Employment and labor laws vary from country to country. This guide is intended to provide the most up to date information available. We will update this guide as needed when changes are made to the laws.
Employment Contracts
Employers are legally required to provide formal written contracts for all employees that include salary/wage, termination terms, job title, etc. The contracts must be written in Hindi and use the Indian Rupee currency (INR).
Working Hours
The standard working hours in India are 40 hours weekly at 8 hours a day. This can also be 48 hours including breaks, only as per client’s discretion.
The employees are allowed to work for 8-9 hours in a day. The standard practice followed by a majority of organizations in India is 8 hours a day of working.
Overtime
All work in excess of the standard 48 hours a week is to be paid as overtime and is regulated by employment contracts, generally calculated at 200% of the regular pay rate.
Public Holidays
Workers are entitled to 12 public holidays per year. The countrywide holidays listed below are the default days to give off, however, workers can choose to swap these days out in order to take off their Regional or Religious holidays instead.
Public holidays that fall on Saturday are observed on the Friday before and public holidays falling on a Sunday are observed on the following Monday.
For the year 2024:
- Jan 1: New Year (Monday)
- Jan 26: Republic Day (Friday) – National Holiday
- Mar 25: Holi (Monday)
- Mar 29: Good Friday (Friday)
- Apr 11: Id-ul-Fitr* (Thursday) – Tentative Date
- Aug 15: Independence Day (Thursday) – National Holiday
- Aug 19: Raksha Bandhan (Monday)
- Aug 26: Janmashtami (Monday)
- Oct 2: Gandhi Jayanti (Wednesday) – National Holiday
- Oct 11: Dusshera (Friday)
- Oct 31: Diwali (Thursday)
- Nov 15: Guru Nanak’s Birthday (Friday)
- Dec 25: Christmas (Wednesday)
Annual Leave (vacation)
The regulations regarding paid leave in India are set in the employment contract as a minimum of 15 days paid holiday a year (following completion of 240 days of employment). However, it is common practice for additional leave days to be included in the contract, together with rules on how many days can be carried over to the following year.
All PTO requests must be applied for at least 15 days prior to the start of the leave and approved by the employer, works committee, and the manager to ensure continuity of work.
Sick Leave
In India, the law mandates a combined 12 days of sick and casual leave for employees. These 12 days can be used for sickness or non-medical emergencies, with the stipulation that medical emergencies are marked as sick leave and other emergencies as casual leave. The distribution of these 12 days between sick and casual leave can vary based on the employee’s needs, for example, 7 casual and 5 sick, or 8 sick and 4 casual. Casual leaves are intended for unplanned situations, while sick leaves are specifically for health-related issues.
Maternity and Paternity
Maternity Leave
Eligible expectant mothers are entitled to 100% of their regular salary rate for 26 weeks for their first two children, decreasing to 12 weeks for any subsequent children. No woman is allowed to work during the six weeks immediately following the day of the delivery or of her miscarriage.
To be eligible, the employee must have been employed for at least 80 days of the preceding 12 months before the expected due date.
Adoptive Mothers and Commissioning Mothers
A woman who legally adopts a child below the age of 3 months or a commissioning mother (a biological mother who uses her egg to create an embryo that is implanted in any other woman), shall be entitled to maternity benefits for a period of 12 weeks from the date the child is handed over.
Every company with 50 or more employees shall have the facility of creche within the prescribed distance either separately or along with other common facilities.
The employer shall allow 4 visits a day to the creche by the woman, which shall also include the interval of rest allowed to her.
Paternity Leave
While government employees are entitled to 15 days of paternity leave, there are no statutory paternity leave laws for the private sector.
Other Leave
Each state generally sets other leave entitlements and policies.
Employee Severance and Terminations
Termination Process
The termination process is standard in India, with notice periods required unless an employer can provide sufficient cause for dismissal without notice due to misconduct, disobedience, lack of skill, neglect of duties, or absence without permission.
Notice Period
The notice period required is at least 30 days.
Severance Pay
In case of a termination due to redundancy, employers are required to pay retrenchment compensation. Severance or retrenchment compensation equal to 15 days’ average pay for every completed year of continuous service or part thereof in excess of 6 months must be paid to a workman on termination of employment.
The provisions of the IR Code pertaining to retrenchment are aligned with the provisions under the ID Act. However, for the purposes of retrenchment compensation, the same will be calculated at the rate of 15 days’ average pay or average pay of such number of days as may be notified by the appropriate government, for every completed year of continuous service or any part thereof in excess of 6 months.
Additionally, as mentioned above, the IR Code also requires employers to contribute an amount equal to 15 days’ wages or such amount as may be notified by the government for every retrenched worker to a “worker re-skilling fund.” In addition, the employer must pay certain termination benefits to employees who are dismissed, including leave encashment, gratuity payment (for employees, whether workmen or not, with 5 years or more of continuous service), payment in lieu of notice (if no notice is given), statutory bonus payment, and any other amounts due under the employment contract.
Employees who are being terminated on account of misconduct are not entitled to notice pay or retrenchment compensation.
Probation Period
Probation periods in India are generally between 3 and 6 months, based on the employee’s role and seniority.
Payroll Cycle
The payroll cycle in India is generally monthly, with wages paid on or after the 28th of each month.
13th Salary
The 13th salary in India is usually mandatory, paid as a percentage of the annual salary and within eight months of the end of the financial year.
The national minimum wage in India is fixed by the respective state governments. It uses a complex method of setting minimum wages that defines thousands of different jobs for unskilled workers and over 400 categories of employment, with a minimum daily wage for each type of job. The new Labour Code has introduced an increase of 14.5 times on the existing minimum wage to Rs 15,000 per month.
Contributions
Employer Payroll Contributions
VISA
There are two main types of visas in India: a business visa (visits to India of up to 6 months to conduct business for a non-Indian company) and an employment visa.
An employment visa is required for foreigners going to India for employment. The maximum length for this type of visa is 5 years, however, if the employment contract is longer than five years, then an extension will need to be sought before the end of the visa.
This visa also offers the possibility to live and work in India on a more permanent basis.
Visa applications must be made in the applicant’s country of residence.
VAT
The standard rates of VAT in India are 18.00% and 12.00%, with other primary rates of 28%, 5%, 3%, 1% & 0.25%.