India PEO

Hiring in India

India offers a wealth of talent, with a labor force estimated at 607.7 million. Organizations from around the world have benefited from hiring in India, however, the country’s labor laws can be complex. Employment relationships in India are governed by its constitution, treaties, statutes, and judicial precedents, as well as collective and individual contracts.  

Given the complexity of Indian labor laws and the differences between central and state-level requirements, there’s a lot for organizations to understand before they start recruiting in India. It’s also important to be familiar with salary and wage benchmarks and the benefits provided in different sectors. 

Relying on an employer of record (EOR) in India 

An employer of record (EOR) provides an easier way for organizations to hire and pay local talent in India. Because of its in-country presence, the EOR can employ the workers a company needs and lease them to that company, taking care to comply with India’s labor laws. As a result, the organization doesn’t have to establish a legal presence or manage compliance in India.  

The EOR can hire and onboard employees in as little as two weeks and manage ongoing responsibilities such as payroll, benefits, and taxes. A full-service EOR can also manage recruitment. Together, these EOR services significantly reduce the administrative burden for an organization. 

Visit our employer of record services page to learn how we can help you meet your international employment needs in India.   

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Doing business in India

Global PEO Services (GPS) helps companies hire employees in India without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by the Global PEO, while the new hires and headquarter teams focus on your business goals.

When hiring employees in India, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.

Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with Indian labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in India. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.

Country Overview 

India, the world’s largest democracy, also has the world’s second-largest population. Culture and civilization have a long history and have had a global impact. In addition, India is a fast-rising economic and nuclear power. With a rapidly expanding economy, India increases exports and produces plenty of new businesses and jobs.

Capital City 

New Delhi

Currency 

Indian Rupee (INR)

Language 

Hindi

Government  

Federal Parliamentary Republic 

No law imposes written contracts in India, but they are generally used to protect workers and employers and limit legal action. However, fixed-term contracts must be in writing. 

Some of the details typically mentioned in the written contract include: 

• Performance assessments 
• Deductions 
• Pension 
• Grievance and disciplinary procedure 
• and more 

The different types of employment relationships are: 

• Permanent Employment – Per India’s Industrial Relations Code (IRC) 2020, permanent employment generally does not have any fixed termination date. Permanent employees enjoy statutory benefits such as paid annual leave, sick leave, compulsory health insurance, gratuity pay, and provident fund. 
• Fixed-Term Contracts – Fixed-term contracts are usually for a set period under a written agreement, and the maximum term for which this designation may run is seven years. 
• Temporary Employment – Per the Model Standing Orders for Service Sector 2020 India, temporary employment is for work that is essentially temporary and usually completed in a limited time. Temporary work agencies (TWAs) handle most temporary contracts in India. 

Probationary period 

A probationary period typically lasts up to 6 months in India, per the Model Standing Orders for the Industrial Relations Code, 2020. This period can further extend up to 3 months. 

Work/Time Regulations 

The Occupational Safety, Health, and Working Conditions Act 2020 of India states that employees cannot work more than 8 hours a day, six days a week. 

According to the Factories Act, the daily work schedule cannot exceed 9 hours, and the weekly work schedule cannot exceed 48 hours. 

Leaves 

Employees in India are entitled to the following leaves: 

• Annual leave – Per India’s Occupational Safety, Health, and Working Conditions Act 2020, employees who have worked for at least 180 days in a year are allowed one leave per 20 days of work. Employees under 18 are entitled to one leave per 15 days of employment. 
• Maternity leave – Per the Maternity Benefit Act of India, every female employee of a company with at least ten employees with 26 weeks of paid maternity leave can begin up to 8 weeks before the due date. Additionally, a woman who adopts a child under three months is entitled to 12 weeks of adoption leave. 
• Sick leave – Company policies primarily govern sick leaves. The length of statutory sick leave varies by industry and ranges from 15 to 40 days. 
• Paternity leave – While there is no statutory minimum paternity leave for private-sector workers, male government employees can take up to 15 days of leave if they have fewer than two surviving children. 

