IndiaAn employer’s guide to employment laws, regulations, and Employer of Record (EOR) services in India.
Looking to hire in India? An EOR can support you
Are you expanding your business into India? Employer of Record (EOR) services can help you recruit, employ, and manage a workforce in India without having to set up a local business entity.
An EOR acts as the official employer for your Indian staff, handling onboarding, payroll administration, benefits provision, tax compliance, and more – all in accordance with Indian labor law and regulations.
By partnering with an EOR like Multiplier, you retain complete control over your employees’ day-to-day activities and business operations while they manage compliance and core HR functions.
How to hire in India
Step 1: Choose between creating an entity and using an EOR
When expanding into India, your first decision is whether to set up a local entity or utilize an Employer of Record (EOR) service. Setting up a local entity grants you full control over your operations. It provides a direct relationship with your employees and establishes a strong market presence.
This option is often best for companies planning to hire a substantial number of employees. However, it involves considerable investment in time and resources. You’ll need to navigate local regulations, establish a business entity, and ensure compliance with various legal requirements.
An EOR simplifies the process by handling all legal and administrative aspects of employment. This approach allows your business to enter and exit the market with greater ease and less risk. While the EOR takes on legal responsibilities and HR functions, your company retains operational control over the employees.
Step 2: Finding an EOR
Selecting the right EOR for your Indian team is crucial. Choosing an unsuitable service can lead to compliance problems, unexpected costs, and a poor experience for your new employees.
Consider these factors when evaluating EOR options:
- Legal compliance: Ensure the EOR is well-versed in Indian labor laws, employee rights, tax regulations, and local benefits. Look for a provider with a strong track record and experience in your specific industry.
- Customer service: Check if the EOR offers comprehensive support. For instance, Multiplier offers round-the-clock human-first support and dedicated account managers to assist you.
- Transparent pricing: Be wary of EORs with low upfront costs but hidden fees or unclear pricing structures. Clarify all potential costs to avoid surprises.
- Total cost of ownership: Focus on value rather than just the lowest price. Sometimes, opting for the cheapest option can result in higher costs due to inadequate service or hidden issues.
Step 3: Employing and onboarding in India
Send over the contract
After selecting a candidate, the next step is to prepare an employment contract that adheres to Indian labor laws. You’ll need to provide the contract in both English and Hindi or the local language to ensure clarity for all parties.
An EOR can create a compliant contract for you in minutes. Then you can customize details such as job duties, salary, working hours, and termination conditions.
Once finalized, your EOR will securely send the contract to the candidate for signing.
Enhance compensation with competitive benefits
To attract top talent in India, you need to include a competitive benefits package in the contract. Instead of sourcing local vendors yourself, leverage the packages your EOR provides. They can even handle sending necessary IT equipment to your new hires.
Get all your documentation in order
Onboarding involves gathering the new hire’s tax and banking details. An EOR like Multiplier can automate this process, setting up payroll efficiently and minimizing paperwork.
With Multiplier’s streamlined system, you can complete the entire onboarding process in as little as two weeks.
Step 4: Run payroll for employees based in India
Handling payroll for employees in India involves understanding local tax regulations and mandatory contributions. India has a progressive income tax system with rates ranging up to 30%, depending on income brackets.
Employers are also required to make contributions to several statutory schemes, including the Employees’ Provident Fund (EPF) and Employees’ State Insurance (ESI).
The EPF is a retirement savings scheme where employers must contribute a percentage of each employee’s salary to their EPF account. Meanwhile, the ESI scheme provides medical benefits and social security to employees. Employers must contribute to this scheme, which supports healthcare services and ensures employees have access to medical care.
Navigating these requirements can be intricate, especially for companies managing employees across different regions in India.
Using an EOR like Multiplier simplifies this task by ensuring accurate and timely salary payments while handling all local taxes, contributions, and deductions. With Multiplier’s integrated global payroll solution, you can efficiently manage payroll for your international workforce from a single platform, eliminating the need for multiple local vendors.
Employ top talent in India through an EOR
Onboard, pay, and manage all your international employees
Employment laws and regulations in India
Employers in India must comply with a range of regulations with regard to their workforce operations. This includes managing working hours, overtime, mandatory benefits, and proper termination procedures.
For example, the standard work week in India is capped at 48 hours, with a maximum of 9 hours per day. Overtime must be compensated at a rate determined by the government, typically 1.5 times the regular hourly wage. Specific rules apply to women and minors, including restrictions on night shifts.
For more details on how these laws impact hiring and managing employees in India, refer to Multiplier’s guide on employment law in India.
Employee benefits and compensation
In India, the current minimum wage varies by state and industry but generally starts around INR 178 per day.
Employers must provide benefits such as the Employees’ Provident Fund (EPF) and Employees’ State Insurance (ESI) contributions. Additionally, female employees are entitled to 26 weeks of paid maternity leave.
Employees are entitled to a minimum of 12 days of paid annual leave per year, which increases with longer service. They also receive up to 15 days of paid sick leave annually, with accumulation limits varying by company policy.
To help you stand out and attract the best talent, Multiplier’s Global Benefits platform offers a range of tailored benefit options to meet the needs of your team in India.
Termination and offboarding procedures
When terminating employment in India, employers must adhere to regulations regarding notice periods and severance pay. The standard notice period is generally 30 days, but it can vary depending on the terms outlined in the employment contract.
Severance pay is also required under Indian law, typically 15 days’ salary for each year of service. The exact amount may be specified in the employment contract or followed by statutory guidelines.
During organizational restructuring or economic challenges, employers can provide notice pay in lieu of the notice period, provided this is detailed in the employee’s contract.
These procedures can be intricate, especially for companies unfamiliar with Indian labor laws, but an EOR like Multiplier can streamline this process.
By managing the offboarding procedures, an EOR ensures compliance with local regulations and facilitates a smooth transition for both the employer and the departing employee.
Visa and work permit assistance
Hiring foreign employees in India requires securing the appropriate visas and employment permits. Here are the main visa categories for working professionals:
- Employment Visa: For foreign nationals employed by Indian companies in roles that cannot be filled by local candidates.
- Business Visa: For individuals visiting India for business purposes, including meetings and negotiations.
- Overseas Citizen of India (OCI) Visa: For individuals of Indian origin who hold dual citizenship and wish to work or invest in India.
- Student Visa: For those who have completed their studies in India and wish to stay temporarily while seeking employment related to their field of study.
Navigating visa applications and renewals can be complex and time-consuming. Expert assistance is often necessary to ensure compliance with Indian immigration regulations.
Multiplier offers comprehensive support for work permits and visa management as part of its Employer of Record (EOR) services. For more details on how we assist with global immigration issues, visit our Global Immigration page.
Get started with Multiplier’s EOR services
Multiplier’s Employer of Record (EOR) services provide a seamless solution for expanding your workforce in India. With Multiplier, you can hire employees without establishing a local entity, manage all HR tasks efficiently, and ensure a positive employee experience.
Our EOR services cover the entire employment lifecycle. We handle compliant contracts, manage payroll and tax obligations, and offer a variety of customizable benefits that meet local standards.
Book a demo to learn more.
