Employer of Record in India
Over recent years, India has emerged as an attractive destination for a global talent pool for employers worldwide.
There are several reasons for this. Firstly, India has been ranked the second-largest English-speaking country after the United States.
This means that companies that wish to hire from this region are less likely to face communication challenges that can hamper an organization's overall productivity.
Secondly, India has repeatedly excelled in software development, IT infrastructure, content writing, digital marketing, and data analysis.
Working professionals in this country are known for their strong technical skills, problem-solving prowess, and analytical abilities.
Lastly, the Indian education system strongly emphasizes Science, Technology, Engineering, and Mathematics (STEM) education.
A significant number of students in these fields graduate annually and are ready to join the workforce.
While all these factors have undoubtedly proved advantageous for companies seeking global expansion in these regions, let’s not forget the associated challenges of hiring remote employees. From understanding the local labor laws to navigating the tax requirements, the list goes on and on.
The worst part? Non-compliance can lead to severe repercussions, including reputational damage, hefty legal fines, and more.
However, there is an easy way out of this: Employer of Record (EOR).
An Employer of Record in India is a third-party service provider that handles all hiring tasks and obligations on your behalf.
Thanks to Skuad’s India EOR solutions, hiring and payroll management for business expansion in India is easier now.
Our unified and automated global Human Resource platform facilitates processes such as onboarding remote teams and managing payroll and employee benefits in compliance with local laws.
All this without going through the time-consuming process of setting up a unique entity in India.
Through our qualified international network, we assist organizations in streamlining their
global expansion to focus on the bigger picture rather than getting caught up in more minor decisions.
Moreover, our solutions give you a cost advantage over others, try our in-house employee cost calculator for a preview of expenses.
How to Hire Employees in India
Well, there are three main ways of hiring employees in India,
- Direct hiring, means you will not utilize any employer of record services in India.
- Hiring via Professional Employer Organization (PEO).
- Partnering with one of the EOR companies in India.
Direct Hiring: Setting up a Subsidiary
Four significant steps are involved in establishing a subsidiary in India.
- The first step involves filling out the Application for Reservation of Name or Form No INC-1. This step will help an organization name a subsidiary and ensure the name is available for use, meaning - another organization does not claim it.
- The Ministry of Corporate Affairs will help the organization in the second step, where an identification number or DIN is allocated, along with establishing a Distributed Control System (DCS) on behalf of the Government of India.
- The third step involves the payment of registration costs and stamp duty after drafting and filing the Memorandum of Association and Articles of Association.
- The final step is to fill Form INC-22 for tax purposes and DIR-12 to appoint directors and managerial personnel with the Registrar of Companies.
The above steps require a thorough knowledge of the entire process and an understanding of the workings of the local authorities to avoid any reworks in the application process.
Other professional social networking apps, such as LinkedIn, are also popular with recruiters, along with Naukri, Shine, and Foundit, for finding talent in all roles.
Those who fulfill all the criteria mentioned in the job description go through an essential background screening before being shortlisted.
The shortlisted candidates are interviewed through a series of panels, like technical and HR, to better evaluate their aptitude for the job and analyze if they are a perfect fit for the company and its culture.
After a final evaluation, the most suitable candidates are selected and offered a letter of intent or employment offer.
Finally, upon successful negotiation and signing, the candidates onboard the team as rightful employees of the company.
Hiring through an employment website, social media posts or advertisements in India has its advantages, such as the availability of many prospective candidates.
It takes away the risk of not finding the right candidate or a shortage of talent in the job pool.
On the flip side, organizations may filter several applications and select prospective candidates most suitable for the job offer.
It is a challenging process, especially the initial screening. It is important that initial screening is done accurately.
Apps like LinkedIn still have a limited reach in India and cannot be the sole platform to source talent, especially if you need talented professionals.
Hiring via Professional Employer Organization (PEO)
A professional employer organization (PEO) may provide a similar form of human resource expertise in recruitment, payroll, benefits, and employee management.
But it is slightly different from an EOR.
A PEO allows you to hire people who become your company’s employees instead of themselves being the legal employer.
The final decisions in all Human Resource matters fall on the organization when working with a PEO.
While this can be beneficial for reviewing every detail, it is also time-consuming, especially when it is in the middle of an expansion.
Partnering with an Employer of Record in India, such as Skuad
Hiring talented employees in a short span is not an easy task.
