India Desk
The employment framework your Indian team sits inside, and the payroll that runs it every month.
Contracts and policies, statutory registrations and benefits, performance and exit handling, and the monthly payroll cycle with all its deposits and returns.
Indian employment law is not a variation on the European model. Notice periods, statutory benefits, the treatment of contract workers and the rules on ending employment all work differently, and the errors are usually retrospective.
A European HR team can run an Indian subsidiary well. It cannot do it from the European handbook.
The problem
Most of what goes wrong in Indian employment is invisible on the payroll report and expensive at the point someone leaves, complains, or an inspector visits.
Contractors who are employees in substance are the most common exposure. It is convenient at the time and produces a provident fund and gratuity liability that surfaces years later, often during diligence on a sale.
Gratuity itself is frequently unprovisioned. It is a statutory payment on exit after a qualifying period, it accrues quietly, and companies discover it as a lump sum rather than a provision.
Termination is the other one. India does not have employment at will, notice and process matter, and a dismissal handled the European way can become an industrial dispute rather than a settlement.
None of this makes India a difficult place to employ people. It makes it a place where the framework has to be set up correctly at the start, because retrofitting it is what costs money.
What we run
Taken together or in parts. Most clients start with payroll and add the advisory once the first employment question arrives.
Appointment letters and contracts drafted under Indian law by Onesto Legal, with confidentiality, invention assignment, notice, and restrictive covenants written to be enforceable rather than copied across.
An employee handbook that reflects Indian statutory requirements and your company’s standards, covering leave, working hours, expenses, conduct, remote working and grievance.
Provident fund, state insurance, professional tax and shops and establishments registration, set up at the right point rather than after an inspection asks about them.
The full cycle: calculation, payslips, salary disbursement, statutory deductions and deposits, and the quarterly and annual returns that follow them.
Leave policy and accrual, gratuity provisioning, insurance and benefits benchmarked against what comparable employers in that city actually offer.
The internal committee, the policy, the training and the annual reporting that Indian law requires of employers above the prescribed size.
Appraisal frameworks that work in an Indian context, and handling of performance and conduct issues in a way that produces a defensible record.
Resignations, terminations and redundancies handled with the correct notice, full and final settlement, and documentation that closes the matter rather than opening one.
How it runs
For a new entity this runs alongside incorporation. For an existing one we start by finding out what is actually in place.
Existing contracts, policies, registrations and payroll checked against what Indian law requires, with the gaps and the exposure quantified.
Contracts, handbook and policies drafted, registrations completed, and the salary structure designed properly rather than converted from a European figure.
Employee master data, structures, statutory deductions and the approval workflow, with a parallel run before the first live cycle.
Payroll processed, payslips issued, deposits made and returns filed, with a single monthly approval from your side rather than daily involvement.
The employment questions as they arise: a difficult exit, a restructuring, a complaint, a policy that needs changing.
Common questions
General guidance rather than advice on a particular matter. Requirements and timelines change, and sector rules vary.
Not directly. Employment requires an Indian entity to act as employer, with payroll and statutory registrations. The workarounds are a consultancy arrangement, which carries misclassification risk where the person is an employee in substance, or an employer of record.
For one or two people an employer of record is often sensible. Beyond that, an entity is usually cheaper as well as cleaner.
Provident fund and state insurance are statutory benefits with employer and employee contributions, applicable once wage and headcount thresholds are met. Registration becomes mandatory at that point.
They are administered separately from income tax withholding, with their own monthly deposits and returns, and employees notice immediately when they are late.
A statutory payment made to an employee on exit after a qualifying period of continuous service, calculated on last drawn salary and years served.
It accrues from the start of employment even though it is paid at the end, so it should be provisioned in the accounts rather than treated as a future cost. Companies that do not provide for it meet it as a surprise.
No. India does not have employment at will. Notice or pay in lieu is required, the reason and the process matter, and certain categories of worker attract additional protection.
Most exits are resolved by a negotiated settlement, and the outcome depends heavily on the documentation created before the conversation rather than during it.
Simpler at the start and the most common source of exposure we see. If a person works your hours, uses your systems, reports to your manager and has no other clients, an authority is likely to treat them as an employee whatever the contract says.
The consequence is retrospective provident fund liability, and it surfaces at the worst moment, usually during diligence.
Indian law requires employers above a prescribed size to have a workplace harassment policy, a constituted internal committee including an external member, employee awareness training, and an annual report.
It is straightforward to comply with and frequently overlooked by small foreign subsidiaries, where the absence of a committee is itself the breach.
The same work, viewed from two sides. Under Onesto Legal it sits with accounting and tax, because the deposits and returns are statutory filings. Here it sits with the employment framework, because that is where most clients first meet it.
It is one team and one fee either way, and you do not need to decide which page you arrived from.
Related
Finding the people the framework will employ.
Read more →The same payroll cycle, seen from the finance and statutory side.
Read more →Employment framework at team scale rather than for single hires.
Read more →Employment contracts and restrictive covenants that hold in India.
Read more →Write to us
That, and whether any of them are engaged as contractors. It is usually enough for us to tell you where your exposure sits and what the framework should look like.
We answer from New Delhi and from Bilbao, so European clients are not waiting a day for a reply.
Onesto Management Consultancy
New Delhi, Mumbai, Bangalore, Hyderabad and Bilbao