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India is known for its highly skilled workforce, particularly in the technology sector, and that is why many companies decide to recruit Indian employees.
However, before you start hiring from this Asian country, it is necessary to understand their hiring procedures and be aware of the regulations. The process of hiring in India involves a few steps, some of which may be similar to those in your own country and some that are quite unique to India.
As an employer in India, you must provide employees with a written employment contract that outlines the terms of their employment. The contracts should include their duties, work hours, remuneration, and benefits. Additionally, you must follow the minimum wage regulations, working hours, paid leave, and other statutory requirements under Indian law.
You should also be aware of the cultural and language differences when hiring in the country. India has a diverse culture, and it’s important to understand and respect the cultural norms and expectations of your employees.
Overall, understanding the regulations and cultural differences involved in hiring in India can help you tap into a highly skilled workforce and successfully grow your business in the country.
India has a large pool of skilled workers who are well-educated and have experience working in diverse industries. The country is home to numerous world-famous universities, producing a large number of graduates in various fields every year.
It also has a robust legal framework that protects the rights of employees, including those who work remotely. This provides a secure and stable working environment for both employers and employees, with legal protections against discrimination, harassment, and unfair treatment.
India also has a large English-speaking population, which is ideal for companies that require their employees to have fluent English communication skills. Because of its geographical location, India also has a convenient time zone, which allows good communication and collaboration with other parts of the world.
Finally, India has a reliable and advanced IT infrastructure, which is essential for remote work. The country is known for its thriving technology sector and innovative startups, which can be a valuable resource for businesses seeking to hire remote workers with expertise in various tech-related fields.
With our Employer of Record solutions, you can hire new employees in India without establishing an entity in the country. We will ensure your new hire is properly employed, in compliance with all local employment laws and regulations.
Hire your first Indian employee with Native Teams.
To ensure a fully compliant hiring process, employers in India must follow a couple of important laws and regulations.
India’s labour law framework has developed over more than a century, shaped by both colonial-era legislation and post-independence reforms focused on worker welfare and social justice.
Early legislation included the Apprentices Act of 1850, the Factories Act of 1881 and the Bombay Trade Disputes Act of 1934. Following independence, laws such as the Industrial Disputes Act of 1947, the Industrial Employment (Standing Orders) Act of 1946 and various state-specific Shops and Establishments Acts became central to the regulation of employment.
More recently, 29 central labour laws were consolidated into four comprehensive Labour Codes, enacted between 2019 and 2020 and brought into effect on 21 November 2025:
The reforms are intended to simplify compliance, strengthen worker protections, expand social security coverage and address modern employment arrangements, including gig work and fixed-term employment.
As of April 2026, the four Labour Codes are fully operational, with the relevant central and state rules finally notified.
The type of employment contract used in India depends on the nature of the work and the employment arrangement. Common types include:
Full-time contracts
Full-time contracts are generally used for permanent employees, typically working a standard 48-hour workweek. These contracts set out statutory benefits such as paid leave, national holidays and Provident Fund (PF) contributions. Employers may also provide additional benefits, including health insurance, gratuity and pension plans.
Part-time contracts
Part-time contracts apply to employees who work fewer than 48 hours per week, often on flexible schedules. Part-time employees are entitled to statutory benefits on a pro-rata basis, including wages, leave, social security contributions and other legally required benefits.
Zero-hour contracts
Zero-hour contracts provide work according to the employer’s needs, without guaranteeing a minimum number of working hours. Employees are paid for the hours they work and are entitled to the applicable minimum wage, although no other statutory benefits are mandated.
Casual contracts
Casual contracts are typically used for short-term or seasonal work, with employees paid according to the work completed rather than receiving a fixed salary or schedule. Minimum wage requirements apply, although casual employees are generally not entitled to statutory benefits.
Fixed-term contracts
Fixed-term contracts employ an individual for a specific, predetermined period, which may be linked to a project, assignment or operational requirement. The contract specifies the start and end dates and generally ends automatically when the agreed period expires unless the parties agree to renew or extend it.
Fixed-term employees are entitled to statutory benefits on the same basis as permanent employees, including wages, leave, social security benefits and medical coverage, subject to applicable legislation. Benefits are provided proportionately where required.
Fixed-term employees also become eligible for gratuity after completing one year of continuous service, even if they are not classified as permanent employees.
An employment contract in India establishes the terms and conditions of the employment relationship, including the employee’s work and compensation. It is based on key principles of Indian contract law, including offer, acceptance, consideration, competent parties, legal object and free consent.
