Setting Up Business In India: Employment Laws And Workers Rights

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Thursday, September 6, 2018 10:00AM / James Toblert (writer@toblertjames.com) 

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, McKinsey Global Institute 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 2018 Wage Code reforms 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. 

 

Annual Leave

·     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.’ 

 

Maternity Benefits

·   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 employment laws in India, contact one of our knowledgeable experts.

 
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