Human Resources & Payroll
By Dezan Shira & Associates
Small and medium enterprises (SMEs) in India may find it challenging to keep track of the country’s changing social security, tax, and regulatory norms when computing payroll for its employees.
This is why it becomes advisable to outsource payroll – which is a functional mix of human resources and accounting – to a qualified third-party service provider. Such a policy frees the company to focus on its core business functions and profit-making operations.
By Dezan Shira & Associates
Employment visas are an annual headache for foreign businesses and businesspeople in India – Indian authorities typically issue one-year multiple entry visas that can be renewed for up to five years. To ensure a quick turn-around time on a successful application, applicants and employers should take a collaborative, hands-on approach
Employers are exposed to a number of legal and reputational risks resulting from wrongful termination, or not following due process. Employers should, therefore, plan to construct contracts and human resource (HR) materials to ensure that senior management, HR personnel, and employees are fully apprised of their rights and responsibilities.
There is no standard process to terminate an employee in India. An employee may be terminated according to the individual labor contract signed between the employee and the employer, if the contract defines a process for termination. Employers should be aware, however, that labor laws supersede the provisions of labor contracts – any termination policy or clause outlined within a contract should be checked against the law by a professional.
The new issue of India Briefing magazine, titled “Payroll Processing and Compliance in India“, is out now and available as a complimentary download in the Asia Briefing Publications Store.
In this issue:
- Payroll Calculation, Processing, and Reporting in India
- The Social Security System in India
- The Applicability and Calculation of Gratuity in India
- Outsource Payroll Processing and Optimize your Business Operations
Businesses in India have to contend with the dual challenge of employment laws and regulations derived from multiple sources. Some of these sources are the constitution, labor statutes, judicial precedents, and collective and individual agreements.
In addition, labor matters come under the concurrent list of subjects in the Indian constitution. This means that labor regulations are in the jurisdiction of both federal and state governments, which have respectively enacted numerous laws on labor relations and employment matters.
India’s social security system is composed of a number of schemes and programs spread throughout a variety of laws and regulations. Keep in mind, however, that the government-controlled social security system in India applies to only a small portion of the population.
Furthermore, the social security system in India includes not just an insurance payment of premiums into government funds (like in China), but also lump sum employer obligations.
Generally, India’s social security schemes cover the following types of social insurances:
- Health Insurance and Medical Benefit
- Disability Benefit
- Maternity Benefit
Foreign companies entering the Indian market cannot fail to note the potential of the country’s large and diversified labor pool. India is currently coming into a unique demographic dividend and has a high working age population, while accelerated economic growth has increased the demand for skilled manpower. It, therefore, becomes essential for foreign companies to conduct thorough due diligence when navigating India’s human resource (HR) environment, which is filled with a myriad of considerations that do not exist in other emerging economies.
By Melissa Cyrill
The government published the Employees’ State Insurance (Central) Amendment Rules, 2017 on January 20, which improve the existing maternity welfare benefits for women who have insurance. The new Rules are in addition to the ESI (Central) Amendment Rules, 2016 – notified on December 22, 2016 – that expanded the coverage of the ESI Act with effect from January 1, 2017.
The ESI (Central) Amendment Rules, 2016 allowed employees earning Rs 21,000 (US$313.53) or less in a month to subscribe to this scheme. Prior to that, the wage limit for ESI subscribers was at Rs 15,000 (US$223.95) per month.