An employment contract typically includes:
Clearly documenting these terms helps both parties understand their respective rights and obligations and can reduce the risk of future disputes concerning areas such as compensation, benefits and termination.
Download a free employment contract for India through Native Teams.
Employment contracts in India may be concluded orally, in writing or electronically, depending on the nature of the employment arrangement.
Oral employment contracts
Oral contracts are agreements made verbally between the employer and employee without a written document. Although less common, they can be legally valid under Indian law. However, the absence of written terms can make them more difficult to enforce and may increase the risk of disputes or ambiguity. They are more commonly used for informal or short-term employment arrangements.
Written employment contracts
Written contracts formally document the terms, conditions and obligations of both parties. They provide greater clarity and legal protection and are standard practice for permanent, long-term or specialised employment arrangements.
Electronic employment contracts
Electronic contracts are created, signed and stored digitally, including through the use of electronic signatures. They can provide greater accessibility and efficiency, particularly for remote and virtual teams, but must comply with applicable electronic signature requirements.
Working hours in India are primarily governed by the Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code), alongside applicable state-specific Shops and Establishments Acts. Until the Code is formally enforced through state rules, employers must ensure compliance with relevant state-level requirements.
Under the OSH Code, employees may work a maximum of 48 hours per week, with the total daily span, including breaks, limited to a prescribed 12-hour spread-over period.
Weekly working hours may be structured flexibly, including through compressed workweeks, provided the 48-hour weekly limit is observed.
Employees are entitled to a rest interval of at least 30 minutes after five hours of continuous work. Any work performed beyond the applicable daily or weekly limits is considered overtime and must be compensated at twice the ordinary rate of pay.
Night work in India generally covers work performed between 7 PM and 6 AM, with specific requirements varying depending on the industry and location.
Night shift work is particularly common in sectors that operate around the clock, including call centres, IT support services and healthcare.
Employers often provide additional allowances or higher rates of pay for night shift employees to account for the inconvenience and potential health impacts associated with working at night. However, the level of additional compensation may vary depending on factors such as the industry, location, role and the employee’s level of expertise.
Night shift pay also tends to be higher in major cities such as Mumbai, Delhi, Bengaluru and Chennai, where demand for night workers and the cost of living may be higher.
Employees in India are entitled to breaks, weekly rest and leave, with requirements governed by the Occupational Safety, Health and Working Conditions Code, 2020 and applicable state-specific Shops and Establishments Acts.
These provisions are intended to protect employees’ health and safety by ensuring adequate periods of rest and reducing the risks associated with prolonged work, including workplace injuries, accidents and illness.
Employees are also entitled to periodic days of rest, with specific requirements varying under the applicable legislation. Employers must comply with these statutory requirements, as breaks, weekly rest and leave are protected employment rights rather than discretionary benefits.
Annual leave entitlements in India are governed by the Occupational Safety, Health and Working Conditions Code, 2020 and applicable state-specific Shops and Establishments Acts.
Adult employees who complete the required period of continuous service are entitled to annual leave with pay. The number of leave days and eligibility requirements may vary depending on the applicable state legislation and industry.
Annual leave generally accrues based on an employee’s period of service, with employees earning a certain amount of leave over time. Accrual rates may vary according to applicable labour laws and company policies.
Unused annual leave may also be carried forward to the following year within specified limits. In some circumstances, employees may be able to encash unused leave, subject to applicable legislation and organisational policies.
Employers must comply with the relevant statutory annual leave requirements, including applicable rules on entitlement, accrual, carryover and encashment.
Salary requirements in India are governed by legislation covering minimum wages, wage payments, equal pay, bonuses, taxation and social security.
Minimum wage requirements apply at both central and state levels. The applicable minimum wage may vary according to factors such as the employee’s skill level, industry and location. Employers must ensure that employees receive at least the applicable minimum wage.
The Code on Wages, 2019 regulates several aspects of employee compensation, including:
Employers are also responsible for deducting tax at source (TDS) from salaries and wages according to the applicable income tax requirements.
Under the Code on Social Security, 2020, eligible employees may also be entitled to gratuity upon retirement, resignation or death, provided the applicable service requirements are met.
To calculate the salary and taxes in India, click here.
Employees in India are entitled to paid sick leave when they are unable to work due to illness or injury. Sick leave is separate from annual or vacation leave.
Specific sick leave entitlements vary depending on the employee’s location and the applicable local laws. Employers must establish policies covering areas such as:
Sick leave policies may also distinguish between short-term and long-term illness, with different procedures applying depending on the duration of the employee’s absence.
