COUNTRY

Written Agreements

Employees can be hired through express (written or oral) or implied contracts. Contracts for fixed-term must be made in writing.

Employers should be vigilant for provisions requiring written contracts in collective agreements or state-level laws.

Oral Agreements

Under the Contract Act, oral contracts are allowed in India and are binding between the parties. However, since oral agreements are difficult to uphold in court, a written contract is the best option for any employment relationship.

According to the Industrial Relations Code 2020, written contracts are not mandatory for hiring permanent or casual employees, however, fixed-term employees must be hired on a written contract. Oral contracts, like written contracts, can be revoked with sufficient notice to the employee.

Implied Agreements

Industrial Relations Code 2020 recognizes implied employment contracts. Certain terms are implied in every contract, such as the entitlement of the employee to recover wages owed from the employer. The Contract Act protects implied promises as long as the implications are rightfully part of the job. Terms that are generally implied in the employment relationship include an employee's duty of fidelity, confidentiality, and protection of the employer's property.

According to the Occupational Safety, Health and Working Conditions Act 2020 of India, no employee can be required or allowed to work in any establishment for more than eight hours a day and six days a week. Children under 18 cannot be employed for more than 6 hours a day and no more than three hours without a break.

The periods of hours of work for all categories of workers must be exhibited on the notice board of the industrial establishment. The Factories Act stipulates that no adult shall be allowed to work in a factory for more than 48 hours in any week and not more than nine hours in any day.

If an employer is involved in a commercial activity, the regional shops and establishments statutes provide the applicable regulations. Generally, they include a maximum of 9 hours per day and 48 hours per week.

India strikes a balance between national holidays, observed in all states and union territories, and gazetted holidays, which the nation's tremendously diverse states may or may not grant their residents.

National holidays are celebrated nationwide, and businesses and government offices shut down.

National holidays:

• Republic Day - January 26
• Independence Day - August 15
• Gandhi Jayanti - October 2

Nationwide gazetted holidays:

• Republic Day
• Independence Day
• Gandhi Jayanti
• Mahavir Jayanti
• Buddha Purnima
• Christmas Day
• Dussehra
• Diwali (Deepavali)
• Good Friday
• Guru Nanak's Birthday
• Eid ul-Fitr
• Eid al-Adha (Bakri id)
• Muharram
• Prophet Mohammad's Birthday (Id-e-Milad)

In addition to the holidays listed above, individual state and union territory holidays exist.

Employees are entitled to paid annual leave at the rate of one leave per 20 days of work if they have worked for at least 180 days in a year. For employees under 18 years of age, annual leave is calculated as one leave per 15 days of work.

Up to 30 days of annual leave may be carried over to the next year. If the employment contract expires before a worker can take annual leave, compensation for leave is made in proportion to the number of months and the number of hours worked in a week.

Sick leave is predominantly determined by company policy and state laws. Statutory sick leave provisions vary from industry to industry and range from 15 to 40 days. The best practice is to outline the terms and conditions of sick leave in contract documents.

India's Maternity Benefit Act grants female employees with less than 2 surviving children 26 paid weeks of maternity leave in companies with at least 10 employees. The leave can begin up to 8 weeks before her due date.

Employers are prohibited from employing women during the 6 weeks following the day of delivery or miscarriage.

To obtain maternity benefits, an employee must work at least 160 days in the 12 months preceding the expected delivery date. A female worker must give written notice to her employer indicating the date she wishes to take time off from work.

If no notice is provided, maternity benefits begin the date she is absent from work to give birth. The benefit is equal to 100% of the wages paid by the employer.

While there is no statutory minimum paternity leave for private-sector workers, the law allows male government employees to take up to 15 days of leave if they have fewer than 2 surviving children. Employees can take this leave once the baby is born or within 6 months of the delivery.

Minimum Wage

Under the Code on Wages, 2019, states and territories of India have the authority to establish their own minimum wage rates, as the national floor-level minimum wage is only an advisory recommendation. Because of this structure, different jurisdictions' minimum wage rates vary considerably.

Some states and territories update minimum wage rates twice a year, with the changes generally taking effect April 1 and October 1; however, basic rates are not always updated on these dates, and the frequency with which jurisdictions update their minimum rates varies. Depending on the jurisdiction, rates are updated:

• once a year with effective dates on January 1 or July 1
• twice a year on January 1 and July 1
• with an effective date other than those listed above
• less frequently than on an annual basis

The updates to the minimum wage rates, sometimes called "dearness allowances," are typically calculated to account for inflation and cost of living increases.

