Finding skilled field service techs and other IT professionals in India is not difficult, especially in the major cities. In fact, by most industry accounts since the second quarter of 2017, there is a rising number of Indian IT workers seeking employment.
However, there are other considerations for U.S. companies who want to do business in India. Before undertaking IT projects in this emerging market, be sure to familiarize yourself with the country’s unique labor laws.
Fixed-Term Employment Contracts
Under the Indian Contracts Act (1872), the term "contract" is defined as an agreement that is enforceable by law. To constitute an agreement under Indian law, there must be both a lawful offer and a lawful acceptance of the offer.
Various new measures have been put in place to regulate circumstances in which employment contracts under fixed-term agreements are executed, interpreted, applied, and enforced. Under India's constitution, labor is subject both to legislation by the individual state and by the central government.
Working Hours and Holidays
Under current laws governing work hours and holidays for workers in India, the normal workday for factory workers is eight hours. Regular working hours may be either 9 a.m. to 5:30 p.m. or 9:30 a.m. to 6 p.m.
For corporations, employees' normal work days are seven hours per day, six days per week. At an Indian subsidiary of a multinational corporation, the work week is typically the five-day schedule of eight-hour days.
Generally, “casual leave” is 10 days per year for employees, and “privilege leave” is 20 to 30 days per year. On May 1, workers in India and other countries celebrate International Workers Day, which is known as the May Day public holiday.
India's Minimum Wage Act
Laws governing wages are one of the most important considerations for companies that want to operate and employ workers in India. The primary goal of the minimum wage legislation was to protect workers from exploitation.
Under India's Minimum Wages Act (1948), in most sectors of India, there are laws requiring employers to pay workers at least the established minimum wage. The minimum wage can vary based on factors including job skill level and degree of formal education.
Employment Visas for Foreign Workers in India
To be permitted to work in India as a foreign national requires an employment visa, which is typically issued for a one-year period or for the term length of the worker's employment contract. The time period of the work project and the employment visa can be extended while the worker is in India.
Foreign nationals applying for employment visas in India must be highly skilled and in a senior level consulting or other position. Employment visas are not granted for routine employment, such as clerical work. The salary of an individual applying for an employment visa in India should be above $25,000.
Long-Term Visas in India
All foreigners, including those of Indian origin who are visiting India on long-term visas, must register with the Foreigners Regional Registration Officer (FRRO). This applies to visitors with Student, Research, Medical and Employment Visas longer than 180 days.
The FRRO's digital registration system is now accessible to foreign nationals online through an e-FRRO portal. The registration process can be completed on the do-it-yourself system, without the need to meet with an agent in person.
Social Security in India
Only individuals who are employed in the organized economic sector are eligible for Social Security in India. Various benefits, including medical care are provided for laborers or other employees who earn less than INR 21,000 per month (USD $300 a month). These benefits are provided through the Employees’ State Insurance Scheme.
All employees must contribute 12 percent of their salaries to the Employees’ Provident Fund Organization (EPFO). Under the Vide Finance Act (2018), the rate is reduced to 8 percent contribution from female employees for the first three years of employment.
The EPFO operates under the auspices of India's Ministry of Labor and Employment, which administers Social Security regulations. All employers with more than 20 workers in India are required to apply to the fund, for the benefit of their employees. Employers with fewer than 20 workers are exempt from contributing to the fund. The fund covers all pensions. It also covers survivor benefits, in case of an employee’s death.
Employees' mandatory contributions to the fund are deducted by their employers as automatic payroll deductions. Employees' contributions earn tax-free interest. The contribution requirements also apply to foreign or international employees while they're working in India. (India's Finance Ministry has recently permitted the EPFO to invest 15 percent of its principal in exchange-traded funds.)
Sick Time and Pensions
Employers in India are required to provide arrangements for employees' illness and pensions. Medical care for employees is covered by compulsory contributions to the Employees’ State Insurance Scheme.
Part of the contributions employers make to the Provident Fund Scheme are appropriated to a Pension Scheme, which provides employees and their families with pension benefits.
Additionally, under the Gratuity Act (1972), after five years of continuous service to an employer, labor workers are eligible for gratuity. Workers do not contribute to the gratuity that they are to be paid. The gratuity is funded only through employer contributions.
Companies with 20 or fewer employees are not required to contribute to a Provident Fund Scheme.
Trade Unions in India
Trade unions in India are essentially established along political lines. Indian trade unions, as in so many other countries, have endured through long and difficult struggles to accomplish a sufficient measure of protection for workers against exploitation. Trade unions discuss important workplace and work-related issues (such as wages and benefits) with organizations' management representatives, and work to protect employees' interests.
In order to be officially recognized, a trade union must continue functioning as such for more than one year after it has been registered as a trade union. If an organization has more than one trade union, then in order for a trade union in that organization to be recognized, a minimum of 15 percent of the company's workers must belong to its membership.
The prominent Central Trade Unions (CTU) in India include:
All India Trade Union Congress (AITUC)
Bhartiya Mazdoor Sangh (BMS)
Centre of Indian Trade Unions (CITU)
Hind Mazdoor Sang (HMS)
Indian National Trade Union Congress (INTUC)
United Trade Union Congress (UTUC)
At Kinettix, our network of global partners spans over 90 countries, and we can help you navigate employment issues and labor laws when you need to hire field techs for your IT project in India or anywhere in the world. Contact us today for more information or your complimentary consultation.