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Key Country Facts

Currency: Rupees (INR)

Time zone: IST (UTC+05:30)

Capital city: New Delhi

Official language: English enjoys the status of subsidiary official language and is the most important language for national, political, and commercial communication. Hindi is the most widely spoken language and primary tongue of 41% of the people.

Employment Contracts

Bespoke by company to company. However, companies may develop a standard template containing the minimum terms and conditions that should become part of the Employment contract.

English-only contract is acceptable, and it is required to mention the Retirement Age (60 years) in the contract.

It is also common for companies to issue a letter of appointment that serves as an employment contract. The letter should include details about the position, responsibilities, salary, starting date, benefits, and regulations for termination.

If an employee signs an employment contract with an Indian company, he/she is protected under Indian labour law. The contract has to be made in writing and signed by both parties. It includes the same information as a letter of appointment. The length of the employment, as well as the probation period, should be stated.

India Holidays

Occasion Date
New Year’s Day Jan 1
Republic Day * Jan 26 (National)
Holi Mar 29
Good Friday Apr 2 (National)
Labour Day * May 1 (National)
Eid-ul-Fitar May 14
Bakri Id / Eid ul-Adha Jul 21
Independence Day * Aug 15 (National)
Raksha Bandhan Aug 22
Janmashtami Aug 30
Mathatma Gandhi Jayanti * Oct 2 (National)
Dussehra Oct 15
Diwali / Deepavali Nov 4
Guru Nanak’s Birthday Nov 19
Christmas Dec 25

As a general practice in India, most employer provides 10 public holidays, but number varies from state to state. For example, in Maharastra state where GoGlobal is located, the number of public holidays are 8 per calendar year; 4 of which must be the above with “*”. In case if any of the National Holiday falls on the weekend, employees could take other days off in lieu of this from the provided list after mutual consent with the employer. Festival holidays may vary based on each state or religion.

Vacation

Annual leave eligibility varies depending on location/state. Annual leave may be carried over; however, no more than 30 days can be carried over to the next year.

If the employment contract expires before a worker could take his/her annual leave, compensation for leave is made in proportion to the number of months and numbers of working hours in a week.

Sick Leave

Sick leave is the leave that an employee can avail when he/she is out of work due to illness and can be taken for minimum 0.5 to maximum 7 days (paid).

There is no sick leave carry-forwards or encashment. At the end of calendar year, any available sick leave will lapse automatically.

For all absences exceeding two or three days, depending on company policy, medical certificate usually needs to be enclosed.

Sick leave can be appended with earned leave; new joiners & resigned employees get prorated sick leave.

Different provisions could be located under different Acts:

  1. 15 days of sick leave is entitled under Apprentices Act, 1961
  2. 30 days of sick leave for 18 months of service under Working Journalist and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955
  3. At least 1/18th of the period working under Sales Promotion Employees (Conditions of Service) Act, 1976.  (http://www.esic.nic.in/benefits.php)

Maternity/Paternity Leave

Female employees are entitled to 12-26 weeks of maternity leave and can be taken as early as eight weeks prior to delivery. Remaining weeks can be availed post-childbirth.

For women who are expecting after having two children, the duration of paid maternity leave shall be 12 weeks (i.e., six weeks prior and six weeks post expected date of delivery). Maternity leave is awarded with full pay on completion of at least 80 days in an establishment in the 12 months prior to her expected date of delivery.

Maternity benefit is awarded at the rate of the average daily wage for the period of a worker’s actual absence from work. Apart from 12 weeks of salary, a female worker is entitled to a medical bonus of 3,500 Indian rupees if health benefits are not provided by the employer.

While paternity leave is authorized for government employees, there is no law that instructs the private sector to make it obligatory. Hence, paternity leave is open to interpretation by individual companies.

Termination/Severance

Generally, if the termination is for a reason other than a justifiable cause, such as non-performance or misconduct, then there should be a mutual agreement to terminate, and the terms of the agreement should be documented. In such cases, there may also be a payment made on account of the termination, like redundancy pay.

It is generally more cumbersome to terminate blue-collar employees in the manufacturing industry, where the matter can go to the trade unions.

It is not very uncommon to terminate employees in other sectors.

Bonus

Statutory bonus is payable as per the Payment of Bonus Act, 1965 and is applicable to establishments employing 20 or more persons. Every employee receiving salary or wages up to INR 21,000/month and who has worked for at least 30 working days in the year is eligible to receive statutory bonus. Minimum bonus payable is at 8.33%, and maximum bonus payable is at 20% of eligible amount and payable within eight months of the end of the accounting year, i.e., before November of every year.

Performance bonus is paid at the discretion of the company. There is no mandatory 13th or 14th month bonus.

India Social Security

Employee Provident Fund (EPF) is one of the main platforms of savings in India for nearly all people working in Private sector Organizations. A provident fund is created with a purpose of providing financial security and stability to employees.

Generally, one starts contributing to these funds as soon as they get employed. The contributions are made on a monthly basis. Its purpose is to help employees save a fraction of their salary every month, to be used in an event that the employee is temporarily unfit/no longer fit to work or at retirement.

Provident fund department has provided three options to opt for PF Contribution from employer perspective:

  1. Restricts Employee & Employer PF contribution to maximum 12% of INR 15,000
  2. Restricts Employer PF Contribution maximum to INR 15,000 and deducts Employee PF at Actual
  3. No Restriction, 12% of Basic + DA will be contributed by both Employee & Employer.

Thresholds:
Social security (Provident Fund) is applicable when the employee count is 20 or more. If the employee count is less than 20, company can opt for voluntary PF registration if majority of the employees give consent for such registration.

Scheme Name Employee contribution Employer contribution
Employee Provident Fund 12% 3.67%
Employees’ Pension Scheme 0 8.33%
Employees Deposit Linked Insurance 0 0.5% (capped at a maximum of INR 15,000)
EPF Administrative charges 0 0.85%
PF Admin account 0 1.10%
EDLIS Administrative charges 0 0.01%

This information does not constitute legal advice.

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