All labour laws regulating employment relationships in India also apply to foreign nationals working in India. These include the Employees' Provident Fund and Miscellaneous Provisions Act 1952 (EPF Act), Employees' State Insurance Act 1948 (ESI Act), Industrial Disputes Act 1947 (ID Act), Maternity Benefit Act 1961 (MBA) and the Payment of Bonus Act 1965 (PBA).

Indian labour law does not apply to Indian nationals who are employed by foreign entities abroad.

Indian legislation recognises two categories of employee, workmen and non-workmen.

The ID Act defines a workman as any person employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment are express or implied. Those mainly employed in a managerial or administrative capacity, or those employed in a supervisory capacity earning more than INR10,000 per month, are not included in this definition.

Sales employees (except in West Bengal) are not treated as workmen if most of their work consists of building custom or sales and promoting business. Although all sales promotion employees are excluded from the definition of workmen, certain sales employees are protected under the ID Act as a result of the Sales Promotion Employees (Condition of Service) Act 1976. These include sales employees in certain industries, including the following:

In addition, the model standing orders under the Industrial Employment (Standing Orders) Central Rules 1946, classify workmen as permanent workmen, probationers, badli workmen and temporary workmen based on the nature of their employment.

Another category of employee recognised under Indian law are contract workers who are employed through an intermediate contractor.

The entitlement to statutory employment rights depends on the category of employee and other factors, including remuneration, location of employee and type of industry. However, an employee who does not qualify as a workman will not receive any protection or benefit under the ID Act.

There is no such provision under Indian law.

Incentives are given for providing employment in the private sector to certain disabled persons earning a monthly wage of up to INR25,000 who are appointed on or after 1 April 2008. The incentive takes the form of a payment by the government of the employer's contribution to the statutory provident fund and the employee's state insurance for a period of three years.

In certain jurisdictions in India it is necessary to inform the employment exchanges if any vacancies arise in the employing entity. The Employment Exchanges (Compulsory Notification of Vacancies) Amendment Bill 2013 (Notification of Vacancies Bill 2013) was introduced in one of the houses of the Indian Parliament on 22 April 2013. It proposes extending the applicability of this statute to private establishments that employ ten or more persons. However, the requirement to notify any vacancies to the prescribed Employment Guidance and Promotion Centres by all employers in the private sector would continue to apply to such establishments in private sector which employs more than 24 people. However, this amendment has not yet come into force.

Certain statutes (for example, the EPF Act and the ESI Act) require that the employer make periodic filings once individuals have been employed.

There are no restrictions or prohibitions on carrying out background checks for applicants in India, after obtaining their consent. This includes requesting information regarding an applicant’s health and criminal record. In such cases, background checks can be carried out by third parties on behalf of the employer. However, the procedure for processing and storing any information relating to physical, psychological and mental health conditions or medical records and history must comply with the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data and Information) Rules 2011 (Sensitive Information Rules).

Procedure for obtaining approval. A foreign national will generally apply for an Indian employment visa to the Indian Embassy/High Commission in his country of residence. The employment visa must be issued from the foreign national's country of origin, or from the foreign national's country of domicile provided the applicant's period of permanent residence in that particular country is more than two years. If the stay in India will be for more than 180 days, the employment visa holder must register with the Foreigners Regional Registration Offices (FRRO) or the Foreigners Registration Offices (FRO) within 14 days of arrival. The foreign national must have a valid travel document and a re-entry permit (if required under the law of the country concerned). An employment visa may be extended on a yearly basis for a maximum period of five years. An application for extension must be made within 30 to 90 days in advance. The foreign national being sponsored for an employment visa must draw a salary in excess of US$25,000 per annum (except for employment in certain sectors).

Cost. The fee for an employment visa is between US$15 and US$1,000, and is subject to periodic amendments by the government.

Time frame. It is difficult to give a precise time frame as the process is at the discretion of the Indian Embassy/High Commission concerned.

Sanctions. If the visa is not granted, the expatriate cannot travel to India. If the visa is granted for a particular purpose and the expatriate does not adhere to that purpose, the expatriate's visa will be cancelled and he will be deported. He will also attract the sanctions of imprisonment and/or fines.

Except for the employment visa, no other permits are required from an immigration perspective.

