Employee Leasing in India: A Guide for US Companies
NNRoad offers services for employee leasing in India. Employee leasing is a contractual agreement in which the leasing company, also known as a Professional Employer Organization (PEO) is the employer.
Many tech companies in the US use a PEO, such as NNRoad, as an HR agency in order to hire skilled employees at cost-effective wages in India. NNRoad can guide you through hiring employees in India through our employment services. It is also important to understand the differences in employment laws and regulations in India compared to the US.
In order to understand employment compliance, we have consolidated a reference guide for US companies looking to hire employees in India.
Labor Laws in India vs US
The US protects against unfair hiring practices, work discrimination, and harassment. India’s laws have similar labor laws, but they also have laws that protect equal pay and prevent discrimination based on gender. An employment service provider in India will be able to guide you through the labor laws to ensure you are compliant when you hire employees in India.
Labor Contract in India vs US
It is not required by law but highly advised to use employment contracts in both countries. The complexity of India’s labor laws typically prompts expert guidance when drafting employment contracts in India. A qualified PEO service provider, such as NNRoad, will advise on and outline the India employment contract for your understanding and ease.
Social Security Contributions in India vs US
Foreign businesses with more than 20 employees in India are required to contribute to the National Pension System. This is funded by both the employer and employee. In the US, a 401k is not a required benefit, and contributions made by employees are only matched by the employer. A qualified HR agency will layout the contributions to be made by the employer and employee in India based on the individual situation.
Annual Leave in India vs US
Indian law requires employers to give their employees 12 days of paid time off (PTO) every 240 days worked. In the US, it is roughly the same. However, PTO is up to the employer’s discretion and negotiated within the contract or company policies. US employees typically get 2 weeks of vacation along with public holidays.
Taxation in India vs US
India’s corporate tax rate for non-resident businesses is 40% plus an additional 2% surcharge. While the corporate tax rate varies from each state, the US average is 21%.
Termination Policies in India vs US
India requires a 30-day notice prior to employee termination, and it is usually for severe cases like misconduct. The US has an ‘at will’ policy, where it is possible for employees to be terminated without notice or reason.
Employment Leasing in India with NNRoad
US companies should take full consideration of the employment laws before they decide to hire their first employee in India. NNRoad is expert in employment regulations in India and can help navigate the complexities of the local Indian labor laws. NNRoad offers employee leasing, entity set-up, payroll services, and benefits administration in India. Contact us to discuss how we can help you hire and expand your business in India.