What should I know about hiring in India?
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 your employees with a written employment contract and outline 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 India. 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.
Why is India a good choice for finding remote employees?
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 from 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.
How can Native Teams help you hire in India
Through our employer of record, you can hire your new employees from India without establishing an entity in the country. We will make sure your new hire will be properly employed following all the local employment laws and regulations.
Hire your first Indian employee with Native Teams.
Legal requirements for hiring in India
It can be difficult for foreign businesses wanting to operate in India to understand and calculate the minimum wage since it’s not set by the government. The minimum wage varies by state and is determined based on multiple factors, including region, industry, skill level, and type of work.
Wages normally vary from 160 INR ($2.40) per day in Bihar to 423 INR ($6.35) per day in Delhi.
Contributions & taxes
In India, the employer is required to contribute to various social security schemes for their employees, such as the Employees’ Provident Fund (EPF), Employee State Insurance (ESI), and Gratuity. The employer’s contribution rates for EPF and ESI are typically 12% and 4.75%, respectively, while the gratuity contribution is calculated at 4.81% of the employee’s basic salary. However, it is important to note that these rates may vary depending on the size of the business and the nature of its operations.
The corporate tax rate in India is 25% for companies with an annual turnover of up to INR 400 crore (approximately USD 53 million) and 30% for companies with an annual turnover of more than INR 400 crore.
In India, employees are subject to income tax on their earnings. The amount of tax an employee must pay depends on their income level, as well as various deductions and exemptions they may be eligible for.
The income tax rates for individuals in India are structured into different tax slabs based on their income levels:
- For income up to INR 2.5 lakh (approximately USD 3,330): No tax
- For income between INR 2.5 lakh and INR 5 lakh: 5%
- For income between INR 5 lakh and INR 7.5 lakh: 10%
- For income between INR 7.5 lakh and INR 10 lakh: 15%
- For income between INR 10 lakh and INR 12.5 lakh: 20%
- For income between INR 12.5 lakh and INR 15 lakh: 25%
- For income above INR 15 lakh: 30%
To calculate the salary and taxes in India please click here.
In India, wages are usually paid out once a month. However, some companies may also have a bi-weekly or semi-monthly payroll cycle.
Is there a 13th salary in India?
There are no legal requirements for 13th-month wage payments in India.
Probation period rules
The probation period in India can vary between companies and industries but it generally lasts between 3 and 6 months. During the probation period, the terms and conditions of employment are typically the same as those after the probation period. However, the employer has the right to terminate the employee’s employment without notice or severance pay during the probation period.
The notice period in India is usually between one and three months, but it can also vary depending on the terms of the employment contract and the industry.
In India, severance pay is not mandatory by law, but it may be included in an employment contract or collective bargaining agreement between the employer and the employee.
As per Indian labor laws, the maximum working hours for an employee should not exceed 9 hours per day or 48 hours per week. This includes one day off per week. However, the actual working hours can vary depending on the industry and the state in which the employee is working.
Leave and benefits
In India, there are several national and regional public holidays. National holidays include:
- Republic Day – January 26
- Independence Day – August 15
- Gandhi Jayanti – October 2
In addition to these, there are several other public holidays that vary by state and region, as well as religious holidays for different communities. Some of the most widely observed regional public holidays in India include:
- Durga Puja
- Eid al-Fitr
- Christmas Day
The number of public holidays is different from state to state, and some employers may offer additional holidays as per their company policies.
As per Indian law, employees are entitled to paid sick leave of up to 12 days per year. This sick leave can be accumulated up to a maximum of 90 days, and any unused sick leave can be carried forward to the following year. The employer may require a doctor’s certificate to verify the employee’s illness if the absence is for more than three days.
The Maternity Benefit Act, 1961 provides for a minimum of 26 weeks of paid maternity leave for female employees. This applies to all establishments with 10 or more employees, and the leave can be taken up to 8 weeks before the expected delivery date. Female employees are also entitled to a maximum of 4 breaks during work hours for nursing the child, until the child is 15 months old.
The Paternity Benefit Bill was passed in 2017, and it provides for up to 15 days of paternity leave for male employees in the private sector. This leave can be availed within 6 months from the date of delivery of the child. However, paternity leave is not yet applicable in the public sector.
What are the minimum vacation days?
In India, the minimum vacation days are not specified by law. However, many companies provide their employees with at least 12 to 15 days of paid vacation leave per year.
Health security & private Insurance
In India, there is a public healthcare system, which provides basic medical care to citizens free of charge or at a subsidized cost. However, the quality of care can often be questionable, and private healthcare is often preferred by those who can afford it.
Many employers offer health insurance as part of their employee benefits package. Private health insurance is also available for individuals and families, which can provide more comprehensive coverage and access to better healthcare facilities.
*Native Teams can support you in finding the best private insurance in the country. Contact us and we will send a comparison of insurance packages and prices.*
Relocation and work permits
Native Teams will apply for your work visa in the nation on your behalf and serve as your Employer of Record. All the required documents can be uploaded using our app. Until you have your work and residency visa, Native Teams will support you by providing you with frequent information on the progress.
How long is the visa/work permit process?
2 to 4 weeks depending on the authorities and provided documents.
Which documents do you need?
Why use Native Teams for hiring in India?
Native Teams lets you employ team members ‘like a local’ meaning you get all the benefits of a global team, wherever you are based. Here are the reasons why you should use Native Teams for hiring:
- No paperwork: We will handle all the necessary paperwork for you.
- Save on taxes: We help you handle your taxes.
- No company set up: You can expand your business using our company entitles.
- Online onboarding: We’re here to ensure your onboarding process is trouble-free.
- No accounting: We will handle all of your accounting needs, including invoicing, payroll, and more.
- Increase your profit: We assist you in growing your business and maximizing your profits.
- Compliance expertise: we can assist your company in navigating the regulatory environments and ensure you meet all relevant requirements.
- Local support: We can assist you in understanding and complying with the relevant local laws.