Hiring Remote Teams from India: Legal and Compliance Guide

The global shift toward remote work has transformed how companies build and scale teams. From early-stage startups in San Francisco to established firms in London or Singapore, hiring skilled professionals from India has become both a strategic and cost-effective move. Yet, amid this opportunity lies a complex legal landscape — one that foreign employers cannot afford to ignore.

Hiring remote teams from India involves navigating employment laws, taxation rules, data protection requirements, and contractual nuances that go far beyond a simple “remote work agreement.” If you’re planning to onboard Indian professionals, here’s what you need to know to make your hiring process legally sound and operationally secure.

1. The Rise of Cross-Border Remote Hiring

India’s massive pool of English-speaking professionals, spanning engineering, legal, finance, marketing, and design, has made it a global remote talent hub. Platforms like Deel, Remote, and Papaya Global have accelerated this trend, allowing international employers to hire, pay, and manage teams with minimal infrastructure.

However, compliance responsibilities don’t vanish just because the employee works remotely. When you hire talent from India, you step into a regulatory framework governed by Indian labour laws, the Income Tax Act, and data protection statutes like the Digital Personal Data Protection Act, 2023 (DPDP Act). Legal experts such as Corrida Legal, a boutique corporate and employment law firm in India, regularly advise businesses on aligning global hiring models with Indian employment law.

2. Direct Employment vs. Contractual Engagement

Foreign employers typically have two legal routes to engage Indian professionals:

• Direct employment: You hire the individual as a formal employee of your company. This often requires a legal presence in India, such as a subsidiary, branch office, or liaison office. The employee is covered under Indian labour laws, including statutory benefits and social security obligations.
• Independent contractor arrangement: You engage the worker as a consultant or freelancer under a contract for services. This model avoids creating an employment relationship but must be structured carefully to prevent “misclassification.”

Each model carries distinct implications in taxation, liability, and termination. Choosing the right one depends on your long-term strategy and growth plans in India.

3. Key Indian Employment Regulations to Consider

India does not yet have a single consolidated labour code in force, so multiple laws govern remote employment. Key among them are:

If your engagement is structured as a contractor model, these laws generally don’t apply, but your contracts must make that distinction crystal clear.

4. Drafting a Compliant Remote Employment Contract

A well-structured contract is the foundation of legal compliance. When hiring from India, the agreement should include:

• Defined parties and governing law
• Scope of work and deliverables
• Compensation terms
• Intellectual property (IP) ownership
• Confidentiality and non-disclosure
• Termination and notice clauses
• Dispute resolution procedures

For companies without local legal expertise, consulting an Indian employment law firm such as Corrida Legal’s Gurgaon office ensures the contract aligns with both Indian and international compliance standards.

5. Tax and Social Security Obligations

Payments made to Indian individuals are typically subject to Tax Deducted at Source (TDS) under Indian tax law.

• For employees: Section 192 of the Income Tax Act.
• For independent contractors: Section 194J or 194C.

Employers must also comply with India’s Foreign Exchange Management Act (FEMA) for cross-border remittances. When the relationship qualifies as employment, contributions toward the Provident Fund (PF) or Employee State Insurance (ESI) may apply.

Businesses that don’t want to set up a legal entity often use Employer of Record (EOR) platforms to manage payroll and statutory obligations efficiently.

6. Data Protection and Cross-Border Privacy

Remote teams handle large volumes of sensitive data. The DPDP Act, 2023 requires companies processing data of Indian citizens to:

• Obtain valid consent before collecting data.
• Maintain transparent data usage policies.
• Ensure compliant cross-border data transfers.
• Implement breach notification mechanisms.

For GDPR-compliant firms, adapting to DPDP standards is relatively seamless. Firms like Corrida Legal guide multinational employers in embedding these clauses into employment contracts and HR policies.

7. Avoiding Permanent Establishment (PE) Risk

If multiple remote workers in India execute core management or revenue functions, tax authorities may deem the company to have a permanent establishment in India.

• Clarify workers have no authority to bind the company.
• Limit core business decision-making from India.
• Use EOR models to maintain legal separation.

8. Protecting Intellectual Property and Confidentiality

Under Indian law, the creator owns the copyright unless assigned in writing. Therefore, contracts should include:

• Automatic IP assignment to the company.
• Moral rights waiver.
• Post-termination confidentiality obligations.

These clauses safeguard business interests when employees or contractors access digital systems globally.

9. Dispute Resolution and Governing Law

Jurisdictional clarity prevents future conflicts. Direct employees of an Indian entity fall under Indian law, whereas remote contractors can be governed by another jurisdiction.

Most companies prefer arbitration for neutrality and efficiency. Clearly defining procedures helps avoid litigation and maintain cross-border professionalism.

10. Practical Roadmap for Global Employers

• Select your engagement model – direct employment, EOR, or contractor.
• Draft clear agreements – ensure legal compliance.
• Manage tax and remittances – handle TDS and FEMA correctly.
• Comply with data privacy laws – integrate DPDP Act requirements.
• Protect IP and confidentiality – reinforce clauses contractually.
• Keep documentation ready – maintain tax and compliance records.

Embedding these steps into your hiring process reduces risk and improves operational confidence.

11. The Strategic Advantage

Beyond compliance, hiring from India offers access to a diverse and dynamic professional ecosystem. By building legally sound frameworks, you create stability, attract top talent, and strengthen trust between global and Indian teams.

As remote hiring becomes the norm, legal diligence is no longer optional — it’s the foundation of sustainable growth.

Author’s Note

This article was written with research support from Corrida Legal, a boutique corporate and employment law firm based in Gurgaon, India, specialising in cross-border workforce compliance, contract drafting, and corporate advisory services.

Reference:

• https://corridalegal.com/