Background Checks

Background checks are not prohibited in India. Employers are allowed to conduct them directly or through third-party agencies.

• These checks must comply with data protection laws, including the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, until the Digital Personal Data Protection Act, 2023 (DPDP Act) comes into force.
• Under current rules, explicit consent is required from the candidate for collecting and processing sensitive personal data (e.g., financial, medical, biometric data).
• Employers typically outsource background checks to specialized agencies to ensure compliance and thoroughness.

Verification and New Hire Reporting

For foreign nationals, ensure valid employment visa (E-visa) issued by the Ministry of Home Affairs.

New Hire Reporting:

• Under the Shops and Establishments Act (state-specific), employers must register new hires and notify local labor authorities.
• PF and ESI registration must be completed within 10 days of joining.
• Maintain digital records of employment contracts and statutory forms for audits and inspections

Onboarding Process & Documentation

Collecting Required Documentation

Employers must gather several key documents during onboarding to ensure legal compliance:

• Signed Employment Contract (Offer Letter): Must include job title, compensation, working hours, leave entitlements, termination clauses, and governing law.
• Proof of Identity and Address: PAN card, Aadhaar card, passport, or voter ID.
• Educational and Professional Certificates: For role verification and background checks.
• Bank Account Details: For salary disbursement.
• Tax Forms: PAN and Form 12B for income tax purposes.
• Provident Fund (PF) and Employee State Insurance (ESI) Enrollment: Mandatory for eligible employees under the EPF Act and ESI Act

Providing Employee Rights and Obligations

Employers are legally required to inform new hires about:

• Working Conditions: Hours, holidays, and leave policies.
• Statutory Benefits: PF, ESI, gratuity, and maternity/paternity leave.
• Code of Conduct: Workplace behavior, ethics, and disciplinary procedures.
• Anti-Harassment Policies: Especially under the POSH Act, including Internal Complaints Committee (ICC) details.
• Health and Safety Guidelines: As per the Occupational Safety, Health and Working Conditions Code, 2020.

This information is often included in an employee handbook or shared during orientation.

Healthcare

Health insurance is a foundational component of employee welfare in India. It is governed by both statutory mandates and employer-driven initiatives.

Statutory Coverage: Employees’ State Insurance (ESI)

• Mandatory for employees earning up to ₹21,000 ($244.97 USD)/month in establishments with 10 or more workers.
• Provides comprehensive medical care, including outpatient and inpatient services, maternity benefits, and disability coverage.
• Services are delivered through a nationwide network of ESIC dispensaries and hospitals.

Employer-Provided Group Health Insurance For employees not covered under ESI—or as a supplementary benefit—many employers offer group health insurance through private insurers.

• Coverage: Typically includes hospitalization (room rent, doctor fees, diagnostics, medicines), pre- and post-hospitalization expenses, and sometimes maternity or critical illness benefits.
• Cashless Network: Most plans offer cashless treatment at network hospitals.
• Cost Sharing: Premiums are often fully paid by the employer, though some companies may require employee contributions, especially for dependent coverage.
• Family Coverage: Employees can usually add spouses, children, and sometimes parents by paying an additional premium.
• Claims and Service: Efficient claims processing and broad hospital networks are key factors in plan selection.

Retirement

Employees’ Provident Fund (EPF) The EPF is the primary retirement savings mechanism in India, mandated under the Social Security Code, 2020.

• Contributions: Both employer and employee contribute 12% of basic salary + dearness allowance.
• Employees’ Pension Scheme (EPS): 8.33% of the employer’s share (up to ₹15,000 ($174.98 USD)/month salary cap) is diverted to EPS, which provides a monthly pension post-retirement.
• Withdrawals: The remaining contributions accumulate in the EPF account, earning interest and available as a lump sum upon retirement or under specific conditions.

Compliance Requirements

• Employers must register with the Employees’ Provident Fund Organisation (EPFO).
• Monthly deposits and annual returns are mandatory.
• Non-compliance can result in penalties and legal action.

