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Hiring in India has become crucial for businesses across sectors due to the country’s rapidly growing economy and large talent pool. India, with a population of over 1.4 billion, boasts a highly skilled workforce, particularly in industries like IT, engineering, healthcare, and education. The country’s young population, with more than 50% under 25, presents an excellent opportunity for businesses seeking to hire skilled professionals.
Recruitment in India is governed by several labour laws, including the Industrial Disputes Act, 1947, the Shops and Establishments Act, and various state-specific regulations. Companies hiring in India must comply with these legal requirements to ensure proper employee rights, benefits, and fair treatment. Many businesses in India rely on job boards, recruitment agencies, and AI-powered platforms like Iris to streamline their hiring processes and access the best talent efficiently.
Facts & Stats
Labor Laws in India
Indian labor law allows a probation period of up to 6 months for employees. During probation, either party can terminate the employment contract without notice or compensation. After the probation period, the contract becomes permanent, and the termination process must follow the guidelines set by the relevant labor laws.
Employees are entitled to 12-21 days of paid annual leave per year, depending on the industry and company policies.
The standard workweek in India is 48 hours, typically divided into six 8-hour days. Some industries and companies follow a 5-day workweek with longer daily hours. Overtime pay is mandatory, calculated at 150% of the employee’s hourly wage, with a maximum of 2 hours per day.
In India, the standard workweek is 48 hours, divided into six 8-hour days. Overtime is paid at 1.5 times the regular hourly wage for hours worked beyond the standard workweek. The maximum permissible overtime is limited to 50 hours per quarter, as per the Factories Act, 1948. Employers must ensure compliance with these limits to avoid penalties.
The minimum wage in India varies by state and industry. It ranges from ₹8,000 to ₹18,000 per month depending on the region and type of work. Most employers offer wages above the minimum, particularly in skilled industries like IT, healthcare, and finance.
Overview of Employer, Employee, and Individual Taxation in India
12.0%
Employees also contribute 12% of their basic salary to the Employees' Provident Fund (EPF) in India. This contribution ensures financial security after retirement or in case of an emergency, like disability or death.
12.0%
Employers in India are required to contribute a total of 12% of an employee’s basic salary towards the Employees' Provident Fund (EPF). Additionally, employers are required to contribute to the Employees' Pension Scheme (EPS) and Employees' Deposit-Linked Insurance (EDLI).
0%, 5%, 20%, 30%
India's income tax system follows a progressive model, with tax rates ranging from 0% to 30%. The rates depend on the individual’s income level, with different exemptions and deductions applicable to reduce taxable income.
India has a mandatory pension system managed by the Employees' Provident Fund Organisation (EPFO). Employees who contribute for at least 10 years are eligible for pension benefits once they reach retirement age (58 years).
Termination Process
The termination process in India must comply with the Industrial Disputes Act, which governs the lawful grounds for dismissal. Employees are entitled to severance pay if dismissed without cause. The notice period varies based on the length of service, but is generally 30 days for most employees.
For employees with less than 1 year of service, the notice period is typically 1 month. For employees with more than 1 year but less than 5 years of service, the notice period extends to 2 months. Employees with more than 5 years of service are generally required to give 3 months' notice.
Employees are entitled to severance pay in India if they are terminated without just cause. The severance pay is typically calculated as 15 days of wages for every completed year of service.
Annual Leave
Employees are entitled to 12-21 days of paid annual leave per year, depending on the industry and company policies.
Sick Leave
Indian employees are entitled to 12-15 days of paid sick leave annually. Additional sick leave is often provided by employers at their discretion.
Maternity and Paternity Leave
Female employees in India are entitled to 26 weeks of paid maternity leave. Paternity leave is not mandatory under Indian law, though many employers offer it voluntarily.
Bereavement Leave
Employees are entitled to 3 days of paid bereavement leave in the event of the death of a close family member.
Public Holidays in India
India observes several national holidays and festivals, including:
Frequently asked questions
What makes Iris helpful for hiring in India?
Iris offers AI-powered tools that help businesses in India automate candidate screening, job posting, and shortlisting, improving the overall efficiency of the hiring process.
Is it mandatory to hire Indian nationals?
While there is no nationalization program, Indian law encourages the hiring of local talent, and employers must prove the unavailability of skills within the local workforce before hiring foreign nationals.
How is severance calculated in India?
Severance pay is generally calculated as 15 days of wages for every completed year of service.
What are the official working hours in India?
The standard workweek is 48 hours, typically spread over 6 days, though some organizations opt for a 5-day workweek with extended hours.
Do employees in India receive a pension?
Employees are eligible for pension benefits if they have contributed to the EPF for at least 10 years, with the amount based on their salary history and contributions.
