India

Contract Types
Contract types in India are either fixed term or indefinite.

Probation
There is no law around probation, but it is common for probation to last between 3 to 6 months.

Working Hours
Working hours are usually 40 hours per week (5 days of 8 hours).

Overtime
No more than 9 hours per day or 50 hours per week is allowed in over-time. Over-time is paid at 200%. If an employee works on a Sunday or a public holiday, a day must be given back in lieu within 2 months.

Other Financial
Salary inflation is very high especially in the tech sector. It is normal to give annual increases of 10% to 15% pa plus an improved job title. It is common for compensation packages to include a variety of allowances to minimise tax. A gratuity payment (see terminations) is due when an employee leaves after 5 years’ service.

Other
Compensation should be stated in local currency. Salaries are generally paid on the 1st of every month. Companies with less than 1,000 employees should pay by the7th of the following month, with companies who have more than 1,000 employees, paying by the 10th.

Corporation Tax 2024
25%

Consumption Tax
GST, different percentages for different types of goods and services. Standard rate is 5%.

Employers’ Social Security Contributions
12% to Employees’ Provident Fund and 1.75% to national insurance

Income Tax Rates

• Up to 300,000 INR – 0%
• 300,000 to 600,000 INR – 5%
• 600,000 to 900,000 INR – 10%
• 900,000 to 1,200,000 INR – 15%
• 1,200,00 to 1,500,000 INR – 20%
• Over 1,500,000 INR – 30%

A surcharge of between 10% and 25% applies to individuals with total taxable income exceeding INR 5 million.

Notice
Termination notice is 30 days (1 month) unless the contract provides for a longer notice period. Payment in lieu of notice is allowed. No notice is required for termination due to misconduct.

Process
A copy of an approved resignation letter is needed for a mutually agreed termination.

Dismissal should be for reasonable cause such as gross misconduct. Redundancies and dismissals for any reason other than misconduct require 1 month’s written notice, and, generally, compensation of 15 days’ average pay for every completed year of service and part years in excess of 6 months. It is important to note that the Labour Law does not apply to all categories of employees, can vary between states, and also has limited application to managerial roles. In the latter case the terms of the employment contract will prevail. Redundancy is considered any reasons that are not related to disciplinary matters, ill health, or expiry of a contract term. Legally, when making redundancies, the principle of “last in first out” applies.

Severance Pay
With more than 5 years’ service, an employee is entitled to an additional gratuity; this is their last drawn salary multiplied by 15/26 multiplied by the number of years’ service, rounded up.

During Probation
During the probation period, 15 days’ notice is required from both parties. The employer can extend the probation period for up to an additional 3 months. Payment in lieu of notice is allowed.

National Public Holidays: 8 to 18 days depending on the state and local custom

Republic Day – January 26th, no day given in lieu

Holi – March 25th, no day given in lieu

Good Friday – March 29th, day given in lieu n/a

Eid al Fitr* – April 11th, no day given in lieu

Rama Navami – April 17th, no day given in lieu

Mahavir Jayanti – April 21st, no day given in lieu

Vesak Day – May 23rd, no day given in lieu

Eid ul-Adha* – June 17th, no day given in lieu

Muharram* – July 17th, no day given in lieu

Independence Day – August 15th, no day given in lieu

Janmashtami – August 26th, no day given in lieu

Milad un-Nabi* – September 16th, no day given in lieu

Mahatma Gandhi Jayanti – October 2nd, no day given in lieu

Dussehra – October 12th, no day given in lieu

Diwali – October 31st, no day given in lieu

Guru Nanak Jayanti – November 15th, no day given in lieu

Christmas Day – December 25th, no day given in lieu

All leave entitlement is based on a 5-day working week. The number of days quoted are working days unless stated otherwise.

Paid legal entitlement (working days)
In India rules on leave can vary between states. The statutory minimum is 15 days (21 calendar days) but senior positions would expect more.

Carry over permitted
30 days can be carried over for 3 years. At the end of each calendar year any leave in excess of 30 days should be paid out.

Timings
The holiday leave period is April 1st to 31st March.

Payment in lieu allowed
Payment in lieu of leave is allowed.

Sick
Sick leave allowance is a maximum of 12 days, paid at 70% of the employee’s average daily wage. Unpaid leave is possible for long-term medical issues.

Maternity
Maternity leave is 26 weeks, starting a maximum of 8 weeks before the delivery date for the first 2 children. If the employee has 3 or more children, this decreases to 12 weeks’ paid leave. The employer pays 100% of their salary during this time and the employee is entitled to a medical bonus of 3,500 rupees. Employees are allowed 12 weeks’ paid leave for the adoption of a child less than 3 months of age. Surrogates and adopting parents are entitled to 12 weeks of maternity benefits.

Paternity
There are no statutory paternity leave laws, however it is common practice to give the employee up to 15 days of leave.

Parental
There is no requirement to offer parental leave in India.

Marriage
There are no statutory laws on leave for marriage, but it is commonly offered for up to 3 days and paid by the employer.

Bereavement
Bereavement leave is not mandatory, but up to 20 days paid leave is commonly offered. 

Other
Casual leave is allowed by some employers for urgent matters. This can be 3 days per month and a maximum of 6 days per year. These days cannot be carried forward.

Medical Benefits
Medical insurance is a normal benefit from competitive employers which is usually offered to employees and family (often limited to 2 children). The plans offered are typically comprehensive, including outpatient, inpatient, doctors’ fees, and drugs. Limits range from 100,000INR to 2,000,000INR pa for senior executives. Co-payment is usually 20%.

Life Insurance
Life insurance is commonly provided under a group life plan, though may be included in a supplementary pension. 24 or 36 months’ death benefit is typically included. It is uncommon for such policies to include disability clauses.

Pension
A minority of employers provide supplementary pension schemes and some opt out of the state scheme (which is allowed as long as the benefits they offer are at least as good as under the state scheme).

Other
Termination indemnities, in addition to those required by law, are often provided by employers.