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A guide to employing and growing your team in India
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India is one of the world’s fastest-growing major economies, serving as a global leader in information technology, pharmaceutical manufacturing, and business services. The labor market is increasingly sophisticated, with a shift toward digital innovation supported by a highly skilled, English-speaking professional talent pool. Employment is governed by a complex framework of central and state labor laws, including the Code on Wages (2019), which has unified wage regulations. India does not have a single national minimum wage. Instead, rates are determined by state governments and the Central Sphere based on skill level, industry, and geographic zone. As of April 1, 2026, the Central Government minimum wage for skilled workers is ?24,804 per month (~$273 USD).
Employer Contributions
Employees’ Provident Fund (EPF): 12%
Employees’ State Insurance (ESI): 3.25% (applicable for eligible salary thresholds)
Gratuity: ~4.81% (provisioned, not monthly paid)
Total Employer Contribution: ~15% to 20% (depending on applicability)
Employee Payroll Taxes
Employees’ Provident Fund (EPF): 12%
Employees’ State Insurance (ESI): 0.75% (if applicable)
Total Employee Contribution: ~12% to 13%
Employee Income Tax Rates
Up to 300,000: Taxed at 0% (No tax)
300,001 to 700,000: Taxed at 5%
700,001 to 1,000,000: Taxed at 10%
1,000,001 to 1,200,000: Taxed at 15%
1,200,001 to 1,500,000: Taxed at 20%
Above 1,500,000: Taxed at 30%
Statutory Leave
In India, leave policies vary by state and organization, but generally, employees are entitled to approximately 12 to 21 days of earned/annual leave, 6 to 12 days of casual leave, and 6 to 12 days of sick leave. Public holidays typically range from 10 to 15 days annually, including both national and regional holidays. Leave carry-forward rules differ by company and state laws.
Pregnancy and Maternity Leave
In India, female employees are entitled to 26 weeks of paid maternity leave for the first two children. For the third child and onward, the maternity leave is reduced to 12 weeks. This applies to organizations with 10 or more employees, and the leave is fully paid by the employer.
Paternity Leave
Paternity leave is not mandated under central law in India, but it typically ranges from 5 to 15 days depending on company policy. However, central government employees are entitled to 15 days of paternity leave.
Work-Related Injury Leave
In India, adopting mothers are entitled to 12 weeks of adoption leave for children below a certain age. Additional leave types include bereavement leave, typically 3-5 days based on company policy, sick leave governed by company or state rules, and work injury leave covered under the ESI or Workmen’s Compensation Act. Many organizations also allow earned leave encashment. Leave for voting (public duty) is generally granted.
Termination Process
Termination of employment in India depends on the nature of employment (contractual, permanent, etc.) and applicable labor laws. Employers must follow due process, especially for workmen under the Industrial Disputes Act, which may require notice, justification, and in some cases government approval.
Severance (retrenchment compensation) is typically 15 days’ wages for every completed year of service for eligible employees.
Notice Period
Common practice: 30 to 90 days (as per employment contract)
For workmen: at least 1 month notice or wages in lieu
Probation Period
Not strictly defined by law
Common practice: 3 to 6 months (can extend up to 12 months depending on role/company)