Employer of Record
COVID-19 status update
As the situation in the India continues to develop, Safeguard Global will be providing in-country intellect to our clients. As of today, we have not identified any disruption that will impact our ability to provide the service our clients expect. Learn more in our COVID-19 Resource Center.
If a lack of speed or local expertise are among your top concerns when expanding to or employing workers in India, an employer of record may be the best option for achieving your global growth objectives.
An employer of record, sometimes known as an international PEO, enables you to quickly hire and onboard workers in India―often in as little as two weeks―without having to take on the cost and risk of establishing a local entity.
Learn about the hiring, employment, payroll and benefits requirements for workers in India and how our employer of record service, Global Employment Outsourcing (GEO), and local HR experts can help you manage your international employment needs.
Hiring in India
Employment relationships in India are governed by the constitution, treaties, statutes, judicial precedents, and collective and individual contracts. There are around 165 labor laws established by states, union territories and the central government.
Additionally, Indian law regulates, and sometimes prohibits, the use of contract workers. Employers are required to register as a principal employer, and contractors are required to hold a license.
Because of the complexity of employment laws in India, compliant employment contracts are an essential business need. As your employer of record and PEO in India, we can ensure that every contract, for every worker, meets all requirements. We can also provide you with guidance about cultural norms and hiring best practices and keep you up-to-date with employment regulations as they change.
Employment contracts in India
As you look to hire employees in India, here are some common regulations you’ll need to know to create a compliant contract, as well as how an employer of record and PEO can provide support for your unique HR needs.
India’s normal workweek is 48 hours, with a limit of 10.5 hours of work in a day. Employees cannot work for more than five consecutive hours without a 30-minute rest break, and they cannot work for more than 10 days in a row.
If work is required on Sundays or holidays, there must be a prior agreement, and employees who work on Sundays or holidays must be provided time off equivalent to those days within two months.
As you consider the appropriate salary to offer new employees, keep in mind:
- States and union territories in India have the authority to establish a minimum wage, so minimum wage rates can vary significantly among jurisdictions
- Any work beyond nine hours a day or 48 hours a week is considered overtime and employees are entitled to twice the normal rate of pay per hour.
As your employer of record in India, we can provide you with resources and insights about employee compensation, so you are better equipped to make a competitive employment offer.
In India, The Payment of Bonus Act mandates a minimum annual bonus of 8.33% of a worker’s annual wage. The maximum bonus allowed by law is 20%, and the percentage the employer applies must be the same for all eligible employees.
Some states have a probation period indirectly addressed in the local law, which ranges from three to six months. Ideally, a probation period should not exceed 240 days.
Termination and severance
State laws in India generally require one month’s written notice for termination or salary in place of notice.
In most cases, terminated employees are entitled to a warning period and a fair hearing. Just cause for a dismissal includes the following:
- Disorderly behavior
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 are entitled to a gratuity payment of 15 days’ wages multiplied by the number of years of service.
As your employer of record in India, we can work with you to quickly handle the unforeseen event of an employee termination, providing legal guidance and a personalized process that ensures you stay out of labor court.
Employee benefits and paid leave in India
When negotiating terms of an employment contract with a candidate in India, here are some of the statutory benefits and paid leave requirements to keep in mind, as well as how an employer of record can support your company’s benefits strategy.
Employers must provide 26 weeks of paid leave during an employee’s first two
pregnancies and 12 weeks of paid leave for a third child and for adoptive and surrogacy-commissioning mothers.
Female 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 expected date of delivery.
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 generally expect 15 to 30 days of leave.
Factory workers, protected by the national Factories Act, receive 19 days of annual leave and may accrue up to 30 days of leave.
India observes three national holidays:
- Republic Day
- Independence Day
- Birthday of Mahatma Gandhi
Employers are required to provide five to nine festival holidays. Festival holidays are determined by the state where a company has operations. When employees are required to work on a public holiday, they are entitled to double pay.
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.
India’s social security system provides numerous services, including healthcare, that cover employees from the organized sector. The system is run by the Social Security Division of India’s Ministry of Labour and Employment.
As your employer of record in India, we may be able to provide optional supplementary medical insurance coverage for professionals and their dependents at a more cost-effective rate.
Employers must finance the Employees’ State Insurance scheme, which provides many types of social benefits in addition to medical care, including: replacement compensation for sickness, maternity, disability and unemployment; survivors’ benefits and funeral expenses payable in the case of employment-related death; and vocational rehabilitation, physical rehabilitation and incentive funding for employers to hire employees with a disability.
Employer social costs cover a large portion of employee benefits in India, but we can consult with you about supplemental coverage options, such as additional pension contributions or life insurance, if needed.
Employee onboarding with an employer of record in India
We write and validate all local employment contracts, streamlining the onboarding process for you and your Indian employees—all you have to do is provide relevant information and review and approve the employment agreement.
As your employer of record in India, we will:
- Schedule a welcome call to discuss HR and employment information for India, as well as answer any questions
- Prepare a customized employment contract in English and in Hindi (or other local language)
- Share the employment contract and benefits information with the new employee for signature and review
- Gather tax and banking information from the employee to set up payroll
- Provide a local point of contact to the employee to answer any questions regarding their employment, local HR or payroll
The entire onboarding process for the employee is often completed in as little as two weeks.
Partner with Safeguard Global as your employer of record and PEO in India
With over a decade of service, we are the longest-serving employer of record and PEO provider in the international market. Organizations around the world rely on Global Employment Outsourcing (GEO) to expand and hire in over 179 countries around the world, quickly and compliantly.
We’ve seen just about every global employment circumstance imaginable—and with our extensive knowledge of local law and culture, we know what it takes to get employment right in India. We provide written contracts in the local language, salaries in the local currency and HR support in your employees’ time zone.
Additionally, as a global payroll provider we support payroll administration—including payments, filings and other calculations—in more than 150 countries and can accommodate the payroll outsourcing needs of any size organization.
Whether you’re looking to hire as part of a strategic expansion or to meet specific talent needs, our global solutions advisors can walk you through your international hiring options so you can make the right choice for your organization. Contact us today.
The information provided on or through this website is for informational purposes only and does not constitute legal advice. Safeguard Global expressly disclaims any liability with respect to warranty or representation concerning the information contained herein, including the lost essence, interpretation, accuracy and/or completeness of the information in transit and language translation.
Learn more about Global Employment Outsourcing
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