Schedule V of the Companies Act 2013 (Schedule V) requires that the following positions be filled by persons aged between 21 and 70 where they are appointed by a company:

However, central government approval is not required if a special resolution has been passed by the company approving the appointment of a director who has reached the age of 70 years.

In addition, independent directors of listed companies must be at least 21 years of age.

Generally, no specific restrictions apply provided that the foreign national is resident in India. However, where a foreign national is appointed as a whole time director or managing director:

There are specific restrictions that apply to the telecom and broadcasting industry. Companies operating in these industries must ensure that the majority of their board of directors comprises of Indian nationals. Industries operating in the defence sector are required to ensure that a majority of their board of directors are resident Indians.

In addition, for security reasons, the Ministry of Home Affairs will vet the appointment of foreign nationals to the following positions:

Only an individual can be appointed as a director or a manager.

No person can be a director of a company if he is already a director of more than 20 companies (of these 20 companies, the director cannot hold directorship in more than ten public companies). Persons declared bankrupt or convicted of offences involving moral turpitude cannot be appointed as a director.

It is not mandatory to enter into a written employment contract. However, certain industrial establishments employing the prescribed number of workmen must adhere to the model standing orders under the Industrial Employment (Standing Orders) Act 1946, which lays down certain conditions of service which must be uniformly implemented across the workforce who qualify as workmen.

Some statutes which regulate local businesses require prescribed particulars to be disclosed in writing to the employee.

Where an employment contract is written, it will usually include the following:

Certain terms are implied into the employment relationship, including:

Collective agreements are common in labour intensive sectors, particularly the manufacturing sectors, including:

There are special rules that apply to employees falling within the definition of "workman" under the ID Act. Where an employer wishes to change the conditions of employment (for example, wages, working hours and so on) of an employee who falls within the definition of a workman, the employer must give either 21 or 42 days' notice of the change in the prescribed form (the length of notice depends on which jurisdiction in India the employee is located in). The employee can then either agree to the change, or object to it and raise an industrial dispute. Where an objection is raised, the dispute must be resolved by the relevant tribunal and the change cannot be made until the dispute is resolved.

For employees not covered by the ID Act, the employment contract will determine whether or not unilateral changes can be made by the employer.

The Minimum Wages Act 1948 grants each local government the power to fix minimum wage rates for:

Minimum wages therefore vary from region to region.

The minimum wage to which an employee is entitled depends on:

Working hours are governed by a variety of statutes depending on the nature of the activity undertaken by the establishment. For example, if the establishment is a factory, the Factories Act 1948 (Factories Act) applies, and if the establishment is involved in a commercial activity, then the local shops and establishments statute applicable in the region in which the establishment is located applies. Generally, these statutes provide for working hour limits both on a daily and weekly basis. The normal daily hour limits range from between eight to nine hours, and the usual weekly limit is 48 hours. Under the Factories Act, the daily limit cannot be exceeded without the prior permission of the authorities. Under the local shops and establishments statute, the normal working hour limits can only be exceeded up to certain prescribed limits, and overtime payments must also be made. Employees cannot opt out of the working hours stipulated under law.

Rest breaks usually range from half an hour to one hour for each working day and are usually required to be given after four hours, or in some states five hours, of continuous work.

Shift workers have the same working hours and rest breaks as other employees. However, establishments using shift workers must obtain the prior approval of the government authorities to keep the establishment open beyond the prescribed opening and closing hours.

Holiday entitlement is generally covered by the employment contract. However, where the employer is involved in a commercial activity, the local shops and establishments statutes will apply and these determine the minimum thresholds concerning holiday entitlement. The thresholds usually range from 12 to 21 days' holiday per year. Certain local shops and establishments statutes also contain provisions concerning sick leave and casual leave (which generally ranges from 12 to 24 days).

Further, the Factories Act provides that every adult worker who has worked in a factory for at least 240 days in a calendar year is entitled to one day's leave with wages for every 20 days of work.

These holidays differ from region to region and range from between four to ten days' holiday each year.

Where the employer is involved in a commercial activity, some of the local shops and establishments statutes provide that employees are entitled to leave on account of illness or injury. Factories which employ the requisite number of workmen must also provide sick leave to their employees (in accordance with the Factories Act). These periods of sick leave are paid.