Overtime, Holiday & Vacation Pay

The Occupational Safety, Health and Working Conditions Code 2020 and Code on Wages 2019 of India mandate that employees who work beyond the standard working hours in their industries in a day are entitled to overtime compensation at double their typical wages for any hour or part of an hour of overtime worked. Employees can only be required to perform overtime with their consent. Employers must pay overtime if an employee surpasses 48 hours in a week, even if he or she does not work more than 9 hours in a day.

Employees working on their rest days or public holidays are entitled to twice their wages for the day.

Annual leave is paid at the normal wage rate of employees.

Notice Period

Employees who have worked for at least 1 year must be given written notice to terminate their contracts. The duration of the notice period depends on the number of employees in the establishment and the reason for termination:

• Establishments with at least 50 employees - 1 month
• Closure of establishment with at least 50 employees - 60 days
• Establishments with at least 300 employees - 3 months

Severance Benefits

Employees who have worked for at least 1 year are entitled to severance pay equal to 15 days' wages for each year of work or any part exceeding 6 months when their employers dismiss them with valid reason. No compensation is paid to employees who refuse to accept any alternative employment offered by their employers or are dismissed due to disciplinary action. Employees dismissed due to transfer or closure of establishment due to unavoidable reasons are also entitled to severance pay, provided their severance pay does not exceed 3 months' wages.

Employees who leave a job after having rendered 5 continuous years of service are entitled to gratuity payment at 15 days' pay for each completed year of continuous service or any part exceeding 6 months. There is a ceiling of INR 2,000,000 (Indian rupees) when calculating severance payments.

Pension

India's Pension Fund Regulatory and Development Authority (PFRDA) was established in 2003 to provide adequate retirement income for citizens and encourage retirement savings. It administers and regulates the National Pension System (NPS), which is a voluntary, contribution-based retirement savings scheme that is structured into two tiers:

• Tier I - the non-withdrawable permanent retirement account into which the accumulations are deposited and invested per the subscriber's option.

• Tier II - a voluntary withdrawable account, which is allowed only when an active Tier I account is in the subscriber's name. The withdrawals from this account are permitted based on the subscriber's needs.

To enroll more employees who work in the informal and unorganized sector in a pension scheme, the Indian Government established a pension scheme within the NPS called the Atal Pension Yojana (APY). Under the APY, the government will match 50% of an individual's contribution up to INR 1,000 (Indian rupees) annually for 5 years.

The Employee Provident Fund (EPF) is compulsory insurance for employers with at least 20 employees and some organizations with over 50 employees. For companies with fewer than 20 workers, the program is voluntary. For employees with basic wages less than or equal to INR 15,000 per month, contributions are 12% of the monthly salary, and the employer contributes 3.67%. For employees with basic wages over INR 15,000 per month, the contribution is the same 12% of the monthly salary; however, the employer contributes 12%.

Dependents/Survivors Benefits

For work-related injuries resulting in death, survivors benefits are as follows:

• Spouse's pension - 60% of the disability pension the deceased received or was entitled to receive is paid to the widow(er). If there is more than one widow, the benefit is split equally.
• Orphan's and widowed mother's pension - 40% of the disability pension the deceased received or was entitled to receive is paid for an orphan younger than age 25 (no limit if disabled or an unmarried daughter) and widowed mother.
• Other eligible survivors pension - if there is no eligible widow(er), orphan, or widowed mother, up to 40% of the disability pension the deceased received or was entitled to receive is paid to other eligible survivors, including the deceased's father, widowed mother-in-law, grandparents; 20% for other dependents younger than age 18 (no limit for an unmarried female).

The minimum monthly combined survivor pension is INR 1,200. The maximum combined survivors pension is 100% of the disability pension the deceased received or was entitled to receive.

In the case of the non-occupational death of the insured person, survivors benefits will depend on the social insurance program of which the employee was a member.

Invalidity Benefits

In India, disability benefits may differ depending on which pension system an employee is a member of.

• Under the National Pension System, the monthly pension is based on the insured person's pensionable wages. In certain cases, it may be paid as a lump sum of total employee and employer contributions plus accrued interest. Benefits are adjusted annually by the central government based on an actuarial evaluation.
• Under the Employee Provident Fund, a lump sum of total employee and employer contributions (plus accrued interest minus previous withdrawals) is paid. Employees who are permanently and totally disabled are entitled to pension depending on their years of service.
• Under the Indira Gandhi National Disability Pension Scheme, a basic pension of INR 300 a month is paid. Additional amounts may apply and vary by state.

For employees who suffer a temporary disability as the result of a workplace injury, 90% of the insured person's average daily wages are paid for the duration of the disability (must last at least three days). There is no maximum duration of payments. Average daily wages are based on the insured person's wages in the last six months. Employees who suffer a permanent disability as the result of a workplace injury are eligible for a permanent disablement benefit, under which a monthly pension is determined based on the assessed loss of earning capacity.