As of March 2024, the estimated population of India is 1.4 billion.
The currency in India is the Indian Ruppe (INR). The currency symbol is ₹.
Permanent employees are those hired for any skilled, semi-skilled or unskilled, manual, operational, supervisory, managerial, administrative, technical, or clerical work for hire or reward, whether the terms of employment be express or implied, with no fixed termination date. Employees in industrial establishments become permanent after their probation of 6 months. Permanent employees enjoy statutory benefits such as paid annual leave, sick leave, gratuity pay, provident fund, and compulsory health insurance.
Employees can be hired through express (written or oral) or implied contracts. Contracts for fixed-term must be made in writing. Employers should be vigilant for provisions requiring written contracts in collective agreements or state-level laws. Employers must issue appointment letters to all employees. Appointment letters should include the following information: Employee name and date of birth Father's/Mother's name Aadhaar number (with consent) Establishment Labour Identification Number Universal Account Number and/or Insurance Number Type of employment Position and category of skill Date of hire Wages and other allowances Growth or promotion opportunities Social security benefits (Employees' Provident Fund Organization and Employees' State Insurance Corporation) General nature of duties to be performed Statutory maternity benefits available Any other information
In India, a temporary worker is a worker who has been engaged for work that is of an essentially temporary nature and likely to be finished within a limited period. Most temporary contracts are handled through temporary work agencies (TWAs). TWAs are loosely regulated by Indian law, but temporary contract employees are protected under The Contract Labour (Regulation and Abolition) Act of 1970. Specifically, the Act regulates: Non-seasonal establishments that employ twenty or more workers as contract labor TWAs who employed or have employed twenty or more workers on any day of the preceding twelve months Temporary agency workers are not required to receive the same statutory benefits as regular employees. However, the Contract Labour Act empowers courts to determine when an employer has misclassified an employee as a TWA worker by examining the worker's length of service, among other factors.
India has provisions for 6 months' probationary period for hiring permanent employees. This period can be further extended by up to 3 months. If a permanent employee is employed as a probationer in a new post, they can be reverted to their old permanent post at any time during the probationary period of 6 months. An employment contract can be terminated without notice in probation.
A normal working day is 8 hours for employees on a daily wage period. Employers may set the normal working day as they choose for employees on any other wage period, provided the total weekly hours do not exceed 48 hours. Under the Occupational Safety, Health and Working Conditions Act 2020 of India, no employee of a covered establishment can be required or allowed to work in any establishment for more than 8 hours a day or 6 days a week. Children aged 14 up to 18 years cannot be employed for more than 6 hours a day and no more than 3 hours without a break. The periods of hours of work for all categories of workers must be exhibited on the notice board of the industrial establishment. If an employer engages in a commercial activity, the regional shops and establishments statutes govern the applicable regulations. As per the August 29, 2025, amendment to the Punjab Shops and Commercial Establishments Act, the standard working hours are increased to 10 hours a day, with a maximum of 12 hours a day, limited to 48 hours per week, for establishments with at least 20 employees. Overtime hours have been increased to 144 per quarter. Employers with more than 20 employees must register with the Labour Inspector within 6 months of starting business, and also within 1 month of closing the business. Effective October 1, 2025, the Maharashtra government has permitted all shops and commercial establishments to operate 7 days a week, except those servicing alcohol. All employees must be given at least a continuous 24-hour rest period a week. On March 11, 2026, the Delhi government issued changes to the Delhi Shops and Establishments Act (1954) applicable to employers with 20 or more employees, which will go into effect upon the Minister issuing a Gazette Notification. Under the amendments, the maximum working time is 10 hours per day (including rest and lunch breaks) and 60 hours per week, with an overtime cap of 144 hours per quarter. The continuous working period increased to 6 hours before employees must be provided with a break. The maximum spread-over period, including rest breaks, will be limited to 12 hours.
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Employees are entitled to paid annual leave at the rate of one leave per 20 days of work if they have worked for at least 180 days in a year. For employees between 14 and 18 years, annual leave is calculated as 1 day of leave per 15 days of work. Up to 30 days of annual leave may be carried over to the next year. If the employment contract expires before a worker can take annual leave, compensation for leave is made in proportion to the number of months and the number of hours worked in a week.
