How to Use an Employer of Record in India? (5 Steps)

You want to hire talent in India, but the thought of navigating Indian labor laws, setting up a legal entity, and managing payroll compliance feels overwhelming. The risk of getting employment contracts wrong or missing statutory requirements keeps you from moving forward.

Here's the reality: using an employer of record in India isn't complicated once you understand the actual process. You don't need months of legal consultations or a local HR team to hire your first Indian employee.

This guide walks you through exactly how to use an EOR in India, from selecting the right partner to onboarding employees and managing ongoing compliance. You'll learn the five steps global companies follow, what it actually costs, and the non-negotiable factors to assess when choosing an EOR provider.

Whether you're hiring your first employee in India or scaling an existing team, this guide gives you the practical information you need to make confident decisions without the compliance headaches.

How can you use an Employer of Record in India?[toc=How to Use EOR]

Using an Employer of Record (EOR) in India isn't complicated, but you need to follow the right process to ensure compliance with Indian labor laws.

From our experience helping several international companies with hiring in India, here's how it actually works when global companies hire Indian employees through an EOR:

Step 1: Select and verify your EOR partner

Before you sign anything, do your homework on the EOR provider. The most important thing is confirming they have their own legal entity in India, not just a network of partners.

What to verify:

• Ask for their Corporate Identification Number (CIN) to confirm they operate a wholly-owned Indian entity
• Check their platform capabilities and whether they offer support during Indian business hours
• Read user reviews on G2 and Trustpilot to see how other foreign companies rate their service
• Compare their compliance expertise, especially with local Indian labor laws and state-specific regulations

Having a direct legal entity matters because it means the EOR is the actual legal employer, giving you better control and faster resolution when issues come up.

Step 2: Define the role and understand total costs upfront

Once you've selected candidates (you handle the sourcing and interviews), you'll work with your EOR to structure the offer properly.

Key details to clarify:

• Define the salary in "Cost to Company" (CTC) terms, which is how Indian employment contracts are structured
• Get a complete breakdown showing gross salary, statutory contributions (Employees Provident Fund and Employee State Insurance), and the EOR's management fee
• Expect management fees between $99-$600 per month per employee, but verify what's included
• Understand that the total cost includes payroll taxes, social security contributions, and services tax

The written employment contract will reflect all these components, so there are no surprises when filing payroll taxes later.

Step 3: Draft locally compliant employment contracts

Your EOR partner creates employment agreements that follow Indian employment laws and even state-specific rules where your employee lives.

What the contract covers:

• Compliance with the Shops and Establishments Act for the specific Indian state
• Mandatory provisions like minimum wage, working hours, paid leave, and national holidays
• Salary structure showing basic salary, allowances, and statutory deductions
• Notice periods, severance pay, and termination clauses per the Industrial Disputes Act
• Benefits like health insurance, retirement benefits through provident fund, and bonus entitlements under the Bonus Act

For eligible female employees, the contract will include maternity benefits. If you're hiring full time employees versus contract workers, the terms differ to ensure compliance with employment law.

Step 4: Onboard your employee with required documentation

The EOR handles the paperwork, but they'll need specific documents from your new hire to stay compliant with Indian tax laws and local regulations.

Required documentation:

• Permanent Account Number (PAN) for income tax withholding
• Aadhaar card for identity verification (KYC requirements)
• Bank details for a local bank account where salary gets deposited
• Any other state-specific documents based on local employment laws

Most EOR providers complete onboarding in 24-48 hours once they have everything. They'll register the employee with the Employees' Provident Fund Organisation (EPFO) and set up Employee State Insurance for those in eligible salary brackets.

Step 5: Manage ongoing payroll, benefits, and compliance

After onboarding, your employer of record handles the monthly administrative work while you manage the employee's daily responsibilities.

What the EOR manages continuously:

• Monthly payroll processing in Indian Rupees (INR) with Tax Deducted at Source (TDS) calculations
• Filing payroll taxes with the income tax department and monthly EPFO submissions
• Social security contributions including provident fund and employees pension scheme
• Benefits administration like health insurance and expense management
• Tracking continuous service for entitlements like Gratuity (paid after 5 years of service)

The EOR also stays on top of changing Indian employment regulations, anti discrimination laws, and tax regulations so you don't face financial penalties or compliance risks. If you need to handle contract renewals or when employees are terminated, they ensure proper notice periods and final settlements per the Indian Contract Act.