The local shops and establishments statutes apply to all categories of employees except where the government has issued specific exemptions in relation to certain classes of employees.

Where an employee is entitled to time off for illness or injury, the period of leave will be paid (see above, Entitlement to time off).

Employees who are covered by the ESI Act can claim sickness or disablement benefit (which is paid by the government). The employer cannot recover any sick pay from the government.

Where the employee is entitled to benefits under his conditions of service which are similar to benefits under the ESI Act, the employer can discontinue or reduce those benefits under the conditions of service to the following extent:

Further, if the employee avails himself of any sick leave from the employer under his conditions of service, the employer will be entitled to deduct from the employee's leave salary the amount of benefit he is entitled to under the ESI Act.

The MBA provides maternity leave to every woman employed in an establishment for at least 80 days preceding the expected date of delivery, up to a maximum period of 12 weeks (of which not more than six weeks can precede the date of delivery). The employee receives her salary during the statutory maternity period.

A female employee is also entitled to leave with payment of maternity benefit for an additional six weeks in the case of miscarriage or medical termination of the pregnancy, and for two weeks with payment of maternity leave for a tubectomy operation.

Further, a woman suffering from an illness arising out of pregnancy, delivery, premature birth, miscarriage, medical termination of pregnancy or a tubectomy operation is entitled to leave with payment of maternity benefit for an additional one-month period. A medical bonus of INR3,500 will also be provided to these employees and they are entitled to certain prescribed nursing breaks.

In the event the employee is covered under the ESI Act, the benefit is paid by the government.

Indian employment law does not provide for paternity rights.

The provisions of the MBA and the ESI Act are also applicable to surrogate mothers. The statutes do not provide any rights to the parents under a surrogacy arrangement.

Indian employment law does not provide for adoption rights.

Indian employment law does not provide for parental rights.

Indian employment law does not provide for carers' rights.

Certain statutory benefits are available only to persons in continuous employment for a particular period of time. For example, retrenchment compensation under the ID Act is payable only to workmen who have been employed for a continuous period of at least 240 days in the establishment. Gratuity amounts are payable only if an employee has worked with an establishment for at least four years and 240 days. Leave entitlement in a particular calendar year is also dependent on the employee's length of service for that year.

Indian law does not recognise the automatic transfer of employment. In the case of a transfer of an undertaking, the ID Act provides that workmen are deemed to be dismissed unless the buyer fulfils certain conditions, including providing the workmen with continuity of service (see Question 24, Automatic transfer of employees).

A temporary worker is one who is engaged for a limited time period and/or for a specific purpose. The definition of "workman" under the ID Act does not exclude temporary workers and they are entitled to the same benefits as full-time workers subject to the provisions of the ID Act in relation to termination provisions. However, where a temporary worker is employed for a genuine specific task for a limited time period, the usual provisions concerning termination for full-time workers will not apply to that temporary worker.

Conversely, where a worker is categorised as a temporary worker and that categorisation is revealed to be a sham, and the employer has used the categorisation to avoid providing the worker with certain rights provided by law, a tribunal will usually grant that employee the same severance benefits as a full-time worker under the ID Act where the worker has been employed for more than 240 days.

Generally, all other labour statutes apply to temporary workers.

The employment of agency workers through third party contractors is governed by the Contract Labour (Regulation and Abolition) Act 1970. It is applicable to:

Agency workers are not treated as the employees of the establishment unless the contract between the establishment and the agency is shown to be a sham, in which case all the statutory benefits usually received by the establishment's employees will be extended to the agency workers.

The duration for which the agency workers have been employed in the establishment is one of the factors that the court considers when determining whether or not an agency contract is a sham, though there is no prescribed length of service that determines that an agency worker is in fact an employee.

Where any regular employee is misclassified as an agency worker or temporary worker and is not given the statutory or contractual benefits he is entitled to, an industrial dispute can be raised.

See above, Temporary workers.

The storage, management and handling of sensitive personal data or information belonging to natural persons located in India is regulated by the Sensitive Information Rules. Sensitive personal data or information is defined under the Sensitive Information Rules to mean information concerning:

Any body corporate receiving any of the above types of information as a result of either using the services of an individual or employing an individual must comply with the Sensitive Information Rules regarding processing and storing that information.

