Requirements for Foreign Employees to Work
Once foreign companies set up an entity in India, they often prefer to appoint employees from their home country or headquarters for the management and control of the Indian business. This is done mainly for the convenience of co-ordination with the parent company in terms of decision-making, financial management and other business matters. This movement of employees could be undertaken by way of secondment or transfer. There are three broad considerations that must be kept in mind, in either of the approaches: i) income tax issues; ii) social security contributions; and iii) visa considerations.
Does a Foreign Employer need to Establish or Work through a Local Entity to Hire an Employee?
Foreign employers may often have requirements wherein they might need to engage a sales person, representative or agent in India, even though they may not have a place of business in India. Also, the foreign employer may not intend to immediately generate any revenue in India. In such a scenario, the foreign employer need not mandatorily set up a local entity in India. There are various methods through which the foreign employer may engage/hire representatives or an agent in India depending on the exact business requirements.
Limitations on Background Checks
Employers are increasingly conducting background checks to guard against inaccurate resumés, overstated work experience and any employee behavioral issues. Typically, employers issue an offer letter, conduct background checks, and expressly state that the person’s employment with the organisation is contingent upon his/her clearing the background checks, and vetting of educational and job qualifications. However, the permission of the concerned employee would be required to conduct a background verification. The governing legislation on data protection has to do with any company collecting, using, or disclosing any personal information of an employee/prospective employee, which will require such person’s consent. The employer’s compliance requirements under the Personal Data Protection Bill, 2019, which is likely to come into effect in 2021, will need to be examined for purposes of conducting background checks on employees.
Restrictions on Application/Interview Questions
Indian labour and employment laws are largely silent as to the process of selection and hiring of employees in the private sector. In any case, as market practice, most employers in India conduct at least basic (education, job history) background verification of prospective employees in accordance with the IT Rules and/or ask prospective candidates to disclose specific information as a condition precedent to the employment relationship.