Partnering with an Employer of Record like Skuad in India is your best option.
It gives your organization enough time to focus on other aspects of international expansions like project management and inventory management.
The EOR takes care of all the compliance and legal issues while helping you speed up hiring.
It uses its knowledge of domestic employment practices and virtual onboarding tools.
Top EORs also have provisions for the e-signing of documents to enable faster onboarding.
Not only does Skuad help in quick recruitment, but it also assists in other Human Resources-related functions.
You get simplified payroll management, time and expense management, security and compliance, and tax filing.
These features add up to a faster, cheaper, and seamless experience for the organization and the candidates.
Furthermore, with Skuad, you can discover exceptional talent in India.
Whether you are hiring software developers, SEO specialists, account executives, or others, our talent experts will connect you to the right people for your organizational growth.
And with Skuad's Employer of Record solutions in India, you can manage the entire employment lifecycle on one unified platform, seamlessly.
Please note that Skuad provides both PEO and EOR services in India.
While working with Skuad as an India PEO partner, organizations have more control over the decision-making processes.
Skuad’s EOR solutions don’t require organizations to form an entity in the country of expansion.
Skuad completely takes over the hassles of working through the various stages of documentation and employment contracts.
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Talk to an expertOnboarding and Agreements
In the simplest terms, employee onboarding refers to getting the new employee acquainted with the organization’s work culture and ethics.
This includes providing them with all the tools or equipment needed to excel in their job roles so that they can become valuable and contributing members of the company.
Now, the first and perhaps one of the most important steps in this onboarding process is to draft a proper contract that complies with the labor laws in India.
An employment contract is a legally binding document that details all the terms and conditions, roles and responsibilities, and obligations of employers and employees.
As long as the working relationship continues, both parties must adhere to all the conditions outlined in this document.
Employment agreements in India can be categorized into five main types.
Permanent Employment Contract
- The permanent employment contract, or full-time agreement, is one of the most commonly used documents for employers and employees in India.
- It is offered only to those permanent employees who are hired full-time.
- It contains all crucial information that the employee must be aware of and adhere to while working in the company.
Part-Time Contract
- It outlines a stipulated ending duration alongside terms and conditions.
- Part-time contracts are offered to those employees who work part-time, such as half a day.
- Part-time workers are not entitled to certain benefits and bonuses, unlike full-time employees.
Freelance Contract
- As the name implies, freelance agreements are designed for workers who are hired by an organization for a specific project.
- These types of contracts usually contain a detailed outline of the project details and safeguard freelancers against potential issues, such as a delay in payment processing.
Zero-Hour Worker Contracts
- Flexibility and time management are two of the most important components of zero-hour contracts.
- It refers to those agreements that do not specify the fixed working hours for employees.
- Additionally, employees under this agreement are not legally bound to work solely for a specific employer, meaning that they can choose to provide their services to other employers, too, simultaneously.
- Zero-hour contracts are not quite common in India. However, they are often used by specific industries, such as hospitality or retail.
Consultancy Agreement
- A consultancy contract is usually required when a company wishes to hire someone who will not work for them.
- This is specifically offered to self-employed individuals who want to collaborate with a business organization on a project/assignment or for a specific duration.
For successful employee onboarding, a careful evaluation of all these different types of employment agreements in India is extremely important.
Additionally, do not forget to complete these below-mentioned tasks.
- Confirm your hire with HR: Once you have selected the candidate you wish to hire for the job role, carefully communicate this to your HR department so that they can run the necessary background checks.
- Send a welcome email to your new employee: A great way to make new team members feel welcomed and excited about their first day at work is to send them an email detailing everything related to their new job role, company culture, dress code, and so on.
- Inform your existing employees about the new hire: Email them with details of the new employee’s background to keep them in the loop.
- Prepare the necessary tools and equipment for the new employee: It is always best to plan and procure all the required equipment for the new employee to excel in their new job role. This includes a clean desk, chair, and other essentials.
After all the pre-boarding preparations have been completed, it is now time to successfully onboard the new employee. This includes,
- Gift your employee a welcome package: Gifting officer merchandise and other supplies can be an excellent way to make your new employee feel appreciated.
- Give your new hire an office tour: Familiarize your new employee with the new office building, the key personnel within each department, the workplace’s security protocols, and so on.
- Introduce the new hire to their workstation: Provide all the necessary equipment, such as passwords, office keys, or elevator cards, to the new employee so they can easily settle in their new workstation.
