Legal Requirements for Hiring Remote Teams in India | Nexocean Currents

What global leaders need to know and how experience turns compliance into culture.

Why compliance matters more than ever

Hiring remote talent in India has never been easier but it has also never been more regulated.

From payroll and tax registration to data protection and employee benefits, global companies face a maze of compliance requirements when they expand into India. Missing a step can mean financial penalties, reputational risk, and lost trust with employees.

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In our experience with global teams, those who succeed don’t treat compliance as a checklist. They build it into the culture from day one making it seamless for leadership and natural for employees.

1. Entity or Employer of Record (EOR)?

Companies hiring in India typically face two options:

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·      Direct entity setup
Incorporating a Private Limited Company or LLP under the Ministry of Corporate Affairs (MCA), followed by mandatory registrations such as PAN, TAN, GST (if applicable), and labour law compliance (PF, ESI, gratuity, maternity benefits).

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·      Employer of Record (EOR)
Engaging a third party to employ talent on your behalf. Faster to launch, fewer filings, but less control for long-term scale.

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In our experience with global teams, fast-scaling firms often begin with an EOR for speed, then transition to a direct entity for greater control. Planning this shift early avoids disruption later.

2. Payroll, Tax, and Social Security

Employers in India must:

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·      Deduct and deposit TDS on salaries

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·      Contribute to:

a. EPFO (Employees’ Provident Fund)

b. ESIC (Employees’ State Insurance Corporation)

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·      Provide gratuity, statutory bonuses, and leave encashment

In our experience with global teams, payroll runs smoothly when compliance is embedded into the monthly rhythm not treated as a year-end scramble. Firms that automate filings and align benefits with local rules avoid surprises and reduce leadership overhead.

3. Employment Contracts and Labour Laws

·      Contracts must define pay, benefits, termination clauses, and IP rights

·      The Shops and Establishments Act applies even to remote setups

·      Working hours, holidays, and overtime vary by state regulations

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In our experience with global teams, the most effective contracts balance local law with global culture. They don’t just protect intellectual property they build trust and clarity for remote employees, which directly impacts retention.

4. Data Protection and IT Security

·       Governed by the Information Technology Act, 2000 and the Digital Personal Data Protection Act(DPDP), 2023

·      Employers must ensure secure handling of employee and customer data

·      Cross-border transfers require explicit compliance frameworks

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In our experience with global teams, compliance becomes sustainable when security is framed as culture, not just law. Teams adopt better practices when data protection is built into everyday workflows, rather than enforced as external rules.

5. Benefits and Wellbeing

Beyond statutory benefits like PF, ESI, and gratuity, employees in India expect:

·      Health insurance

·      Flexible leave policies

·      Learning allowances and wellness support

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In our experience with global teams, retention improves significantly when statutory benefits are paired with these locally expected perks. It signals that the company values employees as partners in growth, not just remote resources.

Building compliance into culture

Compliance in India is more than legal infrastructure it’s a foundation of trust.

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In our experience with global teams building GCCs and distributed pods, those who design payroll, contracts, benefits, and data protection into culture don’t just stay compliant they create environments where remote teams thrive.

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Hiring remote teams in India isn’t hard.

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Hiring them compliantly and sustainably is what creates long-term value.

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When compliance is invisible, employees feel secure, leaders stay focused on growth, and the organisation builds a reputation of trust in one of the world’s fastest-growing talent markets.