Indian employment law prohibits discrimination on the basis of gender both at the time of recruitment and during employment at the workplace. A general prohibition against discrimination is provided under the Constitution of India. These provisions are usually applicable to government bodies. However, it is not clear whether the courts, when interpreting these constitutional protections, could extend them to also cover private entities.

The Supreme Court in Vishakha v State of Rajasthan, AIR 1997 SC 3011 laid down guidelines for the prevention of sexual harassment against women at workplaces. Under the guidelines employers must ensure that an adequate complaints procedure is put in place at work, and appropriate disciplinary action must be taken against those found guilty of discrimination or harassment.

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redress) Act 2013 (SHA) received the assent of the President on 23 April 2013 and came into force on 9 December 2013. The Act reflects the Supreme Court's decision in the Vishakha case and makes it mandatory for all offices, hospitals, institutions and other workplaces to have an internal complaints procedure for dealing with complaints concerning sexual harassment. For this purpose, the SHA proposes the formation of both internal complaints committees and local complaints committees. A complaint under the SHA must be made within three months from the date of the incident (this can be extended by the Internal Committee under the SHA for recorded reasons).

The Whistle Blowers Protection Act 2011 received the assent of the President on 9 May 2014 and is yet to be notified. It is intended to protect those making a public interest disclosure related to an act of corruption, misuse of power, or criminal offence by a public servant. There is no statutory protection available to whistleblowers in India until this is enforced. The Whistle Blowers (Amendment) Bill 2015 has been passed by the lower house of the Indian Parliament and seeks to address concerns relating to national security.

It is mandatory for every listed company, companies that accept deposits from the public and companies which have borrowed money from banks and public financial institutions in excess of INR50 crores to establish a vigil mechanism for directors and employees to report genuine concerns in such manner as may be prescribed under the Companies Act, 2013, read with the applicable rules. The details of the establishment of such mechanisms should be disclosed by the company on its website (if any) and in the board's report.

Under Indian law, there are two types of dismissal:

Redundancy situations are considered in Question 21. Generally, the notice period for ordinary dismissal is one month, unless the employment contract provides for a longer notice period to be given. Under certain local shops and establishments statutes the employer is also required to notify the authorities of a dismissal event.

For dismissal with cause, the ordinary principles of natural justice must be followed, and once an employer has established that misconduct has been proved at an enquiry, the employer can proceed with dismissal without providing any notice period.

The employer must pay certain termination benefits to employees who are dismissed, including:

Termination benefits are calculated on the basis of the employee's salary and length of service.

However, the employer is entitled to recover any damage suffered by it on account of the employee's wrongdoing from the gratuity payment.

The employer must hold an enquiry before dismissing an employee for cause. During this enquiry the employee is entitled to prove his innocence and it is imperative that the employer follows the principles of natural justice while conducting the enquiry.

Under the ID Act, the employer must follow the correct procedure for dismissing employees. Where the correct procedure is not followed, the dismissal is not valid and the employee can claim reinstatement with back pay.

In addition, under certain local shops and establishments statutes, employees can only be dismissed for reasonable cause. Where the employer fails to evidence the necessary cause for dismissal in these instances, the dismissal will be invalid.

A female employee who is on maternity leave cannot be dismissed during, or because of, her maternity leave. In the case of a pending dispute, an employer will require permission of the authority to change the conditions of service of, or dismiss from service, workmen who are members of the executive or are other office bearers of a trade union.

Under the ID Act, the services of a workman can be terminated by redundancy. The redundancy definition under the ID Act is quite wide and refers to the termination of workmen's services by the employer for any reason other than the following reasons:

The following procedural requirements must be met when considering redundancies:

In the case of certain establishments (for example, factories) that employ 100 or more workmen during the preceding 12 months, workmen who are made redundant must be given three months' notice or three months' wages in lieu of notice. The prior approval of the appropriate government department must also be acquired before dismissing such workmen.

As regards other employees, the local shops and establishments statutes provide for the dismissal of non-workmen on any ground, including redundancy (see Questions 19 and 20).

A workman who is made redundant is entitled to compensation of 15 days' average pay for every completed continuous year of service (or every part of a year completed, provided it amounts to over six months).

