Employer of Record India
Infotree Global Solutions help companies to achieve potential growth globally by providing its global payroll and Employer of record services in the country where it wants to expand. Setting up a business in a foreign country like India can be challenging but with Infotree global you don’t have to worry about a thing. As your India Employer of record, we take responsibility for all formal employment duties so that the company can focus on its business development without being concerned about the legal hassles.
Table of Contents
• Hiring In India
• Employment Compliance
• Employee Entitlements
• Payroll Tax in India
• Challenges When Expanding into India
• Benefits of Employer of Record India
• Why Infotree Global Solutions?
Hiring In India
India holds the second-largest share of the population in the world. Thus, the opportunities for a good economy in this wide market are high. Most of the Indian workforce is highly educated and skilled in different fields like technology, industrial production, retailing, healthcare, tourism, and more. Just you need to be aware of the employment regulations for hiring and have the keen eye to recognize the relevant talent of multi-skilled professionals. The India employer of record can do the same for you. Thus, such an authoritative local entity can bring top-rated employees to your organization. Moreover, employment relationships in India are led by different forms such as treaties, individual contracts, statutes, and constitutions according to 165 labor laws established in India. Thereby, foreign employers have to comply with all of them while documenting relationships with contract workers or full-time employees.
All in all, hiring in India is a bit complex process. You may need to streamline your market entry by getting assistance from local experts. The decision would not only potentially save your expansion costs but will also ensure ongoing compliance with Indian employment regulations and tax laws as they change. You get the best hiring practices in less time, cost, effort and onboard your Indian workforce with no need for the subsidiary. We, at Infotree Global Solutions, would act as your employer of record India and manage all things smoothly.
As you are looking to establish employment contracts with your prospective employees in India, we suggest only the best practice to consider. It is a task that requires effective documentation by an Indian employer of record to align with all the legalities and compliances. The better you choose for the purpose, the lesser are the chances of employment disputes later. Let us handle the onboarding, payroll, and administration activities so that your all contracts align with all updated government regulations. Meanwhile, remember, some of the important information below must be there in the offer letters and contracts:
• Working hours
Indian workweek revolves around 48 hours with 8 hours per day from Monday to Saturday. Still, the working hours fluctuate from industry to industry under Indian Labour Law but the maximum of them are limited to 10.5 in a day and 50 hours in a week, including overtime. Though on Sundays and other national holidays, offices remain closed, the necessity is stated in the prior agreement to get consent from the employee. If some employees work on holidays too, they are given time off equivalently on some other days within 2 months.
It is an Indian rule that no employee can work for 5 hours consistently, and they cannot proceed from 10 consecutive workdays also. So, Sundays and 30 min rest breaks in between the 5 hours work are compulsory. Being your employer of record in India we manage all administration smoothly.
Many pre-tax allowances are available for employees in India so their basic salary accounts for only 40% of the total compensation package. The basic salary and some other Incentives are taxable. The former is paid out every month while the latter depends on the consistent performance of the employee.
Besides, other allowances include Children Educational Allowance (up to 100 INR per child monthly), Children Hostel Allowance (up to 300 INR per child monthly), House Rent Allowance (tax-free in some situations), Leave Travel Allowance of Concession (starts from 2nd year of employment), Vehicle Allowance (almost tax-free), Telephone Allowance, and the Special Allowance. Thus, the employment contract should include the complete breakdown of the total salary package on monthly basis.
According to the Wages Act, employees are required to pay their employees before the 7th of every month if their workforce is less than 1000 employees.
Additionally, as per wage growth, Indian employees expect it to be between 10 to 15% every year.
Infotree Global Solutions handle the employer of record services in India, so you need not worry about various allowances, their percentages, regular updates, and all.
The Payment of Bonus Act makes it compulsory to keep the minimum annual bonus of 8.33% and the maximum of 20% based on the annual salary.
Most employers get supplementary insurances like health insurance and different allowances like medical allowance, conveyance allowance, etc, handled by their employer of record India to satisfy their employees with an on-time structure.
