Thursday, September 6, 2018 10:00AM / James Toblert (
India is quickly gaining momentum as an economic power. GDP is expected to break the $4bn threshold in 2022 and with a steadily burgeoning middle-class emerging, the country is a potentially lucrative market for international businesses.
Furthermore, estimates that 60 cities in India will have a population of over one million by 2025. The potential to grow industry on a large scale and expand the country’s workforce has prompted the Indian government to introduce new laws in the employment sector.
The latest law reforms have a business-friendly approach whilst protecting the rights of employees. And whilst most statutes apply to the entire country, some states have a Shops and Establishments Act that differ slightly in some aspects.
International businesses that are planning to expand into the Indian market are required to comply with a plethora of registers and notices, and include certain provisos in employment contracts.
Employment contracts should include as standard:
· Legal terms attaining to the duty of care, a right of privacy and a duty to maintain confidentiality.
· Minimum wage requirements in accordance with which include unskilled, skilled, clerical, non-graduate and graduate levels.
· A typical working day of nine hours is permitted, but no more than 50 hours a week. Some states restrict women working at night between the hours of 8.00pm and 6.00am.
· Breaks of 20 to 60 minutes should be enforced after four to five hours of work.
· Overtime should be paid at double the hourly rate.
· Workers that have supervisory, administrative or managerial roles should be granted a 30 to 90-day notice period in order to terminate employment. Manufacturing units, plantations and mines with over 100 employees require government approval to to terminate employment contracts.
· Employees that have their contracts terminated should be awarded 15days pay for every year of employment.
· Termination for cause only covers bad misconduct, not non-performance.
· Employers can terminate the last employees to join the company first for convenience, but workmen should be given the opportunity to rejoin the company should the role become available again.
· Workers are entitled to 15 days paid leave per annum and up to 10 days paid sick leave.
· An additional 10 days of ‘causal leave’ should be given as an option if workers apply in advance.
· Business are not permitted to hire contract workers unless the contractor holds a valid licence and the employer is registered as a ‘principal employer.’
· Women with fewer than two children are permitted paid maternity leave from 12 to 26 weeks. Women with more than two children are only entitled to 12 weeks paid leave.
· Women that are adopting or “commissioning’ a child are entitled to 12 weeks paid maternity leave.
· Once the paid period of maternity leave has expired, new mothers should be given the option to work from home.
· Businesses with 50 employees or more are required to establish a crèche.
India’s employment laws are heavily regulated under various legislation, and the 2018 reforms introduced a number of significant changes.
It is recommended that UK businesses with the intention of setting up a business in India seek legal assistance with regards to employment contracts and terms of service.
ICGL is committed to providing expert advice. For more details about , contact one of our knowledgeable experts.