India employment compliance in 2026

The Industrial Relations Code 2020 (consolidating the Industrial Disputes Act 1947) sets the threshold at 12 months of continuous service. Once that threshold is crossed, a retrenched workman is entitled to retrenchment compensation: 15 days average pay per completed year of service.

The worker-versus-non-worker distinction matters enormously in India. Senior employees, managers, and those drawing above a wage threshold are not 'workmen' under the Code. Their protections come from contract law and general civil courts, not the Labour Code tribunals.

Workmen vs non-workmen

• Workmen (covered by IRC 2020). Retrenchment requires notice, compensation, and for large establishments, government approval. The 12 months threshold governs compensation entitlement.
• Non-workmen (managers, supervisors, senior roles). Protections are contractual. Termination follows the employment contract, not the Code. The one-year threshold does not apply.

For international companies hiring through an EOR, most white-collar hires fall into the non-workmen category. The Labour Codes apply to their employment, but the retrenchment compensation formula and government approval gates are less commonly triggered. Employment contracts carry more weight.

Key statutory protections:

• The Constitution of India, Article 15. Prohibits discrimination on grounds of religion, race, caste, sex, or place of birth. This applies directly to state action and informs employment law interpretation.
• The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013 (POSH Act). Applies from day one. Requires employers with 10 or more employees to constitute an Internal Complaints Committee. The definition of 'workplace' is broad and covers EOR arrangements. Non-compliance carries financial penalties and reputational risk.
• The Rights of Persons with Disabilities Act 2016. Applies to all establishments. Requires reasonable accommodation for persons with benchmark disabilities. Central Government establishments must reserve posts; private employers have general non-discrimination obligations.
• Equal Remuneration Act 1976 (consolidated under Code on Wages 2019). Prohibits pay discrimination on the basis of sex for the same work or work of a similar nature. Applies from day one of employment.

What applies from day one

POSH Act protections apply from the first day a person works in the workplace, including contract workers, interns, and EOR employees. There is no qualifying period. An Internal Complaints Committee must be in place before hiring, not after a complaint arises.

The Maternity Benefit Act 1961 (consolidated under the Code on Social Security 2020) prohibits dismissal of a woman during maternity leave. Protection applies from the point pregnancy is notified to the employer.

The Whistle Blowers Protection Act 2014 protects persons who disclose information about corruption or wilful misuse of power by public servants. It is limited to disclosures made to a Competent Authority (typically the Central Vigilance Commission or equivalent state body). It does not apply to private sector employment disputes in the way UK PIDA 1998 does.

What private sector employees can rely on

• POSH Act reporting. The Internal Complaints Committee process has built-in non-retaliation protections. An employee who reports sexual harassment cannot lawfully be dismissed, demoted, or victimised for making the complaint.
• Labour tribunal complaints. Employees can file complaints with Labour Commissioners for violations of the Labour Codes. Filing a complaint is itself a protected act and retaliation can form the basis of a separate claim.
• Companies Act 2013, Section 177(9). Listed companies and certain other companies must establish a vigil mechanism (whistleblower policy) for directors and employees. The mechanism must provide protection against victimisation.

For international companies hiring in India through an EOR, it is strongly recommended to put a contractual whistleblower policy in place that extends beyond the statutory minimum. The POSH Act requires an Internal Complaints Committee regardless of entity structure; Teamed handles the compliance framework.

Practical implications for employers in India:

• Lawful basis (consent or legitimate use). Processing employee personal data requires either employee consent or a recognised legitimate use. Employment contracts and payroll processing generally qualify as legitimate use under the Act.
• Privacy notice (Data Fiduciary obligations). Employers must inform employees of the purpose of data collection and their rights before collecting personal data. This must happen at or before onboarding.
• Data Principal rights. Employees have the right to access, correct, and erase personal data held about them. Employers must respond to these requests.
• Data breach notification. A personal data breach that is likely to adversely affect an employee must be reported to the Data Protection Board of India and to the affected individual.
• Cross-border transfers. The DPDPA permits transfer of personal data to countries not blocked by government notification. The list of blocked countries has not yet been published as of mid-2026; international transfers currently proceed under organisational safeguards.

For US or European companies hiring in India through an EOR: employee data flows between Teamed's partner entity in India and the hiring company's headquarters. A data processing agreement between the parties is required. Teamed provides a standard agreement covering DPDPA compliance and mirrors EU standard contractual clause obligations where the hiring company operates under GDPR.

Three frameworks worth knowing for international companies hiring in India:

• Trade union recognition. Under the Industrial Relations Code 2020, a union representing at least 51 percent of workers in an establishment can apply for sole negotiating union status. Multiple unions can form a negotiating council. Recognition is relevant mainly in establishments with larger workforces.
• Works Committees. Establishments employing 100 or more workmen must constitute a Works Committee, with equal employer and employee representation. Works Committees address day-to-day working conditions, not wage bargaining. They are distinct from trade unions.
• Grievance Redressal Committee. Establishments with 20 or more workers must have a Grievance Redressal Committee. Employees must exhaust this internal process before escalating to a labour tribunal.

EOR and union obligations

EOR employment in India places the employer of record (not the client company) as the relevant employer for Labour Code purposes. Union membership obligations, works committee elections, and grievance committees apply at the EOR entity level. Teamed's partner entity in India manages these obligations. The client company is not directly exposed to union recognition proceedings.

The Industrial Relations Code 2020 also requires re-skilling contributions of 15 days wages per retrenched worker to the Worker Re-skilling Fund. This is a new obligation under the Code with no equivalent in the pre-2025 laws.

Real HR and legal experts handle your India hires, from the first offer letter through monthly TDS submissions and ESIC filings. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Employer cost passes through at cost, itemised on every invoice.

Most companies graduate from their first India hire to a team of ten before realising the POSH Act Internal Complaints Committee obligation applies. Compliance that works at one hire is fine until it isn't. The Four Labour Codes are baked into every new hire workflow. Teamed's partner entity in India maintains POSH Act compliance, manages Works Committee obligations where applicable, and ensures full and final settlement is paid within 2 days as required by the Code on Wages 2019.

Start from the India hiring overview. Each child guide covers one layer of India employment law. Key sources: Industrial Relations Code 2020 (PRS Legislative Research), ICLG India Employment Report 2026, and India Briefing employment guide.

1. Check workman status

   Determine whether your hire falls within the 'workman' definition under the Industrial Relations Code 2020. Managers and senior employees have contractual protections; workmen have statutory ones.

2. Issue a written contract

   A written employment contract is required before the start date. It should state notice periods, probation length, and POSH Act awareness. The contract governs non-workman employees.

3. Register with ESIC and EPF

   Enrol the employee in the Employees' State Insurance Corporation and Employees' Provident Fund within the statutory deadline. Both schemes carry mandatory employer contributions from day one.

4. Constitute an Internal Complaints Committee

   If your India headcount reaches ten employees, a POSH Act Internal Complaints Committee must be in place. This is a day-one obligation once the threshold is crossed, not an optional policy.

5. Track the gratuity clock

   Gratuity vests after five years of continuous service. Record the hire date precisely. The gratuity liability is an accruing obligation from the start of employment.