Additional Retirement Options Some employers offer supplementary retirement benefits, including:

• Superannuation Funds: Employer-sponsored defined contribution plans, though less common today.
• National Pension System (NPS): A voluntary, government-backed pension scheme. Some employers facilitate contributions or co-contribute on behalf of employees.

Social Security

At this time, Vensure does not have social security details available.

Employment Contract Details

Employment agreements in India can take different forms, primarily based on the duration and nature of the employment relationship. The two most common types are indefinite contracts and fixed-term contracts.

• Indefinite contracts are open-ended and continue until either the employer or employee terminates the agreement in accordance with applicable laws or contractual terms. These are typically used for permanent roles and do not have a predetermined end date.
• Fixed-term contracts are used for employment over a specific period or until the completion of a particular project. These contracts have clearly defined start and end dates and usually conclude automatically unless renewed. Fixed-term employment has become increasingly popular, especially for project-based roles. Unlike casual or temporary labor, fixed-term employees are generally entitled to the same benefits as permanent employees, calculated on a pro-rata basis.

Required elements include:

• Identification of Parties – Includes the full legal names and addresses of both the employer and the employee.
• Job Title and Description – Clearly defines the employee’s role, responsibilities, and reporting structure.
• Date of Commencement – Specifies the official start date of employment.
• Compensation – Provides a detailed breakdown of salary, allowances, bonuses, and payment frequency.
• Working Hours – Outlines standard working hours, weekly schedule, and any provisions for overtime.
• Leave and Holidays – Details entitlements to casual, sick, and earned leave, as well as public holidays.
• Place of Work – Indicates the primary location where the employee will perform their duties.
• Probationary Period – Describes the duration and conditions of the probation period.
• Confidentiality – Sets out obligations regarding the protection of company confidential information and trade secrets.
• Termination Clause – Specifies the conditions and notice periods required for termination by either party.
• Governing Law and Jurisdiction – States that the agreement is governed by Indian law and identifies the relevant courts for dispute resolution.

Probation Period

The probation period typically last three to six months, depending on the role and company policy.

Visas

• Visa Required: Based on purpose (tourism, business, employment, etc.).
• Application: Online via Indian government portal; includes document submission and possible interview.

Independent Contractors

Independent contractors in India are classified as self-employed professionals or freelancers and are not considered employees under Indian labor law. Their relationship with clients is governed by a contract for services, not a contract of employment.

However, with the introduction of India’s new labor codes, including the Social Security Code, 2020, certain categories of non-traditional workers—such as gig workers, platform workers, and fixed-erm contractors—are now entitled to limited social security benefits, blurring the lines between contractors and employees in some cases.

Written Agreement: A well-drafted contractor agreement is essential. It should clearly define:

• Scope of work
• Deliverables and timelines
• Payment terms
• Confidentiality and IP ownership
• Termination clauses

Taxation

• Independent contractors must file income tax returns under the Income Tax Act, 1961.
• Tax is levied at progressive rates (5%–30%) depending on income.
• Contractors earning over ₹20 ($23,338.11 USD) lakhs annually must register for GST and charge it on services rendered.

No Statutory Benefits: Contractors are not entitled to benefits like:

• Provident Fund (EPF)
• Gratuity
• Paid leave
• ESI (health insurance)

However, they may voluntarily opt into schemes like the National Pension System (NPS) or Atal Pension Yojana.

Misclassification Risks

• If a contractor is treated like an employee (e.g., fixed hours, direct supervision, exclusive work), authorities may reclassify them as an employee.
• This can lead to penalties, back pay of benefits, and tax liabilities for the employer

Paid Time Off

Under Indian labor laws, employees are entitled to a minimum of 15 days of paid annual leave per year, typically granted after completing 240 days of continuous service in a calendar year.

• Additional Leave: Many employers offer more generous leave policies through employment contracts.
• Carry Forward: Unused leave can often be carried forward, subject to company policy and legal caps.
• Leave Application: Employees are generally required to submit leave requests at least 15 days in advance, with approval from the employer, manager, and/or works committee to ensure business continuity.