- Schedule an onboarding feedback session: Get in touch with your new hires a few days after they have been onboarded to learn how well they are adjusting to the work environment. This can also be a great way to identify loopholes (if any) in the onboarding process so that you can rectify them accordingly.
Working with an Employee of Record can save you valuable time that would otherwise go into setting up the entire hiring process, payroll management, tax management, and other such services.
Working with an EOR of repute such as Skuad offers additional benefits such as tailor-made contracts for your needs, establishing all processes in compliance with local laws, easy amendment of existing contracts, and convenient e-signing of documents.
Taxes
Taxation is also a necessary process to which you have to pay special attention. Here too, working with an EOR will help save time and initial costs so that you can focus on the goals and objectives of the expansion.
Taxation in India
Tax | Explanation | ||||||||||||||||||||
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Income Tax applied on an employee’s salary (Two structures exist for this and employees can choose which one they want to follow) | Annual Taxable Income under new regime (4% cess added)
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Tax rebate | Yes, for employees with Net taxable income less than or equal to $6,280 | ||||||||||||||||||||
Financial Year End date | 31st March | ||||||||||||||||||||
Tax documents | Form 16, Form 10 BA, Form 2E | ||||||||||||||||||||
Corporate tax | Between 25% and 30% for domestic companies. At 40% for overseas companies. | ||||||||||||||||||||
Withholding Tax (For Non-residents) | Dividends: None Interest: 20% of interest received from the Government of India or an Indian Concern. 10% interest on income from Indian bonds 5% on interest received on loans in foreign currency. Royalties: 10% |
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Payroll Tax | It may be fixed or proportional to the income level of the employee | ||||||||||||||||||||
Sales Tax | State and Central GST ranging from 0% to 28% | ||||||||||||||||||||
Employer Contribution Towards Social Security | 1.67% to 3.67% towards Employees’ Provident Fund Scheme. 8.33% towards Employee Pension Scheme. 0.5% towards Employees’ Deposit Linked Insurance. |
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Employees’ Contribution Towards Social Security | 12% of the specified salary |
Compliance
Indian labor laws include provisions for an employee’s provident fund, maternity benefits, state insurance, and the issuance of bonuses and appraisals.
These laws protect the interests of the working section of the Indian population.
However, these laws apply to foreign nationals working in India. Foreign nationals employed by Indian companies can also benefit from the Provident Fund law.
This is dependent on the terms of the social security agreement between India and the home country of the foreign nationality worker.
Indian employers employed by Indian entities who have to serve abroad as part of their job come under the umbrella of Indian Labor laws.
However, this benefit does not extend to Indian employers employed by a foreign company.
Knowing these things will help an organization save a lot of time and effort in its expansion process. Hence, partnering with an EOR like Skuad proves to be an efficient option.
Some of the provisions of Employment Laws to note before hiring in India are:
Title | Explanation |
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The Employees Provident Funds & Miscellaneous Provision Act, 1952 |
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The Industrial Disputes Act, 1947 |
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The Maternity Benefit Act, 1961 |
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Indian Contract Act, 1872 |
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Independent Contractors vs Full-time Employees
The Indian education system has over 2.8 crore students enrolling annually in upward of 55 thousand higher education institutions.
A large number of these are knowledge workers engaged in creative and information technology-related pursuits.
More than 27 lakh students choose to pursue super-specialization courses through a post-graduation program. Apprenticeships offered to this young workforce are governed by the Apprentices Act of 1961.
Recently, we saw an increase in remote workers threefold, boosting the existing remote hiring system.
Many knowledgeable workers now get hired virtually and occupy remote positions in companies irrespective of their current geographical locations.
Remote working makes talent from across the country available to employers without being limited by location while increasing talent pool availability.
As companies are adopting digital work models, the popularity of remote working has been on the rise.
Different statutes protect different categories of workers in an organization.
Indian legislation has a set of laws for both – workers and non-workers.
Workers are involved in manual, unskilled, skilled, operational, technical, clerical, or supervisory work.
Non-workers typically have managerial or administrative tasks at an organization.
Intermediate contractors can also help in hiring contract workers for an organization. Indian law recognizes this as a separate worker category from the ones mentioned above.
This worker category is regulated by the Contract Labour (Regulation and Abolition) Act, of 1970, and not the Industrial Disputes Act.
