mercer, WTW surveys).
72. Separation Management
Complete exit lifecycle — resignation, knowledge transfer, exit interview, FnF, system access revocation.
73. Shops and Establishments Act
State-level law regulating commercial workplaces — hours, overtime, holidays, leave. Requirements differ across states.
74. Skill Gap Analysis
Comparing current vs needed skills. Driving multi-billion-rupee investments in AI, cloud, cybersecurity training.
75. Statutory Compliance
Adherence to all labour laws — EPF, ESI, Gratuity, POSH, Minimum Wages, Labour Codes. Non-compliance risks fines and imprisonment.
76. Succession Planning
Identifying and developing talent for critical roles. A board-level governance imperative in India's family business groups.
77. Talent Acquisition (TA)
Strategic hiring function — employer branding, sourcing, assessment, offer management. Transformed by AI tools like Naukri RMS, HireVue.
78. Talent Management
Integrated processes for attracting, developing, engaging, and retaining talent. Uses data to predict flight risks and identify high potentials.
79. TDS on Salary
Income tax deducted at source under Section 192. Remitted by 7th of following month. Old vs New Tax Regime selection critical.
80. Time and Attendance
Tracking work hours, shifts, overtime, leave. Feeds directly into payroll. Modern biometric and geo-fenced mobile apps replacing manual systems.
81. Total Rewards
Holistic framework: base pay + variable + benefits + wellbeing + recognition + career development + work environment.
82. Training Needs Analysis (TNA)
Identifying learning interventions needed at organisational, functional, and individual levels. Ensures L&D budgets (1-3% of payroll) deliver business impact.
Section 6: U - Z
83. Unconscious Bias
Implicit attitudes affecting hiring and promotion — institutional pedigree bias, gender assumptions. Mitigated by structured interviews and blind screening.
84. Universal Account Number (UAN)
Unique 12-digit EPFO number, constant across employers. Enables self-service PF management, transfer, and withdrawal.
85. Variable Pay
Performance-linked compensation — bonuses, incentives, commissions. Plans must be clearly communicated with transparent payout modifiers.
86. Vendor Management System (VMS)
Software managing contingent labour procurement, compliance, and payment. Growing as India's contingent workforce crosses 15M.
87. Voluntary Provident Fund (VPF)
Optional contribution above mandatory 12% PF, up to 100% of basic. Same interest rate (8.15% p.a.) and Section 80C benefits. One of India's most tax-efficient savings instruments.
88. Wage Code 2019
Requires allowances not exceed 50% of total remuneration — excess deemed wages. Materially increases PF and gratuity liabilities.
89. Work from Home Policy
Terms for remote work. Must cover eligibility, equipment, data security, performance expectations. SEZ and STPI regulations add complexity.
90. Workforce Analytics
Operational workforce data — headcount trends, productivity ratios, absenteeism, cost per revenue unit. Drives scheduling and cost optimization.
91. Workforce Diversity
Range of human differences in the employee population. India tracks: gender at leadership, differently-abled (4% mandated in government), LGBTQ+ inclusion.
92. Workplace Wellness
Physical, mental, financial, social wellbeing initiatives. EAPs, therapy platforms (YourDOST, Wysa). 3-4x ROI per ASSOCHAM estimates.
93. Yellow Flag Employee
Early warning signs of disengagement or attrition risk. People analytics can predict with 70-80% accuracy using login activity, survey responses, tenure patterns.
94. Zero-Hour Contract
No guaranteed minimum hours. Indian equivalent in gig platforms. Code on Social Security 2020 introduces social security provisions for gig workers.
95. 360-Degree Feedback
Multi-rater assessment from managers, peers, reports, clients. Surfaces blind spots. Best used for development, not rating.
96. Gig Economy
Short-term, flexible, platform-mediated work. India: 7.7M gig workers (2020-21), projected 23.5M by 2030 per NITI Aayog.
97. Employer of Record (EOR)
Third-party that legally employs workers on behalf of another company. Surging in India with GCC and remote-work boom. Providers: Deel, Multiplier, Velocity Global.
98. Job Architecture
Framework organising all roles into families, functions, levels, grades. Enables consistent job evaluation and equitable pay across geographies.
99. Internal Mobility
Movement across roles, teams, or geographies within the same organisation. Employees who make internal moves are significantly less likely to leave within two years.
100. Psychological Safety
Shared belief that the environment is safe for speaking up, admitting mistakes, and challenging the status quo. Google's Project Aristotle identified it as the strongest predictor of team effectiveness. In India's hierarchical culture, requires deliberate behaviour change from leaders.
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