There is currently no nationwide legislation in India requiring employers to provide paternity leave. The Code on Social Security, 2020 provides benefits for expecting and adoptive mothers but does not establish a dedicated statutory paternity leave entitlement.
In the absence of a nationwide requirement, paternity leave is generally provided at the employer’s discretion. Some employers include it as part of their employee benefits package, with leave periods commonly ranging from a few days to a couple of weeks, depending on company policy and industry practices.
Paternity leave requirements may also exist at the state level. For example, Maharashtra has introduced provisions allowing up to 15 days of paternity leave for male employees in certain sectors.
Maternity leave in India is governed primarily by the Code on Social Security, 2020, which applies to establishments such as factories, shops and offices employing 10 or more employees.
Eligible employees are entitled to a minimum of 26 weeks (182 days) of paid maternity leave, which may be taken before and after childbirth. Up to 8 weeks may be taken before the expected delivery date.
To qualify, an employee must have worked for the establishment for at least 180 days during the 12 months preceding the expected delivery date.
Maternity benefits also extend to:
During maternity leave, the employer must pay the employee her average daily wage for the entire leave period. Additional benefits covering medical expenses related to childbirth may also apply in certain states.
Employment in India may be terminated through several methods, with the applicable requirements depending on the reason for termination, the employee’s classification and the relevant legislation.
Resignation
Employees may voluntarily terminate their employment by providing written notice in accordance with their employment contract, applicable standing orders under the Industrial Relations Code, 2020 (IRC), or the relevant state Shops and Establishments Act. Employers must complete exit formalities and final payments within the applicable statutory timelines.
Termination by the employer
Employers may terminate employment for reasons including performance issues, policy violations, misconduct, redundancy or other business-related grounds.
For workers, termination based on misconduct requires compliance with applicable standing orders and a formal domestic enquiry based on principles of natural justice. Termination for reasons unrelated to misconduct generally requires notice or payment in lieu of notice, according to the employment contract or applicable legislation. Employers must have a lawful and justifiable basis for termination.
Retrenchment
Under the IRC, retrenchment refers to termination for reasons unrelated to employee misconduct, such as restructuring, redundancy or economic constraints.
Employers must provide written notice and pay retrenchment compensation equivalent to 15 days’ average wages for each completed year of service. The last-in, first-out principle generally applies unless the employer records reasons for departing from it.
Prior government approval is required where the applicable threshold is met, which has increased from 100 to 300 workers.
Dismissal
Dismissal may occur in cases of serious or gross misconduct. Before dismissing an employee, the employer must conduct a formal domestic enquiry that includes a show-cause notice, a fair hearing and an opportunity for the employee to present evidence.
If misconduct is established through the appropriate procedure, dismissal may take place without notice or retrenchment compensation. Failure to follow due process may result in the dismissal being treated as illegal retrenchment.
Layoff
A layoff is a temporary suspension of employment where the employer is unable to provide work because of business, machinery or operational reasons. Unlike retrenchment, a layoff does not end the employment relationship unless it is subsequently converted into retrenchment through the statutory procedure.
For establishments above the applicable threshold, generally 50 workers, employees are entitled to layoff compensation equal to 50% of basic wages and dearness allowance. This entitlement cannot be waived contractually.
Constructive dismissal
Although not expressly codified in the Labour Codes, constructive dismissal is recognised through judicial precedent. It may arise where an employer’s conduct effectively forces an employee to resign, such as through unilateral changes to key employment terms, harassment or the creation of a hostile working environment.
Affected employees may seek remedies such as compensation or, for workers, reinstatement, provided they can demonstrate that the resignation was effectively coerced.
Regardless of the method of termination, all full and final settlement amounts must be calculated, cleared and paid within 48 hours of the separation date. Employers should therefore calculate these amounts before the employee’s final working day rather than relying on standard post-employment payroll cycles.
An employer in India may terminate an employment contract only on a lawful and justifiable ground. Employees retain the right to challenge a dismissal before the appropriate labour authority or judicial forum, depending on their classification and the applicable legislation.
Recognised grounds for employer-initiated termination may include:
The dismissal must be communicated in writing and, where required, clearly state the grounds for termination.
For misconduct-related dismissal, employers must follow the principles of natural justice. This includes issuing a show-cause notice, giving the employee an opportunity to respond and conducting a domestic enquiry before reaching a decision.
Where employment is terminated without misconduct or another legally valid cause, statutory retrenchment compensation applies at 15 days’ average wages for each completed year of service, unless the employee is entitled to more favourable terms under their contract.
