In India, minimum wage regulations are intricate and determined by individual state governments. Unskilled workers face a vast array of employment opportunities, with over 2000 job types and 400 job categories, each assigned a minimum daily wage. Adhering to these minimum wage guidelines is crucial for employers to comply with the relevant authority.
Overtime pay in India is typically calculated at a higher rate, often 1.5 to 2 times the regular hourly wage, and is usually mandatory for factory workers. The standard working hours differ by state but generally amount to around 40 hours per week, from Monday to Friday. The maximum permissible working hours, as per the Shops and Establishments Act, are 48 hours per week.
Mandatory benefits for employees in India encompass contributions towards the Employee Provident Fund (EPF), Employee State Insurance (ESI), and gratuity. Additionally, employers may offer various optional benefits such as health insurance coverage, retirement plans, transportation and meal allowances, and flexible work arrangements. The cost of mandatory benefits typically ranges from 5% to 6% of the employee's gross salary.
Although there is no legal requirement for employers to provide a bonus to employees in India, many companies opt to include annual or performance-based bonuses as part of their compensation packages.
Employers in India usually handle payroll on a monthly basis, following a preferred schedule as outlined below:
Individual income tax in India is calculated using a progressive tax rate system, which varies depending on an individual's income slab. Moreover, specific deductions and exemptions may apply based on various factors. Here are the tax rates under the old regime:
For individuals below 60 years of age:
For individuals between 60 and 80 years of age (senior citizens):
For individuals above 80 years of age (very senior citizens):
The monthly employer cost breakdown in India typically includes:
Furthermore, employers may need to cover additional benefits, such as health insurance, as per the employment contract.
An employment agreement in India should encompass various essential details, including job responsibilities, compensation, benefits, working hours, leave policies, confidentiality agreements, termination procedures, and any other specific terms relevant to the employment relationship.
During the onboarding process in India, employees are typically required to provide the following documents:
In certain cases, additional documents may be requested from the previous employer, such as:
Although having a probation period for new hires in India is not obligatory, employers may choose to implement it. The probation period's duration should be clearly specified in the employment contract, typically ranging from 3 to 6 months. During this period, employers assess the employee's suitability for the role.
In India, severance pay is not mandatory unless explicitly stated in the employment contract or terms of separation. The entitlement to severance pay depends on the type of termination:
The notice period in India can vary depending on factors like the employee's position, duration of employment, and terms outlined in the employment contract. Typically, notice periods range from 30 to 90 days.