The provisions related to redundancies under the ID Act also apply to collective redundancies.

Management representation is not required under statute, except in relation to the obligation to form a committee under the ID Act to redress grievances, and the internal committee that is required under the SHA.

There is no requirement to consult with employees about issues that affect them or about major transactions.

Employee consultation and employee consent are not required for major transactions.

An employer only has a duty to consult if this is expressed in the employment contract. If the employer has contractually agreed to consult the employees on certain issues and if it fails to do so, the employees can refer the matter to the courts/tribunals to enforce those rights.

Though there is no statutory right for employees to be consulted on major transactions, in practice employees can employ a number of tactics to delay or frustrate the proceedings. Employees are still able to approach the courts/tribunals on the following grounds:

Employees can adopt these tactics as a way of ensuring that the seller takes their rights into consideration when negotiating the terms of the major transaction.

Indian employment law does not provide for the automatic transfer of employees. Under the ID Act, workmen who have been with an employer for not less than 240 days are deemed to have been dismissed and are entitled to a redundancy payment, as explained below, and at least one month's wages on the transfer, unless both of the following apply:

Where these conditions are not met, the transferring employer will be liable for redundancy payments (that is, compensation of 15 days' average pay for every completed year of service (or every part of a year completed, provided it amounts to over six months)) and salary in lieu of the notice period as is required under law.

With respect to employees other than workmen, the employees will usually have their employment terminated by the seller. In the event the buyer agrees to provide continuity of service, that continuity will then be reflected in the employment contract that the buyer draws up with the employees (see also Question 14).

See above, Automatic transfer of employees.

Where the buyer agrees to provide continuity of service to the employees, the employment terms can be harmonised to the extent that the harmonisation does not result in the transferred employees being subject to less favourable terms than they were subject to under their previous employment.

The law of tort governs the employer's liability for the acts of its employees that are committed during the course of their employment. If an employee commits any tort during the course of his employment, and the act falls within the scope of his ordinary functions, the employer will be liable for that tort.

A subsidiary is recognised as a separate legal personality, distinct from its parent/holding company and therefore a parent company will not be held liable for the acts of its subsidiary's employees. The only situation in which the parent company can be held liable is where the subsidiary can be proven to have acted as the parent's agent, branch or department on the basis of the "corporate veil" doctrine.

If an employer (company) is declared insolvent and consequently wound up, amounts owed to workmen are given an overriding preference to other debts under Section 529A of the Companies Act 1956. All wages, salary due for a period not exceeding four months and sums due from any statutory welfare funds are also required to be paid on a priority basis. The corresponding provisions in Section 326 under the Companies Act 2013 have not yet been notified.

There is no state fund for repayment of employment debts if an employer is declared insolvent.

The Factories Act 1948 and local shops and establishments statutes provide certain health and safety requirements that factories must ensure are complied with, including:

In the case of other establishments, the local shops and establishments statutes contain provisions covering cleanliness of the premises, ventilation, precautions for the safety of employees, and so on.

Foreign nationals are subject to income tax in India on all their income derived from a source in India or received in India during the relevant tax year (subject to any exceptions under a double taxation treaty).

This income also includes income deemed to be received or deemed to accrue/arise in India. Generally, income from salaries is deemed to accrue or arise in India if the services are rendered in India.

However, for an individual who is not a citizen of India, section 10(6)(vi) of the Income Tax Act 1961 (ITA) provides that the remuneration received by him as an employee of a foreign enterprise for services rendered by him during his stay in India will be exempt from income tax subject to the following conditions being fulfilled:

Where a foreign national comes to India and is present in India for a period of 182 days or more during the relevant tax year, he will be considered resident in India. However, for the initial few years (two or three years, depending on his date of arrival and the number of days stay in India), he will be considered as not ordinarily resident for tax purposes and the following income will be subject to tax in India:

Thereafter, once he becomes "ordinarily resident" in India, his global income is taxable in India.

As a general principle, the global income of an individual who is "ordinarily resident" (see above, Foreign nationals) in India is chargeable to tax in India, including all incomes which accrue or arise outside India during the relevant tax year.

