Written appointment
Issue a written appointment letter and employment terms at the start. State shops-and-establishments acts still require registers and display rules even as the labour codes take hold.
South Asia · Hiring guide · 2026
Hiring in India: labour law and payroll
This page is the labour-law and payroll stack for multinational employers hiring in India. It is not a salary survey.
In-country employment is how you run this stack without an Indian company. The rules below still apply to the contract.
To hire without incorporating first, use in-country employment in India.
Contracts
Contracts and probation
Probation
Probation is contractual. Keep it short, state the confirmation rule, and do not use rolling probation to dodge notice or retrenchment process.
Fixed-term vs indefinite
Fixed-term employment is recognised under the codes if it is genuine. Chaining short terms to avoid continuity is the usual dispute.
Hours
Working time and overtime
Hours
Daily and weekly limits, rest intervals, and overtime sit in the Occupational Safety, Health and Working Conditions Code and state notifications. Do not copy a 996 roster from another market.
Overtime
Overtime is generally paid at twice the ordinary rate of wages where the code requires it. Confirm the state and category before you write a handbook rate.
Leave
Earned leave, casual leave, and public holidays follow the code plus state shops acts and establishment custom. Put the leave calendar in the contract.
Wage floor
Minimum wage, 2026
Minimum wages are notified by state and often by skill category. Figures below are the statutory stack, not market salaries.
| Rule | Figure |
|---|---|
| Minimum wage | State and skill-category notifications — no single national monthly floor |
| EPF | 12% employee + 12% employer of wages (employer split typically 8.33% EPS + balance EPF) + 0.5% EDLI; statutory wage ceiling INR 15,000 unless you contribute on higher pay |
| ESI | Employer 3.25% / employee 0.75% of gross where ESI applies (generally up to INR 21,000 / month) |
| 13th month | Not statutory |
The four labour codes are in force nationally; state rules and inspectors still lag. Confirm the state of work before you issue a floor-level offer. A CTC split that keeps basic pay below 50% of wages can pull more of the package into the PF base.
Exit
Terminating and offboarding
Retrenchment is a process
Retrenchment of covered workmen requires notice, compensation, and in some cases government permission. A simple 'termination for convenience' clause is not enough.
Notice and full-and-final
Contractual notice (or pay in lieu), leftover leave, and PF/ESI exit filings. Holding the last salary until a handover is 'finished' is a common dispute.
Gratuity
Generally payable after five years' continuous service. Accrue it from the start even if the first hire may not stay five years.
Questions
FAQ
- Is there a national minimum wage in India?
- Not as a single monthly figure you can put in an offer. Minimum wages are set by state and often by skill category. Use the state of work.
- How much is provident fund?
- Generally 12% of wages on each side, with the employer's share split between EPS and EPF, plus 0.5% EDLI. The statutory wage ceiling remains INR 15,000 unless you contribute on higher pay.
- Is a 13th month required?
- No. Statutory bonus under the Code on Wages is a separate, capped regime for eligible employees — not a 13th salary.
- Can we dismiss without cause?
- Not for covered workmen on a retrenchment. Build notice, compensation, and the statutory process into the hire plan.
Other markets
Other hiring guide pages
Reviewed 11 September 2026
This is a hiring briefing for multinational employers, not legal advice. Statutory rates move by city, province, and sector. Confirm the place of work before you issue an offer.
Sources
- Code on Wages, 2019; Code on Social Security, 2020; Industrial Relations Code, 2020; OSH Code, 2020
- EPF / EPS / EDLI Schemes, 2026; ESIC contribution rates
- State minimum-wage notifications for the place of work
Hire in India
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