India does not have a national statutory entitlement for employee sick leave. Under the Apprentices Act, apprentices are entitled to sick leave as decided by the organization with whom they are training. Employers involved in commercial activities are advised to refer to their local shops and establishments statutes, which may or may not grant employees the right to sick leave. Since nearly everyone needs such time off occasionally, all organizations are expected to have a clear, established policy regarding sick leave and personal days.
Under the Social Security Code, eligible female employees with fewer than 2 surviving children are entitled to a maximum of 26 weeks of maternity leave, which can commence up to 8 weeks before the expected date of delivery. Female employees with 2 or more surviving children are entitled to 12 weeks of maternity leave, which can commence up to 6 weeks before the expected date of delivery. To be eligible, female employees must have actually worked at least 80 days in the 12 months immediately preceding the date of expected delivery. Days for which the employee has been laid off or was on statutory holidays with pay are taken into account when calculating the actual days worked. Female employees are entitled to a maternity benefit at the rate of the average daily wage of the payments she received during the period of 3 calendar months immediately preceding the date from which she takes maternity leave. The maternity leave rate is subject to the minimum wage rate as specified in the Code on Wages. Employers are prohibited from employing women during the 6 weeks following the day of delivery or miscarriage. Female employees are exempt from tasks that require strenuous effort or are physically demanding and exhausting, or that require standing for long periods or may in any way interfere with the pregnancy, the normal development of the fetus, or pose a risk of miscarriage or other harm to her health for the following periods: 1 month preceding the period of 6 weeks before the expected delivery day; and any part during those 6 weeks for which the pregnant woman has not taken maternity leave A female employee who legally adopts a child under 3 months or a commissioning mother is eligible for maternity leave of 12 weeks from the date the child is handed over. A commissioning mother is defined as a "biological mother who uses her egg to create an embryo implanted in any other woman."
While there is no statutory minimum paternity leave for private-sector workers, the law allows male government employees to take up to 15 days of leave if they have fewer than 2 surviving children. Employees can take this leave once the baby is born or within 6 months of the delivery.
Employees who have worked continuously for at least 1 year with the same employer must be given at least 1 month's notice before retrenchment or the termination of a permanent employee. The duration of the notice period depends on the number of employees in the establishment and the reason for termination: Establishments with at least 50 employees - 1 month Closure of establishment with at least 50 employees - 60 days Establishments with at least 300 employees - 3 months
Employees who have worked for at least 1 year are entitled to severance pay equal to 15 days' wages for each year of work or any part exceeding 6 months when their employers dismiss them with valid reason. No compensation is paid to employees who refuse to accept any alternative employment offered by their employers or are dismissed due to disciplinary action. Employees dismissed due to transfer or closure of establishment due to unavoidable reasons are also entitled to severance pay, provided their severance pay does not exceed 3 months' wages. Employees who leave a job after having rendered 5 continuous years of service are entitled to gratuity payment at 15 days' pay for each completed year of continuous service or any part exceeding 6 months. There is a ceiling of INR 2,000,000 (Indian rupees) when calculating severance payments.
India's Pension Fund Regulatory and Development Authority (PFRDA) was established in 2003 to provide adequate retirement income for citizens and encourage retirement savings. It administers and regulates the National Pension System (NPS), which is a voluntary, contribution-based retirement savings scheme that is structured into 2 tiers: Tier I - the non-withdrawable permanent retirement account into which the accumulations are deposited and invested per the subscriber's option. Tier II - a voluntary withdrawable account, which is allowed only when an active Tier I account is in the subscriber's name. The withdrawals from this account are permitted based on the subscriber's needs. To enroll more employees who work in the informal and unorganized sector in a pension scheme, the Indian Government established a pension scheme within the NPS called the Atal Pension Yojana (APY). The Employee Provident Fund (EPF) is compulsory insurance for employers with at least 20 employees and some organizations with over 50 employees. For companies with fewer than 20 workers, the program is voluntary. For employees with basic wages less than or equal to INR 15,000 per month, contributions are 12% of the monthly salary, and the employer contributes 3.67%. For employees with basic wages over INR 15,000 per month, the contribution is the same 12% of the monthly salary; however, the employer contributes 12%.