The Contract Labor Act helps secure minimum wage, health and safety, and basic insurance provisions. However, these workers don’t enjoy benefits like job protection, compensation, and union representation.
Though it is not mandatory, it is highly recommended to enter into a contract with all categories of employees in India where the terms of employment are clearly stated.
Tests to Determine the Classification of Workers
There are two main types of tests utilized by the courts in India to determine whether an individual is an employee or an independent contractor in India. They are namely,
- The Control Test: It assesses whether a master-servant relationship exists, not just in terms of directing the nature of work that needs to be performed but also the amount of control over how the work is completed.
- The Integration Test: It determines whether the worker is fully integrated into the employer’s concern or remains independent of it.
However, please note that these are not the only two tests used to classify workers in India. There are various other factors taken into account by the Supreme Court, such as,
- Who is the appointing authority
- The nature of the establishment
- Who can dismiss
- Who provides the tools/equipment for performing the work
- The degree of control and supervision
- The nature of the job in itself (whether it is skilled or professional work).
IP Protection in India
Intellectual property (IP) refers to any brand, invention, design, or other kind of creation over which a person or business entity has legal rights. In India, some of the most common types of IP include,
- Copyright: Currently, all intellectual property rights are administered by the Department for Industrial Property and Promotion.
- Patents: Matters related to patents are handled according to the provisions of India’s Patents Act of 1970, the 2016 Patent Amendment Rules, and the 2003 Patent Rules.
- Designs: The Designs Act 2000, and the Design Rules 2001, are the primary laws that govern designs.
- Trade Marks: Indian trademark laws comprise the Trade Marks Rules of 2002 and 2017, as well as the 1999 Trade Marks Act.
Types of Visas in India
Visa Category | Explanation | Duration |
---|---|---|
Employment Visa | Foreigners working in India under a registered organization require proof of employment, such as a drawn-out contract. It can be extended. | Up to 5 years or the period of the contract |
Business Visa | It is for foreign nationals conducting business or looking for business opportunities in India. Visa holders need to register with the Foreigners Regional Registration Office if they wish to stay beyond 180 days. They allow multiple entries. They require a letter that mentions the exact details of their business or idea. | Up to 5 years or the period of the contract |
Project Visa | Special Project Visas are only issued to highly skilled foreign professionals coming to India to work in the Power or Steel sectors. They are only valid till the project is operational. They require a letter stating the exact description of the project to be undertaken. | The actual duration of the project or up to a year |
X Visa or Entry Visa | Valid for Indian origin or family members of foreign nationals holding a business, employment, or project visa. They require either a marriage, birth certificate or letter of invitation, depending on the purpose of the visit. | Up to 5 years |
Work Permits
Foreign nationals can apply for an employment visa in India by paying a fee between $125 and $1000, depending on their stay and country of origin. There are no work permits required after that unless the individual is from specified countries such as China, Afghanistan, or Pakistan.
Payroll
The traditional method of processing payroll in India is paying directly through cash, paycheque, direct deposit, pay cards, or mobile wallets.
However, please note that this method can get very complicated very quickly, especially if you are hiring more than one employee.
In addition to this, you will have to understand and comply with all the tax requirements and fulfill these below-mentioned tasks.
Process | Details |
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Applying for a Tax Deduction Account Number or Tax Collection Account Number (TAN) | Companies need to either register online or at their nearest Tax Information Network Facilitation Center. Processing fee and a Goods and Services Tax of up to 18% is applicable. |
Choosing a Payroll System | Payroll systems must be selected, keeping several factors in mind, such as accommodation of benefits like health insurance, the requirements, vision for the business’s growth, etc. Provident Fund or Social Security is capped at 12% of the employee’s salary. It is important to note that employees need to fill out a withholding allowance certificate before collecting payroll deductions. |
Note Down All Employee Information | Basic information, information related to wages and regular work hours for employees, are noted. Using software or a cloud-based service for this step will make it easier to enter and maintain the data. |
A safe and affordable alternative to paying directly is paying through Employer of Record Services in India.
Skuad’s Employer of Record India solutions boast numerous capabilities that make international payment processing streamlined and efficient. They include,
- Payroll in 100+ currencies
- Built-in payroll compliance
- Automated invoicing and payslip generation
- Expense management
- Real-time reporting, and more.
Benefits and Compensation
Statutory employee benefits in India are governed by the following laws,
- The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (EPF Act)
- State-Specific Shops and Establishment Acts
- The Maternity Benefit Act, 1961
- The Employees’ State Insurance Act, 1948 (ESI Act), and other similar regulations.