This ongoing support gives you cost savings compared to maintaining your own legal entity and hiring local employees directly, especially when you're testing the Indian market or scaling internationally.

What are the benefits of using an employer of record in India?[toc=Benefits of EOR]

An employer of record in India solves the biggest pain points foreign companies face when hiring Indian employees. Here are the core benefits:

1. Faster market entry: You can hire within days instead of spending 4-6 months setting up your own legal entity. The EOR is already the legal employer with local compliance infrastructure in place.
2. Compliance handled for you: Your EOR partner manages Indian labor laws, files payroll taxes, handles statutory benefits (Employees Provident Fund, Employee State Insurance), and stays updated on changing Indian employment regulations. This eliminates compliance risks and financial penalties.
3. Predictable costs: You pay a monthly fee per employee (typically $300-$600) instead of bearing the overhead of maintaining a legal entity, local HR staff, and accounting teams for tax regulations.
4. Proper employee benefits: Your team gets health insurance, retirement benefits through provident fund, paid leave per national holidays, and all statutory benefits required under local Indian labor laws without you building the infrastructure.
5. Built-in flexibility: Scale your team up or down based on business needs. Hire one person to test the market or quickly grow to 50+ employees without changing your structure.
6. Reduced legal exposure: The EOR holds the formal employment relationship and manages employment law compliance, reducing your risk in labor disputes while you focus on day-to-day management.
7. HR support included: Get guidance on employment contracts, leave policies, terminations, and other situations that come up with employees in India without building your own HR department.

For a detailed breakdown of how an EOR protects you from compliance risks, reduces costs, and streamlines international hiring, check out our complete guide on the benefits of using an Employer of Record in India.

What are the non-negotiable factors companies should assess when selecting an EOR partner in India?[toc=Factors to Consider]

Choosing the wrong employer of record can leave you exposed to compliance risks and create operational headaches. Here are the critical factors you can't compromise on:

• Verify their actual legal entity status: Don't just take their word for it. Ask for their Corporate Identification Number (CIN) and confirm they own a legal entity in India, not just partnering with local providers. This determines who's truly liable if compliance issues arise.
• Check real user reviews and references: Look at G2, Trustpilot, and Clutch reviews from companies similar to yours. Pay attention to complaints about payroll errors, compliance failures, or poor support. Ask the EOR for client references you can actually contact.
• Test their platform before committing: Request a demo of their payroll management system and benefits administration tools. Is it intuitive? Can you easily track statutory contributions, view employment contracts, and manage expense management? Clunky platforms create ongoing frustration.
• Assess their responsiveness during evaluation: How fast do they respond to your questions? Do they provide clear answers about local Indian labor laws or give vague promises? Their sales behavior usually reflects their ongoing service quality.
• Confirm technology integrations: If you use HRIS systems, accounting software, or time-tracking tools, verify the EOR integrates with them. Manual workarounds between systems lead to errors in filing payroll taxes and social security contributions.
• Understand their contract terms: Look for flexibility in minimum commitments, termination clauses, and notice periods. Some EOR providers lock you into annual contracts that make it expensive to switch if service deteriorates.
• Evaluate their knowledge of your industry: Do they understand your specific needs? Hiring contract workers requires different expertise than managing full time employees. If you're in a regulated industry, they should demonstrate familiarity with sector-specific employment law requirements.

For detailed questions to ask during vendor evaluation and red flags that signal a problematic EOR provider, check our complete guide to choosing an Employer of Record in India.

Get started with Wisemonk EOR[toc=Wisemonk EOR]

If you're ready to hire in India without the compliance headaches, Wisemonk gives you a straightforward path forward.

We've helped 300+ global companies hire and manage over 2,000 employees across India, processing $20M+ in payroll. Our platform handles everything from drafting locally compliant employment contracts to managing Employees Provident Fund contributions and filing payroll taxes on time.

What makes Wisemonk different:

We own our legal entity in India, so you're working directly with the employer of record, not a middleman. Our team understands both Indian labor laws and what foreign employers actually need, which means faster onboarding, clearer communication, and fewer surprises in your total costs.

Here's how to get started:

Schedule a quick call with our team to discuss your hiring plans. We'll show you our platform, break down the exact costs for your situation (salary + statutory contributions + our fee), and answer your questions about Indian employment regulations.

Most clients onboard their first employee within 48 hours of deciding to move forward.

Ready to hire your team in India? Book a call now to see how Wisemonk simplifies international hiring.