In India, the death benefits may differ depending on which system the deceased employee is a member of. Employees' State Insurance Scheme (ESI/ESIC) Under the ESI, for deaths resulting from a work-related injury, the qualifying conditions include being assessed with a work injury or occupational disease. Accidents that occur while commuting to and from work are covered. Employees' Provident Fund (EPF) Under the EPF scheme, the nominee is entitled to a lump sum of the deceased member's accumulated provident fund balance. If the deceased member did not register a nominee, or if the nominee is only to receive part of the fund, the balance is to be divided equally among eligible surviving family members. Employees' Deposit-linked Insurance Scheme (EDLI) Under the EDLI, upon the death of a member of the Fund or of an exempt provident fund, the persons entitled to receive the provident fund accumulations of the deceased member are also entitled to an assurance benefit. The assurance benefit is equal to the average balance in the deceased member's Fund or exempt provident fund account during the 12 preceding months or the period of membership, whichever is shorter. Employees' Pension Scheme (EPS) Under the EPS Scheme, family pension benefits are available to survivors or dependents of a member employee if the EPS member dies under 1 of the following conditions: While employed and has paid at least 1 month's contribution to the Employees' Pension Fund After leaving employment, but before turning 58 years, having rendered service entitling them to a monthly member's pension, and before the start of the pension payment After the start of the monthly member's pension The monthly widow's pension depends on which of the circumstances above the EPS member has passed. Surviving children of the deceased member are entitled to a monthly children's pension in addition to the monthly widow's pension. The children's pension is admissible to a maximum of 2 children at a time and runs from the oldest to the youngest child in order. Orphans of deceased members, or if the widow's pension is not payable, are entitled to a monthly pension equal to 75% of the admissible amount that the widow of the deceased member would have been entitled to. The Gratuity Act The Gratuity Act applies to factories, mines, oil-fields, plantations, ports, railway companies, and shops or establishments that employ 10 or more workers on any day in the preceding 12 months. Beneficiaries of deceased employees who were covered under the act are entitled to a gratuity benefit. Generally, the act requires a 5-year minimum service before an employee becomes entitled, however, the requirement is waived in the case of death or disablement. The Employees' Compensation Act Under the Employees' Compensation Act, employers are liable for compensation in the event of death resulting from work-related accidents or diseases. The compensation is calculated as 50% of the deceased employee's monthly wages multiplied by the "relevant factor" under Schedule IV if the injury results in death. The eldest surviving dependent is also entitled to at least INR 5,000 for funeral expenses. Employers must deposit the funds for compensation and the funeral benefit with the Commissioner to be distributed among dependents. Employers may provide a dependent with up to 3 months' wages in advance. National Pension System (NPS)N Under the NPS, beneficiaries of deceased NPS subscribers who have made contributions to the scheme are entitled to the accumulated pension benefits upon the subscriber's death. Employees should nominate an individual, however, if there is no valid nomination, the legal family may submit a claim.
In India, disability benefits may differ depending on which pension system an employee is a member of. Under the National Pension System, the monthly pension is based on the insured person's pensionable wages. In certain cases, it may be paid as a lump sum of total employee and employer contributions plus accrued interest. Benefits are adjusted annually by the central government based on an actuarial evaluation. Under the Employee Provident Fund, a lump sum of total employee and employer contributions (plus accrued interest minus previous withdrawals) is paid. Employees who are permanently and totally disabled are entitled to pension depending on their years of service. Under the Indira Gandhi National Disability Pension Scheme, a basic pension of INR 300 a month is paid. Additional amounts may apply and vary by state. For employees who suffer a temporary disability as the result of a workplace injury, 90% of the insured person's average daily wages are paid for the duration of the disability (must last at least three days). There is no maximum duration of payments. Average daily wages are based on the insured person's wages in the last six months. Employees who suffer a permanent disability as the result of a workplace injury are eligible for a permanent disablement benefit, under which a monthly pension is determined based on the assessed loss of earning capacity.
Income tax is applicable for individuals, businesses, and all establishments that generate income from sources in India. The Tax Year runs from April 1 through March 31 of the next year. A new tax regime has been introduced in India for individual taxpayers that provides an optional tax rate table for simplified tax calculation and removes around 70 exemptions and about 100 deductions. Tax rates are progressive and range from 5% to 30% under both the regimes. Income tax for residents is calculated at graduated rates and currently ranges from 0 to 30%. Health and education levy applies at a flat rate of 4% of the income tax amount. High-income surcharge also applies to income above INR 5,000,000.
