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India – Employer of Record

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Country Introduction – India

Capital – New Delhi
Currency – Indian Rupee (INR)
Population – 1.38 Billion
GDP – $2.623 Trillion
Official Language – 22 major languages, generally spoken Hindi and English
Major Religions – Hinduism and Islam

India occupies the greater part of South Asia and remains one of the most ethnically diverse countries in the world. Apart from its many religions and sects, India is home to innumerable castes and tribes, as well as to more than a dozen major and hundreds of minor linguistic groups from several language families unrelated to one another. Religious minorities, including Muslims, Christians, Sikhs, Buddhists, and Jains, still account for a significant proportion of the population; collectively, their numbers exceed the populations of all countries except China.

Meghalaya village has won the Guinness world record title for the wettest place on Earth, with about 11,873 millilitres of rain annually. The monsoon season lasts six months.

From the 4th century BC for around 1,000 years, India was the only source of diamonds in the world. The original diamonds were found in the Krishna River Delta. In the 18th century, more diamond deposits were discovered in Brazil, and soon after, in South Africa, adding to the market of diamonds.

Contract of Employment

Employment contracts in India should cover every single aspect of employment along with the regulations of the company. For example, the contract should outline the number of annual leave an employee is entitled to, when the employee becomes entitled to the leave, the leave application/approval process and how many leaves can be carried forward. Every single aspect of employment must be covered in depth. The compensation should be in INR and each component of the total package (CTC) should be broken down. It is recommended to cover all eventualities in a contract too, in order to eliminate misunderstandings between an employer and an employee.

Probation Period

Up to a maximum of 6 months. Usually between 3 and 6 months.


Notice period in India is usually set at 90 days by employers.

This can range from 30 days to 90 days.

Working Hours

Standard working week is 48 hours, Monday – Friday.


All work over 48 hours per week is paid as overtime.

Overtime rate is normally paid 2x salary and it is best to agree this in advance.

Annual Leave

It is mandatory to give employees 15 days off as paid annual leave after completing 240 days of employment. Most employers increase this to 21 days off.

Sick leave

It is mandatory for employers to pay for up to 15 days of sick leave. Employees must provide a medical certificate within 48 hours of the first day of sickness.

Maternity Leave

Female employees are entitled to 26 weeks of paid maternity leave. The maternity leave can start as early as 8 weeks prior to the due date with the remaining leave taken after birth.

There is no statutory allowance for paternity leave.


28% – Higher VAT rate is for goods and services. It applies to consumer durables, air conditioning, automobiles, cement, chocolate and accommodation.

18% – Applies to telephone, banking, insurance, restaurants with alcohol licenses, TV’s, gaming consoles and cinemas.

12% – Applies to non air conditioned restaurants, mobile phones, construction and intellectual property.

5% – Applies to privately provided transport, advertising, sugar, tea, coffee and medicine.

Income Tax

0 – 250,000 INR;  0%
250,001 – 500,000 INR;  5%
500,001 – 1,000,000 INR;  20%
1,000,001+ INR;  30%

Employer/Employee Contributions


Provident Fund (EPF);  12%
State Insurance (ESI);  3.25% – 4.75%
Total Employer Contribution;  15.25% – 16.75%


EPF;  10% – 12%
ESI;  0.75% – 1.75%
Health & Education Cess;  4%
Total Employee Contribution;  14.75% – 17.75%

Public Holidays

Public holidays in India vary from state to state. In total there are 77 different public and religious holidays in India, however each state has different regulations with regards to public and religious holidays.

Severance Pay

Severance pay and severance calculations vary between states in india. Most states in India do not have any requirement for severance pay. It is usually left up to the employer to outline the severance pay in the employment contract.

Work and Residence Permits (Expatriates)

There are 2 types of visa that are issued to foreigners in India. Business vias and employment visa. A business visa is issued for up to 6 months to carry out work for a foreign company. An employment visa is issued if a foreigner is working for an Indian company. The duration of the visa is a maximum of 5 years and this can be extended further before the 5 years are completed.

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