Public Holidays

Employees in India are generally entitled to 12 public holidays per year. While there are nationally recognized holidays, employees often have the flexibility to substitute these with regional or religious holidays that are more personally significant. If a public holiday falls on a Saturday, it is typically observed on the preceding Friday. If it falls on a Sunday, it is observed on the following Monday.

• New Year’s Day
• Republic Day – National Holiday
• Holi
• Good Friday
• Id-ul-Fitr*
• Independence Day – National Holiday
• Raksha Bandhan
• Janmashtami
• Gandhi Jayanti – National Holiday
• Dusshera
• Diwali
• Guru Nanak’s Birthday
• Christmas

Bereavement

• Not mandated by law but commonly provided by employers as part of internal HR policies.
• Typically ranges from 3 to 7 days depending on the relationship (e.g., spouse, parent, child).
• Treated as paid leave in most formal sector organizations.

Maternity Leave

Under the Maternity Benefit (Amendment) Act, 2017:

• 26 weeks of paid leave for the first two children.
• 12 weeks for subsequent children.
• 6 weeks of mandatory leave post-delivery or miscarriage.
• Eligibility: Must have worked at least 80 days in the 12 months preceding the expected due date.

Adoptive and Commissioning Mothers

• Entitled to 12 weeks of paid leave if adopting a child under 3 months or as a commissioning mother (biological mother using surrogacy).

Crèche Facility

• Companies with 50 or more employees must provide access to a crèche within a prescribed distance.
• Mothers are allowed four visits per day, including rest intervals.

Paternity Leave

• Government employees are entitled to 15 days of paternity leave.
• Private sector: No statutory requirement, but some companies offer paternity leave as part of internal HR policies.

Parental Leave

India does not have statutory Parental Leave.

Sick Leave

Indian law mandates a combined total of 12 days of sick and casual leave annually.

• Sick Leave: Used for health-related issues and may require medical documentation.
• Casual Leave: Intended for unplanned or urgent personal matters.
• Flexible Allocation: The 12 days can be split based on employee needs (e.g., 7 casual + 5 sick or 8 sick + 4 casual).

Termination Requirements

At this time, Vensure does not have termination requirement details available. For related information, see Notice Period and Severance details below.

Notice Period

• The standard notice period for termination is at least 30 days, unless otherwise specified in the employment contract or applicable state rules.
• Employers may also provide payment in lieu of notice if immediate termination is necessary

Severance Pay

When terminating an employee due to redundancy, employers are legally required to provide retrenchment compensation, especially for those classified as “workmen” under Indian labor law.

• Compensation must be paid at the rate of 15 days’ average pay for every completed year of continuous service, or part thereof exceeding six months.
• This aligns with the provisions of the Industrial Relations (IR) Code, 2020, which mirrors the earlier Industrial Disputes Act (IDA).

Worker Re-skilling Fund

• Under the IR Code, employers must also contribute an amount equal to 15 days’ wages (or as notified by the government) per retrenched worker to a Worker Re-skilling Fund.
• This fund is intended to support the retraining and employability of displaced workers.

Additional Termination Benefits Upon termination, employers are also required to settle the following dues:

• Leave encashment
• Gratuity (for employees with 5+ years of continuous service)
• Statutory bonus, if applicable
• Payment in lieu of notice, if notice is not served
• Any other contractual dues

Misconduct Terminations Employees terminated for misconduct are not entitled to:

• Notice pay
• Retrenchment compensation

However, due process (e.g., internal inquiry) must be followed before such termination.

Unemployment Insurance

India does not have a universal unemployment insurance or compensation scheme like those found in some Western countries. However, there are limited provisions and emerging frameworks under the new labor codes and social security initiatives that offer partial support in cases of job loss.

Employees’ State Insurance (ESI) – Unemployment Benefits For employees covered under the ESI scheme, there is a provision called the Atal Beemit Vyakti Kalyan Yojana (ABVKY):

• Eligibility: Insured persons under ESI who lose their jobs involuntarily.
• Benefit: Up to 50% of average daily wages for a maximum of 90 days.
• Conditions: Must have contributed to ESI for at least 2 years and be unemployed due to retrenchment, closure, or similar reasons

Anti-Discrimination Practices

Indian law prohibits discrimination in employment based on several protected characteristics, though there is no single, comprehensive anti-discrimination statute that applies across all sectors. Instead, protections are derived from a combination of constitutional provisions, sector-specific laws, and judicial interpretations.