Public Holidays 

The following are the statutory national holidays observed in India: 

• January 13 – Lohri 
• January 26 – Republic Day 
• March 11 – Maha Shivaratri/Shivaratri
• March 28 – Dolyatra
• March 29 – Holi
• April 2 – Good Friday 
• April 14 – Ambedkar Jayanti 
• April 21 – Rama Navami 
• April 25 – Mahavir Jayanti 
• May 14 – Ramzan Id/Eid-ul-Fitar 
• May 26 – Buddha Purnima/Vesak 
• July 21 – Bakr Id/Eid ul-Adha 
• August 9 – Muharram/Ashura 
• August 15 – Independence Day 
• August 30 – Janmashtami 
• October 2 – Mahatma Gandhi Jayanti 
• October 15 – Dussehra 
• October 19 – Milad un-Nabi/Id-e-Milad 
• November 4 – Diwali/Deepavali 
• November 19 – Guru Nanak Jayanti 
• December 25 – Christmas

Benefits

The Pension Fund Regulatory and Development Authority (PFRDA) administers and regulates the National Pension System (NPS), a voluntary, contribution-based retirement savings plan. 

The Indian Government established a pension scheme within the NPS called the Atal Pension Yojana (APY). In addition, some industries have various other pension plans that offer retirement benefits. 

Social insurance, often known as social welfare, is a government-mandated insurance program that provides financial help to the elderly, disabled, and injured. 

Some examples of social insurance programs are: 

• Dependents’/Survivors Benefit – Survivor benefits for work-related injuries that result in death are as follows: 
  • Spouse’s pension – 60% of the disability pension 
  • Orphan’s and widowed mother’s pension – 40% of the disability pension 
  • Other eligible survivors’ pension – 40% of the disability pension to which the deceased was entitled is payable to eligible survivors and 20% to other dependents under 18. 
• Life and Disability Insurance/Benefit – Depending on which pension system an employee is a member of, disability benefits may vary. Employees who suffer a temporary disability due to a workplace injury are paid 90% of the insured person’s average daily wages for the duration of the disability (must last at least three days). 

In India, there are several statutory benefits based on various industry acts. 

Termination 

Employees who have been with the company for at least one year must receive written notice regarding their termination. The number of employees in the organization and the reason for dismissal determine the notice period. 

• Closure of establishment with at least 50 employees – 60 days of notice 
• Industrial establishments with at least 300 employees – 3 months of notice 

Visa/ Work Permits 

All foreign nationals seeking to enter India must obtain a visa. 

Some of the visa categories typically include: 

• Transit visa 
• Tourist visa 
• Employment visa 
• Business visa 
• Student and research visa 
• Entry (‘X”) visa 
• Conference visa  

Japanese nationals visiting India for business, tourism, conferences, or medical treatment are also granted visas on arrival. On the other hand, Nepalese citizens do not require a visa to enter India. 

India has specific requirements for issuing work permits, and visas to employees assigned to work in the country, the most common is the Employment or E visa. It is valid for one year or until the end of the contract in India (up to 5 years). 

Accounting 

Accounting standards must adhere to the International Financial Reporting Standards (IFRS), which establishes the Indian Accounting Standards (Ind AS). Ind AS is required for companies with a net worth of at least INR 2.5 billion, both listed and unlisted.

Taxes 

Corporate Tax 

The standard corporate tax rate is 30% for domestic companies and 40% for international companies.

Value Added Tax (VAT) 

Goods and Services Tax (GST) is a value-added tax (VAT) levied in various nations. 

The standard GST rate in India is 18%. It applies to most goods and services.

Filing dates  

Taxes on income earned in one tax year are typically paid in the following tax year (the “assessment” year). 

Typically, companies must file a final return by 31 October for financial years other than FY 2019-20, and 30 November for companies required to file a certificate on international transactions.

Penalties 

Failure to file a return, tax audit report, or certificate of international transactions; failure to comply with withholding tax obligations; and under-reporting and misreporting may result in criminal charges.
 

 

The Information Technology Act, 2000 governs data protection and violation of personal privacy. 

The primary anti-corruption law in India is the Prevention of Corruption Act, 1988. Besides imprisonment for six months to 5 years, the offender is subject to a monetary fine. 

With our Global PEO/Employer of Record services, companies can expand into India and hire their employees without having to establish a branch office or subsidiary in India.

• Your candidate is hired via our India PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
• Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll – all in full compliance with India laws.
• Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
• With no contractor risks, pass on the compliance burden to Global PEO Services.

Spin Off/M&A Support

• Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.

24/7 Support in 150+ Countries

• Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
• We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.

Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management, and benefits enrollment and management. Mihi enables clients to have easy access to employee data in real-time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with a low headcount.

Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance, and staffing support. Learn more about our end-to-end international expansion services.

Contact Us

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How to hire in India

India is a great country for companies planning to build their workforce overseas. With a surplus of college-educated, skilled workers, India is one of the biggest talent markets in the world. It has also become one of the leading affordable destinations for sourcing tech talent.

So, it’s not surprising that U.S. companies are hiring more Indian workers. Many Fortune 500 companies use Indian talent to do well in the digital age, according to NASSCOM. With remote work becoming more common in the workplace, global employment is a great solution for growing companies.

That said, hiring workers in India comes with a host of complexities. If you’re looking to expand internationally, understanding how to hire in India is imperative. Local laws, regulations, and compliance requirements often create barriers and challenges for companies expanding into India.

Businesses must understand Indian employment laws and compliance requirements when hiring in India. This is crucial for successful operations. This guide helps businesses understand their options for hiring internationally and building a workforce in other countries.

In this article, you will learn:

1. How to hire in India

o Contractors

o Employees

o Outsource to a Global PEO Provider

2. Global Employment Laws in India

o Employment Contracts

o Trade Unions

o Data Protection and Privacy

How to Hire in India

India has an incredible and diverse workforce that touts a broad range of skill sets. Irrespective of the industry of your business, there will be numerous qualified, skilled workers available to support your needs. However, companies need to determine the best route to building their workforce overseas. This means they need to understand the different employment categories in India.

When hiring remote workers, make sure they follow the guidelines for their job classification. This is important regardless of how they are hired.

If your business is wondering how to hire in India, it boils down to three options:

· Contractors

· Employees

· Outsourced vendors

Each of these options comes with its own list of pros and cons, which we’ll outline in the following section.

Related: Why hire in India?

India Country Guide – Accounting, Taxes, HR and more

DIY Hire in India – Contractors

One of the fastest and easiest ways for companies to hire in India is through independent contractors. Many businesses choose this route without considering the potential pitfalls, which can result in costly fines and legal consequences. If your business wants to hire contractors in India, they must meet the country’s employment laws. The following guidelines are to be followed:

· The contractor is allowed to work for multiple companies at the same time. They cannot be restricted to only working for your business.

· The contractor oversees managing and controlling their working status and schedule. The business can’t give them specific hours of operation.

· The contractors are usually project-based or are required to work shorter periods. If they extend their time with a company, it could put the business at risk of being classified as an employee.

U.S. companies hiring in India need international contractors to fill out an IRS Form W-8BEN. This form confirms their foreign status for the U.S. government. This step will mitigate tax risks when hiring in India. However, the business must still adhere to Indian employment law to remain compliant.

If an Indian worker is classified as an independent contractor incorrectly, they have the right to take legal action. This can include suing for benefits, overtime pay and other rights. If your business is willing to accept this risk and takes all the necessary steps to ensure the guidelines are met for contractor status, hiring an independent contractor in India can be an effective method of employment.

Hiring a contractor in India can be a good staffing choice. However, it comes with risks and your company needs to be prepared for these risks. Make sure to follow all the required steps when hiring a contractor in India.

Related: International contractor vs. employee: Understanding the difference

DIY Hire in India – Employees

To hire employees in India whether full- or part-time, a business must establish a legal entity in India. If this is the hiring route you choose, plan for the incorporation process to take more time and money upfront.

Setting up a legal entity in India can take three to six months, depending on the government’s requirements. Businesses must abide by all the setup requirements including things like setting up the back accounts and tax information.

If this is the route you choose, we highly recommend working with an incorporation expert. If the entity has any errors or mistakes, the structure can quickly become inefficient and costly to maintain. Legal entities in a country can affect all parts of a business, like finance, accounting, IT, and supply chain functions. They are important for running a business smoothly.

