On its way to becoming the third-largest global economy, India is a destination of opportunities for businesses and job seekers. Known for its cultural diversity, the country has equally diverse labour codes and employment contracts. Navigating these, along with the disparate regulations across 28 states and 8 union territories, is challenging.

Work Permit / Residence Permit for Foreign Nationals

In India, recruiting foreign talent can be complex. This is primarily because the country has a vast, educated, skilled workforce. Applicants must meet the following conditions to obtain a work visa:

• Employed by an Indian or a multi-national organisation with a physical office in the country.
• Earns a fixed annual salary of at least ₹2,118,888 ($25,000). Certain professions are exempted from this limit.
• Should be a highly qualified professional in fields where Indians are not available.

A work visa is issued for two to five years initially or less if the employment agreement is for a shorter period. The duration of the visa is determined by the profession or skill and the nature of the work (one-time or ongoing).

Employment Agreements

Employers must get employment agreements (EAs) approved by the Ministry of External Affairs before finalising a new hire’s employment. Typically, an EA application must include:

• Company profile
• Company registration details
• Copies of the employee’s passport and visa
• Location of work
• Job description: role and responsibilities,
• Remuneration
• Notice Period
• Job duration
• Non-disclosure and confidentiality
• Jurisdiction to address conflicts between employees and employers*
• Intellectual property rights
• Termination terms and labilities

*India has a multi-tier judiciary system.

Working Hours and Overtime

The workweek in India varies with industry and location. A company may have a five-day or six-day workweek, and alternating between five and six days is also popular in India. In all cases, the details should be clearly mentioned in the EA. An employee can work a maximum of 9 hours a day or 48 hours a week. A 30-minute break is mandatory for every five hours of continuous work. A workday cannot be longer than 12 and a half hours, including overtime.

Overtime is either calculated on an hourly or per-piece basis (India has many factories). Every extra hour must be compensated for with a salary that complies with all application (local and national) regulations. Overtime rules must also be specified in the EA.

Minimum Wage

India has an elaborate wage system with a fixed base salary and variable daily allowance components. Both vary significantly across sectors, skill levels, and employment arrangements (time work, piece work, contract work, overtime). The state (or union territory) governments set these. Employers must adhere to the National Labour Code and regional minimum salary regulations.

Cost of Living

Excluding rent, the average cost of living in India for an individual is ₹28,821.30 ($340) per month. For a family of four, it is ₹99,122.10 ($1,170).

Vacation Allowance

The sick leave allowance varies between 5 and 12 days per year in India. Employers can decide to follow a calendar year or 12 months from the date of joining. Casual leave can vary from one leave for 20 days of work to 15 days per year. Specific privileged leave may also be taken, carried forward, or compensated upon the completion of the year. Employers must fully subscribe to the laws of the jurisdiction they operate in.

Termination

There are multiple ways of terminating employment in India—voluntary, involuntary, under contract, or by law. Employers are liable to pay severance pay to employees who retire, reach the end of their contract, or are laid off. Provisions for severance pay and notice period vary by industry, location, nature of work, and type of establishment.

Ease Compliance in India with Access Financial

Access Financial helps businesses, recruitment agencies, and independent contractors mitigate tax liabilities, minimise administration load, ensure compliance and boost take-home income while fully subscribing to region- and industry-specific labour laws. Our EOR, Employed and Self-Employed solutions include comprehensive wage and employee management services while fully subscribing to relevant labour and company laws.