However, if this person's stay in India is for less than 182 days in aggregate during the relevant tax year, such person would be considered a non-resident in India for that year. In this case, the person would be liable for tax in India only for income derived from a source in India or received in India during the relevant tax year, including income deemed to be received or deemed to accrue or arise in India (subject to any exceptions under an applicable double taxation treaty).

The following rates of income tax apply to individuals as of 1 April 2015 (different tax rates are levied on income received by persons aged above 60 years and 80 years):

In addition to the above, an education cess at a rate of 3% is also payable.

The EPF Act applies to specified factories and establishments employing 20 or more employees. The EPF Act provides for the following three schemes:

The PF Scheme is applicable to all employees earning a salary of not more than INR15,000 per month, unless:

The statutory rate of contribution under the PF Scheme is 12% of the statutory defined wages, which is paid by both the employer and employee (that is, the total payable is 24%). The employer must pay both its own and its employees' contribution, but can recover the employees' contribution by deducting the amount from the employees' salary. A portion of the employer's contribution (equating to 8.33%, which is capped at wages of INR15,000 per month) is diverted from the PF Scheme into the Pension Scheme. Existing members whose monthly salary is in excess of INR15,000 as on 1 September 2014 can continue with their membership, provided they exercise the option to continue to contribute in excess of INR15,000 within six months from 1 September 2014, and they are required to make a contribution at a rate of 1.16% fixed on salary exceeding INR15,000 under the scheme.

Under the EDLI Scheme, the employer must contribute 0.5% of basic wages. The wages on which this amount is calculated is capped at INR15,000 per month for all employees.

The ESI Act is applicable to establishments employing 20 or more employees (though in some states this threshold is reduced to ten employees). Under the ESI Act (which applies to employees whose salary do not exceed INR15,000 per month), both employee and employer must make contributions to the Employees' State Insurance Corporation at the rate of 1.75% and 4.75% respectively. The employer must pay both its own and its employees' contributions, but can recover the employees' contributions by deducting the amount from the employees' salary (see Question 33).

Rewarding employees with bonuses is common and is usually done on a contractual basis. The PBA prescribes a minimum bonus of 8.33% and a maximum bonus of 20% of the wages payable annually by establishments employing 20 or more persons (for employees whose wages do not exceed INR10,000 per month).

Under the Indian Copyright Act 1957, the author is the first owner of the copyright. However, in the case of an artistic or literary work produced in the course of an author's employment, or under a contract of service or apprenticeship, the employer is (in the absence of any agreement to the contrary) the first owner of the copyright.

Under the Patent Act 1970, the right to patent inventions made by employees during the course of their employment is determined by the terms of the contract between the employer and employee. The ownership of a patent in the first instance will vest in the employee in cases where the employer is a legal entity and not a person. In these cases, the employer must execute an assignment deed in its favour for the patent right to pass to it. Alternatively, the assignment right can be included in the employment contract.

During the term of employment, an employer can restrict the employee from working for a third party. Provided that the terms of that restriction are not excessively harsh (given the facts of each case), the courts will enforce it.

Non-compete post-employment provisions must be considered in the light of section 27 of the Indian Contract Act 1872 (Contract Act). Section 27 states that any agreement which restrains a person from exercising a lawful profession, trade or business of any kind is void. Judicial precedents further state that whilst negative covenants can be enforced throughout the term of an employment contract, negative covenants operating beyond the term of employment are void. Indian law does not distinguish between partial and total restraint of trade, and so any non-compete post-employment provision will be considered void and will not be enforceable against the employee.

The position is not so clear concerning non-solicitation post-employment clauses and whether they are in restraint of trade, as this depends on the circumstances of each particular case, and the parameters under which the clause is drafted. However, even where non-solicitation clauses are upheld by the courts, at best an employer will generally only be entitled to damages from the infringing employee for breach of contract. Even in this instance, the employer will need to show that the enforcement of the non-solicitation provision is essential to protect its confidential information, and that the provision does not prejudice the employee's ability to carry on a business or trade. Indian courts will be very reluctant to grant an injunction which effectively prevents a customer from taking his business elsewhere. Where there is a non-solicitation clause preventing the former employee from soliciting the employer's other employees, the courts are also reluctant to grant injunctive relief preventing the employees being solicited from leaving the employer.

The final enforcement of certain legislation is pending, including the following:

Separately, other important proposed regulatory changes are: