Hiring in India? Avoid These Costly HR Mistakes | Doing Business in India | Episode 14
GeneralApril 15, 2026
Is organizing your workforce in India a routine administrative step or does it need careful structuring?
In this episode of the Veyrah Law series, Ajay Joseph (Partner) breaks down why getting your ground team structure right before you start hiring is always time better spent than fixing problems after the fact. While the Indian government has attempted to simplify the landscape by consolidating over 29 central statutes into four new Labour Codes, the transition is still underway and significant uncertainty remains.
This briefing moves beyond basic hiring to provide a strategic roadmap for foreign investors and strategic partners. We discuss why the new reforms are largely a repackaging exercise and explain the critical distinction - your direct headcount drives your liability, while your supervision style drives your legal risk. We explore the unique dynamics of the Indian labour environment, where letting workers go remains a difficult bureaucratic process rather than a purely commercial one.
The episode covers essential strategies for operations, such as the importance of keeping a lean core headcount, the dangers of directly supervising contract workers and why senior management protections like garden leave are more effective than post-employment non-competes. To ensure long-term stability, we also suggest practical structures like using consultancy arrangements for specialist roles and investing in robust employment agreements from the outset.
Keywords
- Labour Codes: The four comprehensive statutes – covering wages, industrial relations, social security, and safety. Designed by the central government to consolidate and simplify over 29 labour laws.
- Retrenchment: The act of laying off employees in a factory setting.
- Fixed-term Employment: A hiring structure that allows businesses to engage workers for a specific duration, providing flexibility without the long-term obligations attached to permanent employment.
- Contract Labour: Workers supplied through registered third-party contractors for non-core functions like housekeeping or administration, helping a business minimize its direct legal obligations.
- Principal Employer: The entity that engages a contractor for services, carrying specific legal responsibilities to ensure the contractor’s workers are managed correctly to avoid “deemed employment” risks.
- Deemed Employees: A legal status where contract workers are treated by courts as full employees of the principal employer because they were supervised directly rather than through the contractor.
- Consultancy Arrangements: A structure for engaging senior or specialist roles as independent retainers rather than employees, which can significantly reduce employer obligations when framed correctly.
- IP Assignment: Crucial clauses in employment or consultancy agreements that ensure all intellectual property created by the individual belongs strictly to the company.
- Non-compete Clauses: Provisions intended to stop employees from joining competitors.
- Garden Leave: An arrangement where an employee is paid their full salary through a notice period during their employment but kept away from active work.
Timestamps
Production Date:
Recorded on 28 March 2026