• Probationary period
Some states in India allow for a probation timeframe of three to six months but a maximum of eight months. It is primarily seen in the technology and services sector. The period allows the employer and employee to terminate the project even without the written notice.
• Termination and severance
Employers are required to either send a one-month prior notice to the employee or share the salary along with informing about termination. In India, most workers are entitled to warn periods for termination for causes like insubordination, disorderly behavior, theft, or bribery.
As far as severance is concerned, employees terminated for reasons like continued Ill health, disciplinary action, retirement, or expiration of the employment contract are entitled to 15 days salary for each year of the service they have performed (at least 2 years). Those with five years of experience deserve gratuity payment of half month’s salary multiplied by the years of experience.
To keep all your activities legally compliant with local regulations, the India employer of record can assist you swiftly. Everything including all the benefits and rules regarding holidays that an employee deserves would remain updated. Apart from the minimum wage, as the contract should explain all about vacation criteria, leaves, and other entitlements, you are obliged to be updated with all the statutory benefits and paid leave requirements. Contrarily, partnering with an international EOR service provider can unwind your stress by handling all the below requirements:
• Maternity leaves
Female employees are entitled to 26 weeks of paid leave during their first two pregnancies while those taking leave for a third child are entitled to only 12 weeks.
They also get more benefits like the medical bonus of 3500 INR by sending 7 weeks written notice provided they have worked for around 3 months before the expected date of delivery. The bonus and paid leave amount are paid by the social funds if the recipient is the factory level employee, otherwise, the employer is liable for the same.
In India, statutory paternity leave has not been much introduced yet.
• Sick leave
Employees are entitled to sick leaves when they catch any illness or injury. The period is generally 15 days in a year, though can be extended to 40 days in some cases. It also depends on the type of role employees hold, such as Journalists, Newspaper Employees, and Sales Employees can avail the sick leave of one month within 18 working months. They get half of their salary during medical leave. As some employers demand a medical certificate to grant sick leave, sales employees necessarily come under this requirement to fulfill.
Besides, employees can also carry the leave to the next year, bearing in mind the specifications of the company’s administration.
Employees are entitled to a minimum of 21 days of paid vacation. According to the Shops and Establishments Act, the days can vary from state to state ranging from 15 to 30 days annually. The statistics count for 1.25 days per month.
Under the national Factories Act, factory workers are entitled to 19 days of annual leave. Leave may accrue to 30 days.
• Health Coverage
Under the Social Security Division of India’s Ministry of Labour and Employment, employees may get several allowances, including health coverage. Health Insurance is usually seen to be the blend of private and public one in India and it’s a common allowance there.
As your employer of record in India, we can provide you with the most competitive and affordable insurance coverage for professionals and their dependents.
Payroll Tax in India
When it comes to taxes, the need for India employer of record becomes critical. The primary requirement that has been taken into consideration is the income tax. It is defined based on the employee’s annual salary such as income up to 2,50,000 Indian rupees costs no tax while income between INR 2,50,000 to INR 5,00,000 comes with 5% tax. Similarly, an employee is supposed to pay 20% on the income between INR 5,00,000 to INR 10,00,000 and 30% in the case of over INR 10,00,000.
Not only employees but employers also in India contribute to various taxes. Employees are required to contribute 12% of the total wages and employers 3.67% to the compulsory savings scheme called Employees Provident Fund (EPF), which leads towards retirement benefits and pension. The percentage does not count allowances but only salary. Government employees are also liable to pay for Employee Pension Scheme (EPS). In addition, employers’ 9.94% contribution goes to social insurances.
Indian corporation tax rate is 30% for a domestic firm with a gross turnover of up to Rs. 2.5 billion. Besides, the sales tax rate is 18% in India, according to 2006-2021 data. Goods and services are divided into five different tax slabs for collection of tax: 0%, 5%, 12%, 18% and 28%.
