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Localised employment contracts
India stands out as one of the most strategic talent hubs and fastest-growing markets in Asia. Known for its highly educated and multilingual workforce across many industries, cost-effective hiring, and a strong presence across sectors like IT, finance, and customer service, India offers a rich talent pool for businesses expanding globally. Its large and youthful population, in addition to the growing digital infrastructure, make it the ideal destination for remote hiring and international team building.
India offers a unique mix of scale, skill, and affordability, making it a very powerful destination for companies looking to expand globally. But while the talent opportunity is huge, employers must navigate India’s layered regulatory system, including region-specific labour laws, mandatory tax deductions, and social contribution schemes.
Looking to hire in India? Explore employment costs, legal obligations, and everything you need to build teams compliantly. Get our full hiring guide now!
Employment contracts in India can be different, depending on the employment arrangement, duration, and other factors. They can also be oral, written, or electronic, where the written form is the standard practice for permanent and long-term employment.
Notice periods: At least 30 days.
Termination of employment: Due to breach of contract, serious misconduct, redundancy, or unethical behaviour by the employee.
Want to learn more about employment contracts in India? Get our full template now!
Employers in India are required to provide mandatory employment benefits in accordance with the country’s labour laws. Many of them also offer extra perks to stay competitive in the job market. Understanding both of them is essential to attracting and retaining talent.
Leave policies: Paid annual leave, sick leave, maternity leave.
India has a comprehensive tax system that applies both to individuals and businesses. Employers are responsible for withholding and remitting income tax and social security contributions. Additional tax rules may apply to royalty income, professional fees, and other payments.
Personal income tax rate: From 0% to 30%.
VAT: 18%
Tax allowances: House rent allowance, leave travel allowances.
Curious to learn about India’s tax allowances and similar tax regulations?
Employers in India must pay salaries in accordance with the terms stated in the employment contract, and wages must meet or exceed the minimum wage set by the central or state governments. Salaries are typically paid on a monthly basis, and timely payment is mandated under the labour law.
Salary payment deadline: Not fixed.
Taxes and contributions payment deadline: Within 15 days of the last day of the calendar month.
Payroll declarations deadline: By March 31st.
Payroll currency: INR.
Curious to explore India’s regulations about payroll, salaries, and contributions in more detail?
India’s labour laws are shaped by a mix of central and state legislation, covering areas such as employment types, minimum wages, working hours, probation periods, and termination. To remain compliant, employers must navigate both national standards and state-level regulations.
Total employment cost:
Minimum wage: INR 15.000 per month (varies by state)
Probation period: Up to 2 months.
Need a more detailed overview of India’s regulations about employment types, employer obligations, and work conditions?
EOR partners let you hire anyone in India without opening legal entities. Your EOR will take over the legal responsibilities of an official employer, including:
PEO services provide HR and administrative support while you remain the legal employer for your team in India. PEO services are beneficial for employers who already have legal entities in India but need help managing:
With Native Teams’ locally adjusted payroll calculator, you can estimate net/gross salaries, employer/employee contributions, and other mandatory deductions in India.
Note: The information provided above is for general guidance only and should not be considered a substitute for legal advice. We strongly recommend consulting with qualified professionals who specialise in local labour laws before making any hiring decisions. While the data was accurate at the time of writing, labour regulations are subject to change, and it is your responsibility to stay informed about the latest developments.
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When hiring a freelancer or a gig worker in India, the working relationship should remain clearly independent. Freelancers must be registered as self-employed and are responsible for managing their own taxes and social contributions.
Misclassifying a freelancer as a full-time employee may result in penalties, back payments, and compliance issues under the Indian labour law.
