Introduction

India continues to attract global businesses with its skilled workforce, vast consumer base, and growing tech ecosystem. But doing business in India is not without its complexities - especially when it comes to employment law. Each state has its own labour regulations layered over national frameworks, and Maharashtra, home to Mumbai and Pune, is one of the most commercially significant states.

Recent updates to India’s labour codes, alongside regional nuances in Maharashtra, make it essential for employers to understand both federal and state requirements. Getting this wrong can lead to penalties, reputational risk, and disrupted operations. But with the right support, it’s possible to remain fully compliant while building strong, equitable employment foundations.

Quick Tips

• Register under the Maharashtra Shops and Establishments Act if hiring locally

• Maintain digital and physical records as per state-prescribed formats

• Understand regional minimum wage variations, including skill-level and zone-based rates

• Monitor compliance with working hour restrictions and leave entitlements

• Factor in state-specific maternity, gratuity, and contract labour rules

Federal vs State Law: The Indian Compliance Puzzle

India’s labour laws are split between central (federal) and state legislation. In 2020, the central government consolidated 29 laws into four Labour Codes. While these codes are passed at the federal level, states like Maharashtra must implement them through specific rules. As of 2024, Maharashtra has begun notifying draft rules but not all are in force, creating a compliance grey area.

What this means for global employers: you must comply with existing state laws until notified otherwise. For example, the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 remains in effect, governing hours of work, holidays, and working conditions for commercial establishments.

Why Minimum Wages Still Vary By Skill and Zone

Unlike countries with uniform national wage structures, India’s minimum wages vary by state, skill category (unskilled to highly skilled), and geographic zone. In Maharashtra, Zone I (e.g., Mumbai city) has higher rates than Zone III (rural areas).

For instance, as of 2024, the monthly minimum wage for a highly skilled worker in Mumbai under the Shops and Establishments Act is significantly higher than that for an unskilled worker in Zone III. Employers must monitor the quarterly notifications issued by the Labour Commissioner’s office to stay compliant.

Missing these updates could result in fines, back pay liabilities, and employee dissatisfaction. For payroll providers and HR teams, this means real-time tracking is essential. A global policy won't cut it - localisation is non-negotiable.

Contract Labour and Third-Party Risk

Maharashtra has strict requirements when it comes to contract labour. Any employer engaging 20 or more contract workers must register under the Contract Labour (Regulation and Abolition) Act. Moreover, principal employers are held responsible for ensuring that contractors pay wages, provide benefits, and comply with labour standards.

In one client case, a UK-based fintech engaged a service vendor in Pune for customer support. When a wage dispute arose, the principal company was held accountable by local authorities. We helped them restructure the contract, onboard verified vendors, and set up an audit mechanism - reducing their risk significantly.

For global firms operating through vendors or partners in India, HR should be involved in procurement reviews and contracts. You are only as compliant as your weakest link.

Real-World Example: Getting Setup Right in Pune

We recently supported a US-headquartered company expanding into Pune. Their global templates didn’t fit the local wage structure, and their onboarding missed key state registration requirements. Within weeks, we aligned their offer letters to local law, registered their entity under the Shops and Establishments Act, and trained their HR on digital register maintenance.

The result? Smooth onboarding, zero compliance delays, and a better employee experience. They’re now set up for sustainable growth in Maharashtra, with confidence.

Final Thoughts

Doing business in India is full of opportunity - but without local insight, it can be a compliance minefield. Maharashtra, with its commercial importance and regulatory demands, deserves particular attention. Get the right advice, act early, and make HR a strategic partner in your India expansion.

What’s next for your global people strategy?

Book a free compliance check-in or HR audit with ThinkGlobal HR. Whether you’re setting up in India, reviewing vendor risks, or aligning your global templates to local law, we’ll help you get it right - with clarity, confidence, and calm.