In India, there are three types of entities you can establish:

· Corporation

· Project/Branch Office

· Liaison/Representative Office

Establishing a legal entity in India requires:

1. Obtaining a Director Identification Number (DIN) online

2. Obtaining a Digital Signature Certificate (DSC) online

3. Reserving a company name online with the Registrar of Companies

4. Preparing the Memorandum and Articles of Association

5. Filing incorporation application online

6. Requesting and obtaining a Certificate to Commence Operations

7. Making a company seal

8. Obtaining a Permanent Account Number (PAN) from an authorized franchise or agent appointed by National Securities Depository Services Limited (NSDL) or Unit Trust of India (UTI)

9. Registering with the Employees’ Provident Fund Organization (EPFO)

10. Registering for VAT

11. Registering for medical insurance

12. Various other registrations (only if a company is set up in Mumbai)

Even after a company sets up its legal entity, the work is not done. Establishing the entity itself is only the first step. Post incorporation action items may include setting up payroll, securing benefit packages, setting up accounting systems and processes, taxes, and more. Additionally, businesses will need to ensure annual corporate compliance moving forward as laws and regulations change.

Related: 7 questions about international entity setup, answered

Article | Hiring International Contractors or Employees (Understanding the Difference)

Outsource to a PEO Provider

Companies that want to hire in India without the hassle of DIY, can use a global Professional Employer Organization (PEO) provider. PEOs, sometimes referred to as Employer of Record (EOR), act as a partner to your business.

In addition to acting as an employer, they also conduct a background check of the employee. After this process, they lease those employees to a business for an affordable rate. Companies can leverage the legal entity of the PEO provider to reduce their international risks and liabilities.

In short, the PEO handles administrative tasks so businesses can concentrate on their employees’ daily duties. PEOs use their existing legal entity network for hiring and taxes, companies can hire much faster without sacrificing compliance. Here are a few the administrative services a PEO provides:

· Fast international hiring

· Global payroll

· In-country compliance

· Reduced risks with international contractors

· Global talent acquisition

· HR technology for international workforces

· Compliant employment contracts

Related: DIY global expansion

Whitepaper |DIY Global Expansion: Everything You Need to Know Before you Start

Global Employment Laws in India

When learning how to hire in India, businesses often have many questions about the process. We will cover some of the most common questions and concerns companies have around labor law.

Employment Contracts

Employment contracts are an important element to consider when hiring Indian employees. The relationship between an employer and employee can be expressed or implied, either through a written contract or verbal agreement. However, verbal agreements can lead to legal complications if there are any employment disputes.

For this reason, employment contracts are strongly encouraged among employers. Additionally, some Indian states like Karnataka and Delhi require written contracts for workers in shops and commercial establishments.

Employment contracts or letters commonly include the following information:

· Name and address of the employer and the employee

· Title of the job or nature of the work (or a job description)

· Place of work

· Working hours

· Probationary period, if any, and its terms

· Date of commencement of employment

· Salary and benefits (including social security)

· Type of contract (permanent or fixed term)

· Notice required for termination of employment

· Leave entitlement (paid time, sick leave, maternity leave, paternity leave, etc.)

· Conditions under which the employer can terminate the contract

Additionally, the Employees’ Provident Funds and Miscellaneous Provisions Act 1952, requires every employer with over 20 employees to make prescribed contributions to the employees’ provident fund for all Indian employees earning less than INR 15,000 per month.

Both employee and employer contribute equal amounts to the Employee’s Provident Fund (EPF). The employee receives the amount as a lump sum payment upon retirement. Employers in India, with more than 20 employees contribute 12% of their income, while those with less than 20 employees contribute 10%.

EPFO members who have contributed to the Employee Pension Scheme (EPS) account are eligible for a pension. The pension continues to be paid to the nominee. The employer’s contribution is 8.33% of the employee’s salary (basic + dearness allowance). Employees receive a pension after the age of 58 years.

Failure to contribute to the EPS and EPF may result in fines and penalties for the employers. Employers can be prosecuted and jailed if they intentionally commit fraud by avoiding making contributions in some cases.

Related: 7 common questions about international employment contracts

7 Common Questions About International Employment Contracts

Trade Unions

Trade unions are common in India and are governed by the Trade Unions Act 1926 (TU Act). This creates the ability for groups to register as a trade union but does not make registration mandatory. If a trade union is recognized by the Indian government, employers must engage in collective bargaining agreements in good faith or risk a violation of fair labor practices.

The TU Act guarantees certain rights to trade unions, including their right to negotiate and secure terms of employment acceptable to its members. Employees can negotiate through a contract, but they can also protest to push for their needs. This law protects trade unions from being prosecuted for criminal conspiracy and sued in civil courts for trade disputes. Ultimately, trade unions are an important aspect for companies to consider when learning how to hire in India.

