India remains one of the most attractive markets for global employers building distributed teams, but its labor framework is layered, with rules that shift by state, by industry, and by how long an employee has been with you.
For companies hiring their first team members in India, the details that catch employers off guard rarely show up in a quick Google search. Here's what global employers actually need to get right.
Contracts: Flexibility Comes With Guardrails
India doesn't cap how long a fixed-term contract can run, or how many times it can be renewed, but that flexibility isn't a loophole. Indian courts have been clear that fixed-term contracts should be reserved for genuinely temporary or project-based work, not used as a workaround for permanent, ongoing roles.
Employees on fixed-term contracts are entitled to the same statutory benefits as permanent staff, including gratuity eligibility once they've met the minimum continuous-service threshold for that contract year. Employers who lean on repeated fixed-term renewals to sidestep standard protections risk having those contracts recharacterized — with the liability that comes with it.
Working Hours and the Overtime Details Employers Miss
The standard workweek in India runs 40–48 hours across Monday–Friday, though six-day weeks are still common in many industries. Overtime is capped at a 48-hour weekly ceiling and only applies where the contract explicitly provides for it, at double the normal pay rate. Certain roles, such as managerial positions, are typically exempt.
Note, too, that you cannot structure a "global salary" that bundles in overtime pay regardless of hours actually worked. Overtime has to be calculated and paid on top of base salary when it applies.
Leave: The Statutory Floor Is Just the Starting Point
Statutory annual leave in India sits at 15 business days per year, but how that leave accrues and carries over matters more than that number on its own. Leave typically accrues at roughly 1.25 days per month, carryover is permitted up to a state-specific cap (as high as 45 days in some states), and in practice, 20–30 days of annual leave is a common benchmark among competitive employers, well above the legal minimum. Unlimited leave policies are also permitted in India, but they come with a catch: employers still need to track the statutory leave balance the employee would otherwise have accrued, since that portion must be cashed out on termination even under an "unlimited" policy.
Payroll, Tax, and Statutory Contributions
Employees in India must be paid in Indian Rupees on a monthly cycle. Foreign-currency payroll isn't an option. Mandatory worker contributions center on the Employees' Provident Fund (EPF) and income tax, and employees can choose between the old and new tax regimes each year, each with its own slab structure and exemptions. Business expenses that an employee pays out of pocket and the company reimburses are generally tax-exempt, provided proper documentation is kept. This is useful to know before assuming reimbursements will be taxed like additional income.
Benefits That Help You Compete for Talent
Supplemental benefits — private medical insurance, life and disability coverage, meal vouchers — aren't legally required in India, but they're standard practice among employers competing for skilled talent, and often the deciding factor for candidates weighing multiple offers.
Visas and Global Mobility
India permits visa sponsorship for foreign hires, though quotas can apply depending on the applicant's nationality, so mobility timelines should be scoped case-by-case rather than assumed.
Getting It Right Without Building a Local Entity
Every one of these details — contract structuring, leave accrual mechanics, overtime exemptions, tax regime elections, visa quotas — is manageable. The difficulty for global employers isn't any single rule; it's the volume of state-by-state and case-by-case nuance, and the cost of getting it wrong after the fact.
Atlas HXM operates entities in 160+ countries and can get compliant employees hired in India, and most markets globally, in as little as two weeks. If you're planning your next hire in India, talk to an expert about what compliant, direct employment looks like for your team.