Under these provisions, every employee in India is entitled to the following benefits,
- Gratuity: It refers to a certain amount of monetary compensation that must be provided to an employee at the end of their employment period. The Payment of Gratuity Act 1972 determines the amount to be paid.
- Insurance: Under the ESI Act, both employers and employees are required to contribute 4.75% and 1.75% of their payable wages, respectively. The funds collected are used to provide health and other benefits to employees and sometimes their family members in the event of maternity, accidents, and sickness.
- Provident Fund: Under the EPF Act, both employees and employers are required to pay 12% of the wages, dearness allowance, and retaining allowance.
- Bonus: Under the Payment of Bonus Act, every factory or establishment that employs 20 or more individuals is required to pay bonuses to its employees who earn less than INR 21,000. The bonus amount equates to 8.33% of the wage earned by the worker in an accounting year or INR 100 (whichever is higher).
In addition, employers in India may also provide certain other health benefits, which are referred to as discretionary benefits, meaning these are not statutory entitlements. They include,
- Transportation
- Health and Life Insurance
- Relocation allowance
- Mental health benefits
- Employee stock ownership plan
- Paternity leave
- Gym memberships.
Worker Rights In India
In addition to benefits and compensation, employees in India are also entitled to certain rights. They include
Statutory Working Hours
A general workday in India consists of 8 working hours.
Job Specific Working Hours
Factories Act, 1948 | Employees cannot work beyond nine working hours in a factory. |
Shops and Commercial Establishments Act | The 48-hour workweek for employees in commercial establishments. |
However, the Shops and Commercial Establishments Act is a state act, and the exact numbers may vary from state to state.
Rest Period
Between work days, a rest period of at least ten and a half hours is to be provided to Indian workers before returning to work.
Minimum Wage
The minimum wage in India is regulated by the Minimum Wage Act 1948. It is currently set at INR 15,000 per month.
Probation Period
- There are no specific Indian laws that address the duration of an employee’s probation period.
- However, it is generally between three to six months. It may even be extended up to a year in some cases if required.
- If any employee’s performance has not been ideal during this period, the employer can terminate their services, citing that as a reason.
Anti-Discrimination Laws/Acts
India has various provisions in place to safeguard employees in the event of workplace discrimination. They include,
- The Constitution of India: Article 14 and Article 15 of the Constitution of India guarantee ‘equality before law’ and prohibit any form of discrimination based on sex, gender, age, and religious beliefs, among other grounds.
- The Persons with Disabilities Act, 1995: Establishes all the rules and regulations to safeguard the rights of differently-abled people in India, at work, and elsewhere.
- The Wages Code 2019: Prohibits discrimination in matters related to wages and recruitment of employees.
- Industrial Disputes Act: It prohibits the commission of any unfair labor practices in India, including workplace discrimination.
Health and Safety Act
- The National Policy on Safety, Health, and Environment at the Workplace is the primary regulation that establishes a series of guidelines to eliminate the incidence of work-related injuries, diseases, and disasters.
- It also aims to enhance the well-being of employees and society at large and guarantees a high level of occupational safety and health through a proactive approach.
Remote & Hybrid Work in India
While understanding and complying with all the labor laws in India is undoubtedly necessary, it would be of no value if your organization is unable to facilitate remote work.
Typically, three main factors determine any company's remote readiness. They include:
- Flexible Work Arrangement
By flexible work arrangements, we mean whether or not an organization has policies or guidelines that can facilitate remote work. These include incorporating effective communication and collaboration tools, performance evaluation, work hours, time management, and more.
- Technology and Infrastructure Requirements
Moving on, you need to have the proper infrastructure and technology in place to maintain the same level of productivity and efficiency outside a traditional office environment. By this, we mean suitable hardware, such as laptops or mobile devices, a reliable internet connection, and software, such as robust cybersecurity measures.
- Data Privacy and Security
Last but not least, to truly enjoy remote work's benefits, you must ensure optimum security and privacy of crucial business information and data. Ensure that your organization has security measures to comply with all data protection regulations and protect sensitive data.
Salary
Salary structures in India are split between allowance types such as house rent, leave and travel allowance, phone allowance, special allowance, and other such allowances related to particular job roles.
Many of these are a percentage of the principal salary sum. Employees might negotiate to work with some specific splits of their salary like Provident Fund, etc.