Data Protection and Privacy

Under the IT Act 2000, Indian employers need permission from employees to collect, process, and store sensitive personal data. This can include information such as passwords, financial information, bank account details, medical information and more.

Employers cannot collect personal information except with the subject’s prior consent in writing and must inform the subject of the right not to provide the information. For any of the information employers collect, they are expected to provide necessary security with the stored information. If there is a breach of personal information, the company could face legal consequences.

Employers in India can monitor employees’ email, phone calls and system use to protect business information. However, the monitoring must be limited to a work phone and cannot be performed on an employee’s phone.

Partnering with Global PEO Services

Getting started with global expansion can be an exciting time for any organization. However, it can also expose you to various risks and challenges. With Global PEO Services (GPS), a Safeguard Global company, you can manage these risks and keep your operations running smoothly.

As laws and regulations change and update, you never have to worry about compliance. We can manage all the legal requirements and payroll for international teams, while your business handles the daily tasks.

As laws and regulations change and update, you never have to worry about compliance. We can manage all the legal requirements and payroll for international teams, while your business handles the daily tasks.

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HR & Benefits in India

Your Employees, Our HR

Get the India HR support you need without setting up a legal entity or hiring HR personnel. Save time and enjoy peace of mind as our experts manage all aspects of your India HR.

India Recruitment Solutions

Need help finding talent? Our dedicated team of experienced recruiters can help you find and hire the employees you need, fast. We have an in-depth understanding of local job markets and provide you with access to exclusive talent networks, so you are always choosing from the best available candidates.

A solution for every staffing need:

• Contingent Hire
• Permanent Hire
• Recruitment Process Outsourcing (RPO)

Best in Class Employee Benefits

We provide high-quality benefits packages for your employees and their families. Our robust heath and benefits plans are designed to enhance local mandatory benefits while addressing employee expectations and cultural nuances.

Our employee benefits plans include:

• Top of the line health benefits (medical, dental, vision)
• Life insurance and short-term / long-term disability
• Employee assistance program – phone/online counseling & support
• Employee wellness program – health & wellness classes
• Business travel insurance

Guaranteed HR Compliance

Stay compliant without the complexity. Our experts manage the HR compliance requirements for your India teams and consistently monitor changes to labor laws so you are always informed and up to date.

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Payroll in India

Pay Employees Without the Hassle

Pay employees in India without setting up a legal entity. Get peace of mind as we manage all aspects of your India payroll, ensuring your employees are always paid accurately, on time, and in their local currency.

Cross-Border Payments & Payroll Compliance

Run compliant payroll in India no matter where your business is located. Our India payroll experts get you set up fast and ensure you are always in compliance with local payroll requirements.

Struggling to Manage Payroll for Independent Contractors?

Pay your contractors easily and without the risk. Rather than taking on the liabilities associated with employing an independent contractor, we allow you to hire them as employees through our India PEO. They continue to work for you, while we manage all aspects of payroll, HR, and compliance.

The Solution to Low Headcount Payroll

Eliminate complexity and reduce the cost associated with running payroll for just a few employees. With Global PEO Services, you gain full access to our pre-existing India payroll infrastructure, teams, and processes. Stay flexible, save time, all while getting the payroll services and support you need.

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Payroll & PEO in India

India Payroll Outsourcing & Management Services

Hire and pay employees in India without setting up a legal entity. With our India payroll and PEO services, you select the candidate, and we handle the rest.

After successfully hiring and onboarding your employees, we manage all aspects of the payroll process, ensuring your employees are always paid accurately and on time.

Our India payroll experts have an in-depth understanding of local payroll requirements and provide you with in-depth guidance and compliance support.

 

Our India PEO Payroll Solutions Cover:

Struggling to Manage Payroll for Independent Contractors?

Global PEO Services eliminates the complexity and liabilities associated with employing and paying independent contractors. We allow you to hire your contractors as employees through our India PEO. The individual continues to work for you, while we manage all aspects of payroll, HR, tax, and compliance.

The Solution to Low Headcount Payroll

Finding a payroll option for countries where you have low headcounts can be a challenge. Global PEO Services provides the solution. By using our India PEO to manage your payroll, you leverage our pre-existing payroll infrastructure, teams, and processes, even if you only need payroll for just one employee. Stay flexible, save time, all while getting the payroll services and support you need.

Want to learn more about our PEO Payroll Services? Reach out to us today!