Overall, the entire documentation is a complex process if it has to be reliable. Contrarily, we as your India employer of record can make it easy for you as the process is handled by our experienced team. Ranging from hiring to onboarding to handling payroll, we provide you a dedicated and cost-effective solution.
Challenges When Expanding Into India
Businesses face some restrictions when they expand into India. Some of them go like understanding the local structure, compensation details, various allowances, negotiating compensation packages, etc.
Also, the Indian system consists of various legalities. It is governed by some authorities and is centered around several labor laws established by Central Government, states, and union territories. Hence, setting up employment relationships needs analytical attention, potential expenses, and a long period for complete administration. Mostly, employers set up their local subsidiaries to support the operations of hiring, payroll, and all other functionalities. Thus, their business expansion results in high expenditure along with consuming a lot of time.
However, companies can minimize risk and unexpected challenges in the foreign land by partnering with a reliable employer of record India, who performs all the activities required. You need not worry about losing your top professionals for the reason of inaccessible coordination to expensive claims. We, at Infotree Global Solutions, have in-house talent acquisition to support you in day-to-day control and management. Our experts with a wide knowledge base of all Indian labor laws and regulations keep your operations updated with local formalities. The daunting activities of payroll, absorbing the delays, smoothening the onboarding, and ensuring the reliability of employees’ details are some of the challenges that we help you tackle efficiently.
Benefits of Employer of Record India
To simplify your expansion process let Infotree Global assist you to deal with all the complexities. Be it hiring employees or distributing payroll or taking care of expenses, we are there to assist you at every step. Partner with us and start your global business without worries.
• Market Access
Relying on the professional expertise of an Employer of Record is the best way to enter an unknown market quickly. By using EOR services, an international organization can avail the expertise of an Indian employee to work for its company. Besides quick access to the Indian market, the employer of record also enables the client to ease off worries related to payroll and HR.
• In Country Laws
It is hard to ignore the importance of regulations and compliance in a foreign country. If you are operating a business in India, you need to be well aware of the payroll and taxation rules. With India Employer of Record services, a company can hire a foreign individual or local employees and deal with the complexities of the country’s rules. Be it income tax, social security contribution, expanse management, withholding charges, or business tax, an EOR/PEO takes care of it all with total compliance.
• Diverse Solutions
No matter whether you already have a company on international location or you are going to establish the one, an employer of record can help you significantly. The EOR Company can hire staff on your behalf without having the need of setting up a subsidiary in India. If your firm is already operating, using EOR for managing payroll tasks can be a great idea as they can present an effective solution to tax and accounting responsibilities in the country.
Why Infotree Global Solutions?
Setting up a branch office or just a subsidiary in India to assist with a micro-level team is a time-consuming and complicated process. There are stronger worker protections for labor law in India that need greater attention and expert details to understand the best practices.
As an Employer of Record India, we take all the responsibility to make it a smooth and easy journey for you to expand into India as we help you to hire your employees. We also offer customized end-to-end solutions to handle your HR matters to ensure that your practices comply with the regulations without suffering from the burden of establishing a foreign subsidiary or branch office hassle-free.
In addition to this, you get immense value and benefits including, but not limited to –
• Power-packed strategies and consultation to expand your business to India. We will help you with proven and powerful strategies to expand your business in India with proper Visa and regulation compliance from starting to the end.
• Easy onboarding and administrative activities for employment locally. We will also take care of payroll management systems and payments for all of your employees.
• We provide you with the supply of local benefits administration for recruitment expenses including employment arrangements.
• Hassle-free compliance with local laws and regulations so you don’t have to worry about any placement laws in the India for your recruitment needs.
• You also won’t have to stress about any additional payroll taxes. It can immensely save countless hours that go into processing and submitting taxes for each specific case and business operation.
If you wish to share your concerns or discuss any issues with us regarding solutions of India PEO Services, feel free to get in touch with us. An executive from our team will get back to you shortly and get all the details on your concern to understand your problems from your perspective!
Let’s get connected, let’s build together!