Check out Skuad’s salary insight tool, which allows you to access valuable information on current salary trends and comparisons to make competitive and fair offers to your employees.
Scope of Negotiating Terms
The negotiation process in India may be different than what it is in other countries, given the societal structure. Like Indian families, companies also follow a hierarchical structure where each decision is taken in a top-down manner, possibly delaying the time taken to execute a decision. Terms like ‘I will get back to you’ are also common as companies and candidates do not want to refuse any offer right away since it can be considered rude.
This hierarchical structure also means that job titles become very important for employees. They are almost as important as the monetary remuneration provided. This gives employers a critical bargaining tool in the negotiation process.
Leave Policy
Let’s take a look at the statutory leave entitlements of employees in India.
Annual Leave Accrual Entitlement
For Shops and Commercial Establishments, the annual leave laws differ under each state’s law.
The minimum number of annual leave days is 12, extending up to 30 days depending on the state a company is operating in.
On average, most states mandate 15 days of leave for every working year.
Maternity Leave
Twenty-six weeks of maternity leave for female employees as a part of the Maternity Benefit Act.
Compensatory Leave
One is granted per weekly allotted holiday or public holiday that an employee has worked. They can either be taken immediately, at a later date, or converted into an encashable option.
Public Holidays
- Monday 1 January, 2024, New Year’s Day
- Saturday 14 January 2024, Makar Sankranti/Pongal/Uttarayan/Magh Bihu
- Friday 26 January 2024, Republic Day (Statutory)
- Monday 25 March, 2024, Holi
- Friday 29 March, 2024, Good Friday
- Tuesday 9 April, 2024, Ugadi/Gudi Padwa
- Thursday 11 April, 2024, Eid-ul-Fitr
- Friday 14 April, 2024, Amedkar Jayanti/Mahavir Jayanti/Vaisakhi/Vishu/Bihu
- Wednesday 1 May, 2024, Labour Day
- Monday 17 June, 2024, Bakri Eid
- Wednesday 17 July, 2024, Muharram
- Thursday 15 August, 2024, Independence Day (Statutory)
- Monday 19 August, 2024, Raksha Bandhan
- Monday 26 August, 2024, Janmashtami
- Saturday 7 September, 2024, Vinayaka Chaturthi
- Monday 2 October, 2024, Mahatma Gandhi Jayanti (Statutory)
- Friday 11 October, 2024, Dussehra (Mahanavmi)
- Thursday 31 October, 2024, Diwali
- Friday 15 November, 2024, Gurupurab/Guru Nanak Jayanti
- Wednesday 25 December, 2024, Christmas
Background Checks
Background checks are an absolute necessity, especially when it comes to international hiring.
In India, there are certain guidelines that you must follow to conduct effective background checks.
For example, for certain job roles, employers might have a legal obligation to conduct a criminal record check before hiring any new employee.
Other types of similar background checks may involve credit checks, education verification, and employment verification.
Below, we have provided you with a detailed overview of all these different types of pre-employment checks in India.
- Criminal Record Check
A criminal record check helps uncover any information related to an employee's past convictions or criminal records that may affect their suitability for a job.
In India, the criminal record is also known as a Police Clearance Certificate (PCC), which the High Commission issues.
- Education Background Check
An educational background check helps to ascertain the accuracy of claims made by job applicants related to their academic qualifications.
These can be anything from college degrees to diplomas or certificates. For this purpose, the employer may directly contact the educational institutions to verify the claims.
- Employment History Check
An employment history check is done to verify the past work experience of a potential candidate.
This includes scrutinizing previous job roles and responsibilities, joining dates, reasons for leaving, and other related information.
An employment history check is especially important when you are hiring candidates for higher-level positions within your organization that require expertise and knowledge.
Termination and Offboarding
There is no standard procedure for terminating employment in India. When offboarding an employee, an employer must consider the terms of the employee contract and the provisions of the respective Act related to the specific employee type.
However, an employer may be tried by the Indian Judiciary System for wrongful termination if their actions are not in compliance with the state’s Shops and Commercial Establishments Act.
In general, an employee gets a written notice period of 30 days, or compensation for those 30 days, in some cases.
Contracted employees and freelancers protected by the Indian Contract Act can ask for compensation and, after that, initiate legal proceedings if there is a breach of contract as per Section 73.