Protected Characteristics and Legal Frameworks

• Religion, Race, Caste, Sex/Gender, Place of Birth, Descent: Protected under Articles 15 and 16 of the Constitution of India, which guarantee equality of opportunity in public employment.
• Disability: Covered under the Rights of Persons with Disabilities Act, 2016, which mandates reasonable accommodations and prohibits discrimination in hiring, promotion, and workplace accessibility.
• Sexual Harassment: Governed by the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act). Employers with 10 or more employees must establish an Internal Complaints Committee (ICC) to handle complaints.
• Gender Pay Equity: The Equal Remuneration Act, 1976 prohibits wage discrimination between men and women for the same or similar work.
• HIV/AIDS Status: The HIV and AIDS (Prevention and Control) Act, 2017 prohibits discrimination in employment against individuals based on their HIV status.
• Transgender Persons: The Transgender Persons (Protection of Rights) Act, 2019 ensures non-discrimination in employment and mandates inclusive workplace policies

Workplace Safety Standards

Workplace Environment

• Employers must ensure adequate ventilation, lighting, cleanliness, and control of dust, fumes, and noise to maintain a hygienic and safe workspace.

Machinery Safety

• All dangerous machinery must be properly guarded, regularly inspected, and operated according to documented safety procedures.

Fire Safety

• Workplaces must be equipped with firefighting equipment, clearly marked emergency exits, and conduct regular fire drills.

Welfare Facilities

• Employers are required to provide clean drinking water, sanitary latrines and urinals, washing areas, and first aid kits.

Hazardous Processes

• Industries dealing with hazardous substances must follow special safety protocols, including containment, monitoring, and emergency response plans.

Employers must:

• Conduct risk assessments
• Provide personal protective equipment (PPE)
• Offer safety training and supervision
• Maintain records of accidents, injuries, and occupational diseases

Monitoring and Enforcement

• Compliance is overseen by Factory Inspectorates and State Labor Departments, which conduct inspections and audits. Employers found in violation may face penalties, shutdown orders, or legal action.

Workers’ Compensation

Coverage

• Applies to employees in both the organized and unorganized sectors.
• Covers injuries, occupational diseases, and death arising out of and in the course of employment.

Employer Liability Employers are liable to compensate workers for:

• Permanent or temporary disability
• Death resulting from workplace accidents
• Occupational diseases listed under the Code

Compensation is calculated based on the employee’s wages and age. Compensation Amount For death, compensation is the higher of:

• 50% of monthly wages × relevant factor (based on age), or
• ₹1,20,000 ($1,399.82 USD) (minimum threshold)

For permanent total disablement, it is 60% of monthly wages × relevant factor or ₹1,40,000 ($1,633.13 USD), whichever is higher.

These amounts are subject to periodic revision by the government.

Time Limits

• Employers must deposit compensation within 30 days of the accident or death.
• Failure to do so may result in penalties and interest.

Medical Expenses

• Employers are responsible for medical treatment costs related to the injury or illness.

Dispute Resolution

• Disputes are handled by Employees’ Compensation Commissioners or Labor Courts.
• Appeals can be made to higher courts under specific conditions.

Additional Requirements

• Mandatory Reporting: Employers must report workplace accidents to the appropriate labor authority.
• Insurance: Many employers take workers’ compensation insurance to cover liabilities.
• Recordkeeping: Employers must maintain records of workplace injuries and compensation paid.

Labor Law Sanctions

Code on Wages: Ensures timely payment and minimum wage compliance. Violations can lead to fines and back-pay orders.

Industrial Relations Code: Regulates layoffs, strikes, and union rights. Non-compliance can result in legal proceedings and penalties.

Social Security Code: Mandates PF, ESI, and gratuity coverage. Employers failing to register or contribute face penalties and interest.

Occupational Safety, Health and Working Conditions Code: Enforces workplace safety standards. Violations may lead to shutdowns or criminal liability.