In practice, termination requirements may be determined by a combination of the employment contract, certified or model standing orders and applicable state-specific Shops and Establishments legislation, depending on the employee’s classification and the rules applicable in the relevant state.
The notice period for termination in India depends on the employee’s classification, applicable legislation and employment contract.
Notice period for workers
For employees classified as workers under the Industrial Relations Code, 2020 (IRC), retrenchment generally requires one month’s notice or wages in lieu of notice.
Establishments employing 300 or more workers must obtain prior government approval for retrenchment, layoff or closure. Establishments below this threshold must still comply with the applicable notice and compensation requirements.
The Model Standing Orders may also apply and establish requirements relating to misconduct, disciplinary proceedings and termination procedures.
Notice period for other employees
Employees outside the worker category, including those in managerial, supervisory or administrative roles, are generally subject to the applicable state Shops and Establishments Act.
Requirements vary by state, but one month’s notice or wages in lieu of notice is typically required after a minimum period of continuous service, commonly three months.
Where the employment contract specifies a notice period, the contractual terms apply provided they are no less favourable than the statutory minimum. Contracts may establish longer notice periods, mutual notice obligations or different requirements during probation.
Challenging a dismissal
Employees who believe they have been unlawfully or unfairly dismissed may challenge the termination through different mechanisms depending on their classification and circumstances.
Employees should generally first use the employer’s internal grievance procedures where appropriate. For employees classified as workers, disputes may be referred to a Conciliation Officer under the IRC. If the dispute remains unresolved, it may proceed to the Industrial Tribunal, which can adjudicate matters including unfair dismissal, retrenchment disputes and compensation claims.
Employees outside the worker category may pursue claims through the labour authorities designated under the relevant state Shops and Establishments Act or through the civil courts, particularly in cases involving breach of contract, inadequate notice or allegedly unlawful termination.
Unemployed individuals in India may have access to government support, employment assistance and skills development programmes, depending on their eligibility and the schemes available to them.
Unemployment benefits
Eligible individuals may receive financial assistance through government schemes designed to provide support during periods of unemployment. Eligibility requirements, benefit amounts, duration and application procedures vary between programmes.
Job-seeking assistance
Government agencies and employment exchanges may provide support including job listings, career counselling and employability programmes. Jobseekers may also have access to workshops covering areas such as CV preparation, interview skills and job search strategies.
Retraining and skills development
Unemployed individuals may access vocational training, apprenticeships and skills development programmes designed to prepare them for new roles and industries. Depending on the programme, training may be provided free of charge or at a subsidised cost.
Rights and protections
Unemployed individuals are entitled to dignity and protection against discrimination, including discrimination based on gender, caste, religion, disability or age. Legal avenues may be available where individuals experience discrimination or unfair treatment.
Obligations while seeking employment
Individuals receiving unemployment-related support may be expected to actively seek employment, register with employment exchanges, participate in relevant job-seeking activities and maintain or develop their skills. Compliance with programme requirements may also be necessary to maintain eligibility for applicable benefits and support services.
Severance pay in India is not a universal statutory entitlement. Whether it is required depends on the employee’s classification and the circumstances in which employment ends.
Under the Industrial Relations Code, 2020 (IRC), statutory severance requirements apply to employees who qualify as workers. Where a worker is retrenched or affected by the closure of an establishment, they are entitled to compensation equivalent to 15 days’ average wages for each completed year of continuous service.
Severance is generally not payable where employment is terminated for proven misconduct, provided the required due process has been followed.
Employees who fall outside the statutory definition of worker, including many managerial, administrative, supervisory and other private-sector corporate employees, do not have a statutory entitlement to severance. Any entitlement instead depends on the employment contract, company policy or a negotiated exit arrangement.
In practice, employers may offer severance in cases such as redundancy, restructuring, role elimination or termination without cause. A severance package may include:
Gratuity is separate from severance pay and operates as an independent statutory entitlement. Employees on indefinite-term contracts become eligible for gratuity after five years of continuous service, while employees on fixed-term contracts become eligible after one year of service.
A probationary period in India allows employers to assess an employee’s performance, conduct, capabilities and suitability for the role before confirming their employment.
For most corporate, managerial, administrative, supervisory and professional employees who are not classified as workers under the Labour Codes, probation is primarily governed by:
As a result, the duration of probation, confirmation process, extension and termination requirements may vary depending on the contractual terms and applicable state legislation.