Working with an EOR like Skuad helps organizations carry out such actions in compliance with local laws to avoid disputes in the future.
Skuad can also help organizations draft reliable labor contracts.
Cultural Considerations
Last but not least, another important step in the international hiring process is determining whether the new employee is compatible with the organization’s goals and values.
Cultural fit is important because it directly influences the individual's morale and productivity.
Below, we have highlighted a few key characteristics of the work culture in India.
- Respect for authority: Respect for authorities, and those who are in high-level positions in a work environment, is deeply ingrained in the Indian work culture. This can be viewed through the way juniors and freshers interact with managers or senior staff.
- Teamwork and collectivism: Teamwork is highly valued in the Indian work culture, and employees often prioritize group achievement over individual achievement.
- Formal communication style: Formal communication style can be predominantly viewed in traditional Indian offices. On the contrary, a more casual communication style is adopted in Indian start-up organizations.
Conclusion
The most important part of setting up a remote team in India in 2024 is knowing the local laws and how they will affect all employment processes.
Factors like the laws governing different kinds of employee types, differences in state laws, understanding the Indian negotiation process, setting up payrolls, and getting through the nuances of taxation can slow down the expansion process.
However, instead of setting up a new local entity and understanding the impact of every law on the employment process, it is much simpler to work with a trusted partner who can take care of your HR needs.
It will also ensure that your HR practices comply with the local legal system and that you are never on the wrong side of the law.
Skuad’s global infrastructure and employment expertise make hiring exceptional talent in India simple. Using a unified platform, Skuad manages payroll and benefits and helps you with compliance and taxation.
Skuad has built trust among prominent remote employers and continues looking for ways to make your expansion plans smoother.
Contact Skuad today to give your business expansion plans the boost they need.
FAQs
Q1. What does Employer of Record in India mean?
Ans: An Employer of Record (EOR) in India is a solution that legally onboards employees for companies, handling payroll, tax, social security, benefits, and compliance with local labor laws. It enables companies to hire in India without creating a local entity, simplifying expansion and operations.
Q2. How to hire employees in India through an Employer of Record?
Ans: Here's a step-by-step guide to hiring employees through an Employer of Record in India:
- Choose between an EOR and a legal entity: Evaluate if hiring through EOR service providers in India is more feasible than establishing your own entity, considering your company's size and growth plans. Opt for an EOR if you seek a simpler, cost-effective solution without the complexities of establishing and maintaining a legal entity in India, ideal for companies focusing on flexibility and fast market entry.
- Select the best EOR for your needs: Consider Skuad for hiring, paying, and managing Indian employees. Assess the services required and your global hiring expansion plans.
- Onboard Indian employees: With your chosen EOR, collect employee details (name, DOB, contact, bank info, PAN, TAN, EPF account), and issue localized employment agreements covering legal requirements like wages, benefits, and termination policies.
- Run payroll: The EOR will handle payroll, including tax withholdings and contributions to social security programs, in compliance with Indian laws.
Q3. Why work with an EOR?
Ans: Partnering with Skuad as your EOR in India offers numerous benefits. We bring our specialized expertise to the table, helping you navigate the intricacies of Indian labor laws. By entrusting us with your employment needs, you can access India's vast talent pool without the hassle of establishing a local entity. Furthermore, it minimizes legal and financial risks, streamlines HR processes, and empowers your organization to scale efficiently in the Indian market.
Q4. How much does an EOR cost?
Ans: With Skuad as your Employer of Record in India, you can enjoy exclusive pricing of just USD 199 per month, per employee.
Q5. Can I hire someone in India from the USA?
Ans: Certainly! When partnering with Skuad, you can confidently hire talent in India from the USA. We facilitate this process by serving as your trusted EOR in India. Skuad ensures that your cross-border employment arrangements meet all legal and administrative requirements. By leveraging our expertise, you can navigate the complexities of hiring in India while maintaining full compliance with local labor laws, taxation regulations, and other statutory requirements. This approach empowers you to expand your global workforce seamlessly and efficiently.
Table of Content
- Employer of Record In India
- How to Hire Employees in India
- Onboarding and Agreements
- Taxes
- Compliance
- Types of Visas in India
- Work Permits
- Payroll
- Benefits and Compensation
- Worker Rights In India
- Remote & Hybrid Work in India
- Salary
- Leave Policy
- Background Checks
- Termination and Offboarding
- Cultural Considerations
- Conclusion
- FAQs
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