Presenting a job offer in India and negotiating salary and benefits involves several key steps to ensure clarity, transparency, and mutual agreement. We can guide you through the process to present a compliant and robust job offer that aligns to Indian regulations.
Before you issue an offer in India these are basic employment terms you need to be aware of to navigate your recruiting process and create an adequate job offer that is descriptive for your preferred candidate.
Some of the most significant employment terms in India:
- Permanent Employment: This refers to long-term, full-time employment with a company, where the employee is entitled to benefits like provident fund, gratuity, and medical insurance.
- Contract Employment: Employees are hired for a specific period or project. They are not entitled to the same benefits as permanent employees but are covered under the Contract Labour (Regulation and Abolition) Act, 1970.
- Probation Period: A trial period during which a new employee’s performance is evaluated. This period typically lasts between 3 to 6 months, after which the employee may be confirmed as a permanent employee.
- Notice Period: The period an employee or employer must give before terminating employment. This can range from one month to three months, depending on the terms of the employment contract.
- Provident Fund (PF): A government-managed retirement savings scheme where both employer and employee contribute a percentage of the employee’s salary each month.
- Gratuity: A lump sum payment made to an employee by the employer as a token of appreciation for their service. It is payable to employees who have completed at least five years of continuous service with the employer.
- Leave Policies: This includes various types of leaves such as earned leave, sick leave, casual leave, and maternity leave. Employees are entitled to a certain number of days of leave per year as per the company’s policy and statutory requirements.
- Working Hours: As per the Factories Act, 1948, the maximum working hours are 48 hours per week, with a daily limit of 9 hours. Overtime is payable if an employee works beyond these hours.
- Minimum Wages: The Minimum Wages Act, 1948 mandates that employers pay their workers at least the minimum wage rate set by the government. These rates vary by state, sector, and type of work.
- Employee State Insurance (ESI): A self-financed social security and health insurance scheme for Indian workers, offering medical and cash benefits.
These terms are critical for understanding the legal and regulatory framework governing employment in India, ensuring both employers and employees adhere to their rights and responsibilities.
Once you have evaluated the above, there are 4 elements you need to consider when generating an offer to hire in India.
- Formal Offer Letter: Provide a detailed formal offer letter that includes:
- Job Title and Description: Clearly define the role and responsibilities.
- Salary Details: Break down the salary structure, including basic pay, allowances, and any variable components.
- Benefits: Outline all benefits such as health insurance, provident fund, gratuity, bonuses, and other perks.
- Leave Policies: Specify the leave entitlements, including annual leave, sick leave, and any special leave.
- Probation Period: Mention the duration of the probation period and the evaluation criteria.
- Working Hours: State the expected working hours and any policies regarding overtime.
- Location: Indicate the location in India) this employee will be based.
- Notice Period: Define the notice period for both the employee and employer.
- Start Date: Clearly mention the expected start date.
- Detailed Compensation Breakdown: Include a detailed compensation statement that outlines the salary components such as:
- Basic Salary
- House Rent Allowance (HRA)
- Special Allowances
- Performance Bonuses
- Provident Fund contributions
- Tax Deductions
- Benefits Explanation: Provide a comprehensive guide to the benefits offered, including:
- Health and medical insurance
- Life insurance
- Retirement benefits (PF, gratuity)
- Wellness programs
- Professional development opportunities
- Legal Compliance: Ensure the offer complies with local labor laws and regulations, including minimum wage requirements and statutory benefits.
