Employment Agreement Requirements in India

Backdating, currencies, and classifications.

Updated on March 14th, 2023

Can employment agreements be backdated in India? 

We do not recommend agreement backdating in India as this can lead to complications with deductions for statutory payments such as the Provident Fund. 

Can a supported employee work before their start date?

No, supported employees cannot begin working before their contractual start date.

Can we pay the salary in a different currency than the local currency?

No. Employees in India must be paid in Indian rupees (INR). Salaries cannot be paid in United States dollars (USD) or any other currency.

Should we classify our talent as a contractor or an employee?

Please note that contractors cannot currently be supported under our Indian entity.

In simple terms, classification status comes down to whether the individual is in business for themselves or under your company's control. If the individual is under your control, it is safer to classify them as an employee on either a permanent or fixed-term basis. 

Specifically, courts look at many factors to determine whether an individual is an employee or a contractor, including the following: 

  • Whether or not the individual exclusively provided services to the company
  • The degree of control the company had over the individual’s work (including where, when, and how to perform the work under the employment agreement)
  • Whether the individual was required to supply their own tools and equipment
  • The degree of business risk taken by the individual (e.g., their chances for profit and risk of loss)
  • The degree of integration between the individual’s activities and the company’s business

An “employee” is a long-term, employed member of staff who has agreed to receive and complete work for their employer on a regular basis. Their working hours will be determined by their employer, and their pay will be based on an annual salary.