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Capital City
New Delhi
Currency
Indian Rupee
(
₹
)
Timezone
GMT +5:30
Payroll Frequency
monthly
Tax Year
1 April - 31 March
Employer Tax
16.75%
Languages
Hindi
Capital City
New Delhi
Currency
Indian Rupee
(
₹
)
Timezone
GMT +5:30
Payroll Frequency
monthly
Tax Year
1 April - 31 March
Employer Tax
16.75%
Languages
Hindi
India's rapid economic growth is highlighted by a projected GDP surge to 5 trillion USD by 2025 and an anticipated 8.4 trillion USD by 2030. This growth is fueled by a diverse business sector, offering companies in various industries opportunities to expand their global market presence.
Ranking second only to China, India possesses the world's second-largest online marketplace; boasting a user base of over 560 million. The country's connectivity is expected to surpass 850 million by 2025, exceeding the combined population of all G7 nations, thanks to its expanding population.
India takes pride in its robust legal framework, safeguarding the rights of employees, including those working remotely. This framework ensures a secure and stable working environment, offering legal protections against discrimination, harassment, and unfair treatment for both employers and employees.
With a large English-speaking population, India emerges as an optimal location for companies seeking skilled and fluent English communicators. The country's favourable geographical location and time zone enhance communication and collaboration, promising high-quality interactions with employees in India.
Businesses can only operate smoothly in India if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in India below, to avoid any compliance issues.
In India, though written employment contracts are not mandatory, the Industrial Employment Act of 1946 requires documentation of specific formalities. Fixed-term contracts are allowed for short-term roles, but consecutive short-term contracts are not permitted. Employment agreements must include the following:
We can help you get a new employee started in India quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.
In India, the typical workweek is 40 hours, with 8 hours per day. It can be extended to 48 hours, including breaks, only with client approval and careful consideration of legal requirements and job needs. The private sector often follows state Shops and Establishment Acts (SEAs), which cover working hours and other employment conditions. SEAs are crucial for balancing employer and employee interests and ensuring compliance with labour laws, making them essential for both employers and employees in India.
Hours worked beyond the standard 48 hours are compensated as overtime and are governed by employment agreements. As per Indias Minimum Wages Act of 1984, overtime is paid at a rate of 200% of the regular pay, although specific states in India may adjust these limits regionally.
In India, probation periods typically last 3 to 6 months, depending on the employee's role and seniority. While a 3-month probation is suggested by the Industrial Employment Act of 1946, it's not mandatory, allowing employers to decide based on job needs. This practice is widely used to assess employee performance. Some Indian states also include probation provisions in local labor laws, adding complexity to employment rules.
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1 April - 31 March is the 12-month accounting period that businesses in India use for financial and tax reporting purposes.
The payroll cycle in India is usually monthly, with employees being paid on or after the 28th of each month.
The minimum wage for employees in India is typically 22.25 INR per hour, amounting to ~3,560 INR per month for a typical 40 hour work week.
Low-income workers in India are required to receive 13th-month salary, calculated as a percentage of their annual income and paid within eight months after the financial year concludes.
Employer payroll contributions are generally estimated at an additional 16.75% on top of the employee salary in India.
In India , the typical estimation for employee payroll contributions cost is around 18.08%.
In India, individual income tax is determined using progressive rates, ranging from 5% to 30%. There are two regimes available: the New Personal Tax Regime (NPTR) outlined below, and the old regime, allowing taxpayers to opt for either of the two.
In India, the retirement age - set between 58 and 60 years - is regulated by the Employees Provident Fund Act of 1952 and the Industrial Employment Act of 1946. Both employer and employee contribute 12% to the Employees Provident Fund Scheme (EPFS) and other funds, covering pension and deposit-linked insurance for the employee.
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In India, work permits and visas are essential for employers hiring foreign nationals. The process involves submitting applications, providing supporting documentation, and meeting specific eligibility criteria. The primary visa types include the Employment Visa for skilled foreign workers, the Business Visa for business-related activities, the Project Visa for government-related projects, and the Intern Visa for internships. Employers play a crucial role in sponsoring and supporting these applications to ensure compliance with Indian labor laws and avoid penalties.
To obtain a work visa, applicants must provide documents such as a valid passport, employment contract, and proof of qualifications. Processing times vary, with Employment Visas taking up to 5 months. Employers must also assist foreign workers with post-arrival registration at the Foreign Regional Registration Offices (FRRO). Understanding these requirements helps ensure a smooth hiring process and compliance with Indian regulations.
The annual leave entitlement in India is 15 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.
In India, public holidays differ across states, typically outlined in employment contracts. However, many states mandate 10 public holidays annually, including paid time off for voting. Some are obligatory national holidays, while employers choose others from a broader list provided by the state. The prescribed holidays in India are as follows:
The employment contract in India mandates a minimum of 15 days of paid leave annually after completing 240 days of employment. Additional leave days and rules for carryover can be negotiated in the contract. Paid time off requests must be made 15 days in advance and require approval from the employer, works committee, and manager for work continuity.
Expectant mothers can take a 26-week maternity leave for their first two children, reduced to 12 weeks for subsequent births. During the six weeks post-birth or miscarriage, working is prohibited. Compensation is 100% of the regular salary, contingent on 80 days of employment within the 12 months preceding the due date.
Government workers are entitled to a 15-day paternity leave. There is no legally mandated paternity leave regulations for private sector employees.
Employees with three months of service receive 15 days of paid sick leave annually and are given at the employers discretion, with pay at 70% of their regular daily salary. A medical certificate is required within 48 hours of sickness. In the private sector, employers cover the cost, while factory employees use their annual leave for sick or casual leave.
There is no statutory provision for shared parental leave in India.
In India, employment termination can be executed "at-will" or without cause; primarily determined by the terms of the employment agreement, provided that adequate notice and severance pay are given. Compliant termination include:
The minimum notice period for regular dismissal is at least 30 days or 1 month. However, this may differ depending on the specific regulations in each state of India. You can get in contact with us if you'd like more information on this!
Employees may be eligible for severance pay depending on the cause of termination:
Disclaimer
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.
ABOUT THE AUTHOR
Jesse Weisz
Jesse is an experienced R&D Analyst at Playroll, a leading Employer of Record (EOR) provider. With a strong background in data analysis and market research, Jesse specializes in identifying emerging trends and driving innovation in global HR solutions. She is an all-rounder, critical thinker and success-seeker (often inextricably linked to being a late-night tea drinker).
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