Hire in India

HR & Benefits

Contracts

In India, employment contracts can be fixed, permanent, or temporary / probationary, depending on the nature of the job and the agreement between the employer and employee. Permanent employment contracts must include benefits such as provident fund (PF) contributions, gratuity, paid leave, and employee insurance. Fixed-term employees are entitled to the same benefits as permanent employees after they have worked for three months.

Termination and notice periods

In India, a combination of central and state laws applies to the termination of employees.

It’s relatively difficult to terminate an employee in India due to the combination of central and state laws that govern termination. The nature of the employer’s business, the type of employee, and the state the employer is based in determine which laws apply to employee termination. “At-will” employment is not recognized in India, so employers must have a valid reason for terminating an employee.

In most cases, terminated employees are entitled to a warning and a fair hearing. Just cause for a dismissal includes, but is not limited to, the following:

• Theft  

• Disorderly behavior 

• Bribery  

• Insubordination 

• Habitual negligence of duty 

• Lack of capability   

• Financial irregularities 

A notice period of one month is common, though it may be longer.  

Employees with at least one year of service are entitled to severance pay of 15 days' wages for every year of service. Employees who have completed five years of service and work for an employer with 10 or more employees are entitled to a gratuity payment of 15 days' wages multiplied by the number of years of service.  

Probation periods 

Some states have a probation period indirectly addressed in the local law, which often ranges from one month to one year in the private sector, and up to two years in government jobs. 

Annual leave

For non-factory employees, vacation leave entitlements, referred to as "annual" or "privilege" leave, are governed by the Shops and Establishments Act and vary from state to state, but workers can expect at least 15 days of leave each year. 

Factory workers, protected by the national Factories Act, receive one day off for every 20 days worked (up to a maximum of 12 days off).   

Employees also receive “casual leave,” which is typically five to 12 days per year for unplanned absences.

Sick leave   

Personal and sick leave are generally governed by the Shops and Establishments Act. Each state in India separately defines sick leave and employee entitlements vary from seven to 12 days. 

In the manufacturing sector, sick leave is governed by the Industrial Employment Act and employees are entitled to up to 10 days of leave. 

Maternity leave

Employers must provide 26 weeks of paid leave during an employee's first two pregnancies and 12 weeks of paid leave for any additional child as well as for adoptive and surrogacy-commissioning mothers. 

Pregnant employees who have worked for an employer for at least 80 days in the 12 months prior to the date of expected delivery are eligible for benefits, with written notice seven weeks before the due date.