Visas are required of all foreign nationals seeking to enter India. Types of visas include:
India issues Employment or E visa for 1 year or the term of the contract in India (up to 5 years). An Employment visa is granted to a foreign national who is a highly skilled and/or qualified professional and is engaged or appointed by a company, organization, or industry undertaking in India on a contract or employment basis. Foreigners traveling to India to do volunteer work with a Non-Governmental Organization will also need an E visa. E visa is also required for self-employed individuals, consultants, foreign artists conducting regular performances, specialists, etc. The foreign national being sponsored for an E Visa in any sector must draw a salary above USD 25,000 (United States dollars) per year. However, this condition does not apply to ethnic cooks, language teachers, translators, and staff working for an embassy in India.
Starting a business and hiring employees in India offers great opportunities with its expanding economy and huge talent pool. It can be difficult to manage the process with India’s complicated labor laws, tax laws, and cultural nuances. An Employer of Record (EOR) solution makes it easier where companies can employ people in India without maintaining a local presence. At Engage Anywhere, we simplify your entry into the Indian market through our EOR India solutions, allowing you to hire employees in India using EOR without the need to set up a local entity.
India is a rapidly developing market with a quickly rising workforce. While employing staff in India is subject to numerous legal, administrative, and cultural needs, this guide streamlines the recruitment process and offers a checklist for companies undertaking expansion into India.
Companies have to abide by India’s labor laws, taxation regulations, and employment policies. Our EOR services in India ensure full compliance while handling payroll, HR, and administrative tasks, allowing you to focus on business expansion.
Our EOR service providers in India offer a cost-effective and streamlined way to hire employees. Here’s why businesses trust us:
Hiring in India involves several legal and administrative steps. Below are key components managed through our EOR services in India:
Employment contracts in India should include:
Indian employers are subject to taxation guidelines, such as:
Our payroll outsourcing companies in India handle all these calculations accurately.
Employment compliance includes adherence to labor laws, anti-discrimination policies, and health and safety standards. Regular audits and updates are necessary to remain compliant with Indian employment laws.
Businesses hiring foreign employees must be aware of visa requirements:
Work permits are tied to employment visas and require:
Work permits in India require sponsorship, compliance with visa conditions, and proper documentation. Our India Employer of Record team ensures smooth processing.
Payroll management includes:
Our payroll outsourcing services in India and payroll services in India ensure accuracy, compliance, and timely payments.
Indian labor laws protect employee rights, including:
Salaries in India vary based on sector, location, and experience. Employers must:
Workers in India are also eligible for:
Many employers conduct background checks to verify the following:
We conduct employee background checks and ensure smooth offboarding with proper notice periods and severance policies.
Termination processes must comply with Indian labor laws. Key considerations:
Understanding cultural aspects enhances workforce management:
Providing competitive benefits attracts top talent. Common benefits include:
Entering India requires careful balancing of employment law, compliance matters, and cultural considerations. At Engage Anywhere, we act as your trusted Employer of Record (EOR), handling all HR, payroll, and compliance matters while you focus on growing your business. Our expertise ensures you stay compliant with Indian labor laws, mitigating risks and reducing administrative burdens.Our EOR service providers in India and payroll outsourcing India experts simplify workforce management. Whether you’re a US company hiring employees in India or a growing enterprise exploring opportunities, our EOR India solutions ensure seamless, compliant operations.
Engage Anywhere provides full-service Employer of Record (EOR) solutions designed specifically to address your business requirements. With an extensive understanding of Indian labor laws, we make it easier for you to expand your workforce into the Indian market.
Begin hiring in India today and realize your company’s potential in one of the world’s most rapidly growing economies.
An EOR is a third-party organization that oversees employment duties, such as payroll, compliance, and administration of benefits, on behalf of a company.
No, an EOR enables businesses to hire Indian employees without opening a local entity.
Employers have to abide by tax laws, such as TDS, PF, ESI, and professional tax laws.
An EOR keeps companies in compliance by maintaining payroll, taxation, and regulations, minimizing risk of legal headaches.
With the help of Engage Anywhere, your business can confidently and easily navigate the intricacies of hiring in India.
