HR Software for India

Leave Policy

Maternity Leave

Pregnant employees who have worked for the same employer for 80 days in the last year are entitled to 26 weeks of paid leave. No more than 8 weeks may be taken before the birth of the child.

The employee receives 100% of her average salary during this period and the employer is responsible for this compensation.
The employee can extend the vacation without pay.

You can use the leave module in IceHrm to manage maternity leave in India.

Paternity Leave

There is currently no statutory paternity leave.

Parental Leave

In India, parental leave is not regulated by law. However, employees may be entitled to maternity leave.

Sick Leave

Employees are entitled to paid sick leave for up to 12 days. Sick leave is counted as one day per month. The employee receives 100% of his average salary, and the employer is responsible for this payment.

Pay & Tax

Minimum Wage Requirements

The minimum wage in India is complex. There is no statutory minimum wage for private sector organizations outside of the regulated “factory” industries.

For the factory sectors, India uses a complex methodology to set minimum wages, which are set at the state and sub-state levels and updated regularly. India defines nearly 2,000 different types of jobs for unskilled workers and over 400 employment categories with a daily minimum wage for each type of work.

The variable dearness allowance (VDA), which takes inflation developments into account, is also included in the calculation of the monthly minimum wage.

Individual Income Tax

Individual income tax is between 5% and 30%. Income tax is calculated at progressive rates. Indian income tax comprises 2 regimes, the new personal tax regime (NPTR) and the old regime. Taxpayers have the opportunity to choose one of the two regulations.

The following table shows the new personal tax regime (NPTR), which comes into force on April 1, 2020:

Gross Annual Income (INR)Tax Rate (%)
Up to 250,000Exempt
Between 250,001 – 500,0005%
Between 500,001 – 750,00010%
Between 750,001 – 1,000,00015%
Between 1,000,001 – 1,250,00020%
Between 1,250,001 – 1,500,00025%
Above 1,500,00030%

Payroll Cost

The estimated employer cost is 5% of the employee’s salary or INR 1950*.

When registering, the employee decides how he or she would like to contribute to the Provident Fund. Employees can choose to have their contributions calculated based on their basic monthly salary (40% of gross monthly salary) or based on a fixed amount of INR 15,000. The employer’s cost of the Employee’s Provident Fund (EPF) and the EPF administration fee of the Provident Fund Office are calculated based on the employee’s decision. The cost of Employee Deposit Linked Insurance (EDLI) is 0.5% of INR 15,000 (INR 75) in both cases.

  • Employee’s Provident Fund (EPF): 4.8% of the employee’s gross monthly salary (12% of the basic salary) or INR 1800
  • Provident Fund Management Fees: 0.2% of the employee’s gross monthly salary (0.50% of the base salary) or INR 75
  • Employee Deposit Linked Insurance (EDLI): 0.5% of INR 15,000 (INR 75)

*Employees in India can choose their own Provident Fund contribution, which must be matched by the employer. Employees can choose a percentage of their base salary (40% of the employee’s gross monthly salary) or a fixed amount. This affects the costs for the employer.

Overtime Pay & Maximum Hours

The standard working hours are 8 hours per day and 40 hours per week. The normal working week lasts from Monday to Friday.

There are no legal requirements for private sector employees who do not work in a factory.

Overtime pay is mandatory for factory workers. It is common practice in the industry for additional hours worked to be compensated through prorated PTO or additional compensation equal to 100% of regular salary.

Termination

Termination Requirements

Dismissals must take into account complex rules and the regulations of the country in which an employee is employed. Off-boarding is always carried out by the employer with the main participants. It may include ad hoc fees as well as required or recommended steps in certain termination cases.

Terminations in India can be made “at will” (without cause), depending on the employment contract, as long as the prescribed notice period and severance pay are observed.

Compliant terminations include:

  • Voluntary by the employee
  • By mutual agreement
  • Unilaterally by the employer due to:
    1. Probation period
    2. Breach of duties and responsibilities
    3. Gross non-performance and misconduct violating the terms of the contract
  • When the contract expires

Notice Period

The minimum notice period for ordinary termination is 1 month, but this period varies from state to state in India.

Severance for Employees

Employees are entitled to severance pay based on the reason for termination.

  • Termination of employment due to dismissal – Employees are entitled to severance pay equal to 15 average daily wages for each year of continuous service or part thereof that exceeds 6 months.
  • Employees who are laid off – The employer must pay severance pay, including accrued vacation days, severance pay (for employees with more than 5 years of continuous service), severance pay (if no notice has been given), statutory bonuses and any other amounts due under the employment contract numbers are.
  • Employees who are dismissed for misconduct are not entitled to notice or severance pay

To protect you from unforeseen financial risks due to redundancies, IceHrm applies a severance pay provision to all employment contracts in this country. IceHrm has extensive expertise in managing litigation risk around the world and our severance provision calculation is based on prevailing common law or statutory requirements and best local practices. If your employee resigns or is not entitled to severance pay, you will receive a refund of any unused amounts.

Statutory Time Off

Paid Time Off

The PTO is set out in the employment contracts. The minimum PTO entitlement is 18 days.

Public Holidays

National holidays are:

  • New Year’s Day
  • Lohri
  • Makar Sankranti
  • Republic Day
  • Maha Shivratri
  • Holi
  • Ugadi
  • Ram Navami
  • Mahavir Jayanti
  • Good Friday
  • Eid al-Fitr
  • Buddha Purnima
  • Bakri Eid
  • Muharram
  • Rakshabandhan
  • Independence Day
  • Janmashtami
  • Ganesh Chaturthi
  • Onam
  • Gandhi Jayanti
  • Dussehra
  • Eid-e-Milad
  • Diwali
  • Guru Nanak Jayanti
  • Christmas

Onboarding

Onboarding

3 working days after signing the MSA and paying the deposit.

Additional Info

Employment Contract Details

Contracts must be written in English and may be bilingual. They must be in writing and signed by both parties.

A contract must contain:

  • Surname
  • Function and job description
  • Exemption
  • Obligation of the employee
  • Conditions for Termination

Probation Period

Probationary periods are not mandatory and there is no legal obligation for employers to provide a probationary period. The standard India probationary period in the employment contract is 6 months with the option to extend it for another 3 months at the discretion of the employer.