Probation under the Karnataka Shops and Establishments Act
The Karnataka Shops and Establishments Act does not prescribe a statutory maximum probationary period. Employers commonly establish probation periods of three to six months, which may be extended based on the employee’s performance.
Probation should not be unreasonably long or arbitrary, as prolonged probation without justification may be regarded as an unfair labour practice.
Employers may extend probation where performance issues or other shortcomings are documented and communicated to the employee, with the extension linked to clear performance expectations.
Intellectual property created during employment in India may include inventions, designs, software code, artistic works and other original or innovative outputs. Ownership and protection of these works depend on the applicable legislation and the terms of the employment agreement.
The main legal frameworks governing intellectual property include:
Employment contracts should clearly establish the ownership and permitted use of intellectual property created during employment. They should also define the scope of the employee’s duties and the circumstances in which intellectual property is created on behalf of the employer.
Where intellectual property rights are intended to belong to the employer, the employment agreement should contain an express assignment of those rights. Employers may also provide compensation or other consideration in exchange for the assignment of IP rights, with the applicable terms clearly documented in the agreement.
Employee data protection in India is primarily governed by the Digital Personal Data Protection Act, 2023 (DPDP Act), which applies to the processing of personal data in the employment context, subject to certain exemptions. The right to privacy is also recognised as a fundamental right under Article 21 of the Constitution.
Under the DPDP Act, employers that collect, process or store employee personal data are considered Data Fiduciaries, while employees are considered Data Principals.
Employers may process personal data for lawful purposes based on consent or other legitimate uses, including employment-related activities such as recruitment, attendance management, payroll, performance evaluation and statutory compliance. They must also follow requirements relating to:
Employees have rights relating to their personal data, including the ability to access information about its processing, request correction or erasure, withdraw consent where applicable and raise grievances. Employers must establish appropriate grievance procedures.
The Information Technology Act, 2000 and the SPDI Rules, 2011 also remain relevant, particularly for cybersecurity and sensitive information such as health, financial and biometric data and passwords. Employers must implement reasonable security practices and protect personal information against unauthorised disclosure.
Non-compliance with the DPDP Act may result in financial penalties of up to INR 250 crore, depending on the nature and severity of the breach. Enforcement is handled through the Data Protection Board of India.
Non-compete clauses in India may be included in employment contracts, but their enforceability depends on factors such as reasonableness, scope and the legitimate interests being protected.
Non-compete restrictions should be reasonable in terms of their duration, geographical scope and nature. When assessing such clauses, courts may consider factors including the employee’s seniority, the nature of the employer’s business and the potential impact of the restriction on the employee’s ability to earn a livelihood.
Non-compete clauses may be used to protect legitimate employer interests, including trade secrets, confidential information and client relationships. Any restriction should be proportionate to the interests being protected and should not unnecessarily prevent the employee from earning a livelihood.
Other relevant considerations include:
India does not have specific legislation dedicated solely to remote working. Instead, remote work arrangements are governed by existing employment, data protection and health and safety requirements.
Applicable state-specific Shops and Establishments Acts regulate matters such as working hours, overtime and working conditions, while minimum wage requirements continue to apply regardless of whether an employee works remotely or on-site. Employment protections relating to workplace disputes also extend to remote employees.
Employers should establish clear remote work policies or agreements covering areas such as:
Employers are responsible for taking appropriate measures to protect sensitive information and maintain data security when employees work remotely.
Health and safety obligations also continue to apply. Employers should address relevant risks associated with the employee’s remote working environment and ensure appropriate working conditions.
Remote employees are generally entitled to the same employment benefits and entitlements as on-site employees, including applicable leave, insurance and other benefits. Remote working arrangements should not result in unequal treatment in relation to these entitlements.
Employees working remotely in India are generally expected to meet the same professional responsibilities and performance standards as employees working on-site, while complying with their employer’s remote work policies.
Key responsibilities include:
Hiring employees from India can offer several advantages compared to hiring from other countries.
Firstly, India has a vast and diverse talent pool with a strong emphasis on education in science, technology, engineering, and mathematics. This makes the country an excellent source of skilled professionals in IT, software development, engineering, and other technical fields.
In addition, India’s fast-growing economy and its position as a global leader in outsourcing and business process management mean that Indian employees often have experience working with international clients and projects. This can be very advantageous for companies seeking expertise in IT services, customer support, and back-office operations.
The cultural adaptability and proficiency in English, which is widely spoken and used in business settings in India, are a huge advantage for ensuring the smooth integration of Indian employees into international teams. Additionally, the cost-effective labour market in India allows companies to benefit from high-quality talent at competitive wage rates.
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