Employer of Record in India

Hiring and payroll management for business expansion in India has never been easier than now, thanks to Skuad’s Employer of Record Solutions. Our unified and automated global Human Resource platform facilitates processes such as onboarding remote teams, managing payrolls, and employee benefits in compliance with local laws. All this without having to go 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 in more minor decisions.

India at a Glance

Estimated Population: 1.39 billion

Currency: INR Indian Rupee

Capital: Delhi (National Capital Territory)

Number of officially recognized languages spoken: 22

Languages frequently used: Hindi, English

GDP: -10.29% (2020)

Employment In India

Indian labor laws include provisions for an employee’s provident fund, maternity benefits, state insurance, and issuance of bonuses and appraisals. These laws are put in place to protect the interests of the working section of the Indian population.

However, these laws are also applicable 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. But 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:

Timings, Holidays, And Leave Policies In India

Public Holidays in India

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-Fitar

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, Janamashtami

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

Contractors vs. Full-time Employees

The Indian education system has over 2.8 crore students enrolling annually in upward of 51 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, 1961.

Recently, we saw an increase of remote workers three folds 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 bridging the location gap while increasing the 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, 1970, and not the Industrial Disputes Act.

The Contract Labour 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.

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.

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.

Hiring in India

The recruitment process in India is fairly straightforward. Once the hiring needs are identified, and the job description is put down, employers have to either use an internal team or partner agency to find suitable talent for the role.

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.

Other professional social networking apps such as LinkedIn are also popular with recruiters for finding talent in all kinds of roles, along with Naukri, Shine, and Monster.

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 shortage of talents in the job pool. 

On the flip side, organizations may have to go through a tiresome procedure of filtering several applications and selecting prospective candidates who are most suitable for the job offer. It is a challenging process, especially the initial screening. It is impertinent 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 from, especially if you need talented professionals.

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, giving 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 using their 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 assists in other Human Resources-related functions such as 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.

Probation & Termination

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.

There is no standard procedure that exists in India when it comes to the termination of employment. To terminate an employee, an employer must keep in mind 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.

EOR Solution

With so many benefits, such as doing away with the need to establish a new entity, freeing up time and resources to focus on other aspects of your expansion plans, and simplifying legal compliance, EOR is the best way to enter the Indian workspace. Skuad’s expertise allows for a cost-saving, faster-paced, and overall smoother approach to an organization’s expansion without the need for establishing a new entity to take care of all the employee management processes.

While organizations have the choice to set up an entity and take up the staffing, employee management, and payroll management activities by themselves, it can be time-consuming and run the risk of legal hurdles.

Outsourcing Employment Through An EOR in India

Choosing to work 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.

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 are some additional benefits of working with an EOR of repute such as Skuad.

Types of Visas in India

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 & Taxes in India

To set up payrolls in India, you have to be aware of the local rules and the acts governing those rules. Knowing your employee profile is of utmost importance since it will help you understand which act you have to refer to. 

Taxation is also a necessary process you have to pay special attention to. 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.

Payroll Details

Taxation in India

Incorporation: How to Set Up a Subsidiary in India

There are four significant steps involved in the establishment of 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.

2. On behalf of the Government of India, the Ministry of Corporate Affairs will help the organization in the second step, where an identification number or DIN is allocated along with the establishment of a Distributed Control System (DCS).

3. The third step involves the payment of registration costs and stamp duty after drafting and filing the Memorandum of Association and Articles of Association.

4. The final step is to fill Form INC-22 for tax purposes and DIR- 12 for appointment of 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 sort of reworks in the application process.

Companies providing EOR Solutions, such as Skuad, can be of great help in this case.

Professional Employer Organization (PEO)

A Professional Employer Organization (PEO) may provide a similar form of Human Resource expertise such as recruitment, payroll management, benefits management, and employee management. But the key area where it differs from an Employer of Record is that 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.

Skuad provides both PEO and EOR services. 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.

Conclusion: What Gives Skuad’s India Solutions an Edge?

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 draw out the process of expansion.

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 are compliant with the local legal system and you are never on the wrong side of the law.

Skuad’s global infrastructure and employment expertise make it simple to hire exceptional talent in India while also managing your payroll, benefits and helping you with compliances and taxation using a unified platform. Skuad has managed to build trust among some prominent remote employers and continues to look for ways to make your expansion plans smoother.

Contact Skuad today to give your business expansion plans the boost they need. 

FAQs about EOR in India

1. What does Employer of Record in India mean?

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.

2. How to hire employees in India through an Employer of Record?

Here's a step-by-step guide to hiring employees through an Employer of Record in India:

1. Choose between an EOR and a legal entity: Evaluate if hiring through an EOR 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.
2. 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.
3. 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.
4. Run payroll: The EOR will handle payroll, including tax withholdings and contributions to social security programs, in compliance with Indian laws.

3. Why work with an EOR?

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 the Indian labor laws. By entrusting us with your employment needs, you gain access to 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.

4. How much does an EOR cost?

With Skuad as your Employer of Record in India, you can enjoy exclusive pricing of just USD 199 per month, per employee.

5. Can I hire someone in India from the USA?

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 adhere to 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.