Comply with employment laws and issue compliant Indian employment contracts for foreign employees working in India using our expert PEO Services.
When expanding into a new market, a key goal is to establish a happy, productive workforce that complies with local labour laws. A sure-fire way to achieve this is through a coherent, professional employment contract.
While businesses employing Indian employees are not required by law to provide a written employment contract, it is often seen as standard, best practice to provide a coherent written employment contract that sets out both employee and employer terms. Certain states in India do legislate for a written agreement while others state a verbal agreement will suffice. However, in the best interests of both parties, it is preferrable to have a signed contract.
At a basic level, an Indian employment contract should contain the following:
- the employee and employer's name and place of residence
- the employee's job
- hours of work
- details of salary, payment periods and bonuses
- start date of the employee
- length of probation (if applicable)
- notice period
- returning of company property
- termination
By outlining the above, and any other notable working terms and conditions, an Indian employment contract endeavours to create a fair and amicable working environment and avoid disagreements throughout the employment term. It is therefore paramount that an Indian employment contract contains the correct information and is produced in a way that avoids irregularities in order to facilitate this. However, for an expanding business this can be easier said than done. Read on to find out all you need to know about creating a compliant employment contract for Indian employees and how our PEO services in India can help you achieve this.
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What types of employment contracts are there in India?
There are two types of employment contracts in India - a fixed term and a permanent contract.
Fixed-term contract
A fixed-term contract is a temporary contract that has a fixed start and end date. A fixed-term contract is usually under 4 years - if it exceeds this time period then it is a permanent employment contract.
A fixed-term contract can help provide security for employees and an expected duration of service for employers.
Permanent employment contract
The most common form of employment agreement in India, a permanent employment contract remains in place until either the employer or employee terminates the employment.
A permanent employment contract can cover both full and part-time employees.
Casual employment contracts
Casual employment contracts, otherwise known as a freelancer's contract, sets out the terms of work for a set amount of days or hours work. As this type of contract is mainly set aside for freelancers who will complete a set amount of work, there is little in terms of notice period or employee benefits.
Can I change an employment contract?
Indian employment contracts cannot be changed unless the permission of both parties is given. Therefore, the employer cannot unilaterally change an employment contract - a factor set out to protect employee rights.
Do I need to translate an employment contract?
It is strongly advised that an employment contract is translated to an employee's preferred language. While English is a common language in India, any mis-translations or mis-communications in an employment contract can lead to disagreements and employee disputes further down the line.
How do I write an Indian employment contract?
While the Indian government outline what should be included in employment contracts, actually writing one compliantly is easier said than done. And, as we mentioned, discrepancies in the content of an employment contract can cause employee disputes whether that's at the start of an employment term, the duration of employment or the termination of employment.
Meanwhile, in India employment visas can only be applied for once a written employment contract is in place, adding further importance to this written document.
With this in mind, an in-depth knowledge of the structure and content of an employment contract as well as Indian employment laws is required to facilitate the compliant hiring of employees in India. However, this knowledge takes a huge amount of time, resources and money for expanding businesses.
In order to ensure the smooth and compliant onboarding of Indian employees it is highly recommended that you outsource your employment contracts to a trusted professional. This is where our PEO services come in.
Why use a PEO partner to manage Indian employment contracts?
Producing compliant Indian employment contracts is a challenge for expanding businesses. The risk of non-compliance coupled with the complexity of foreign employment laws makes pulling together a coherent contract a time-consuming, costly affair. To add to this, businesses also need to consider payroll, tax, national insurance contributions, recruitment and work visas to name but a few.
Meanwhile, errors in employment contracts can cause employment disputes which run a huge risk of fines, employee lawsuits and can jeopardise your new expansion into India.
A PEO partner can take all of this from your shoulders, allowing you to focus on your company's expansion knowing that employee contracts are taken care of. At Leap29 our Indian PEO team are up to date on the latest employment laws and contract requirements in India meaning we can issue contracts compliantly and promptly on your behalf.
If you want to find out more about how our PEO Services in India can support your global expansion, call our experts today on +44 (0) 1625 537 555 or email [email protected].
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