Employer of Record (EOR) in India: A Complete Guide

India at a Glance

• Population: 1.43 billion
• Currency: Indian Rupee (INR)
• Capital: New Delhi
• Business languages: English and Hindi (21 other officially recognized languages)
• GDP: $3.94 trillion
• Key talent hubs: Bengaluru, Hyderabad, Pune, Mumbai, Delhi NCR, Chennai

What is an Employer of Record in India?[toc=What is EOR in India]

An Employer of Record (EOR) in India is a third-party company that legally hires employees on your behalf, managing complex local payroll, taxes, employment contracts, and compliance, allowing foreign companies to hire talent without establishing a local entity.

You hire the talent, manage their work, and run the day-to-day operations while your EOR partner handles all the messy legal and compliance stuff that comes with hiring employees in India.

Now that you understand what an Employer of Record in India is, let's walk through exactly what an EOR in India does.

What does an EOR in India do?[toc=What an EOR does]

An EOR in India becomes the legal employer of your workforce and handles all compliance requirements. We've helped 300+ global companies hire in India, and here's what an EOR actually does:

• Becomes the legal employer on paper while you manage the work
• Processes monthly payroll and salary payments
• Handles all tax filings including TDS, PF, ESI, and Professional Tax
• Creates employment contracts that comply with Indian labor laws
• Manages employee onboarding, offboarding, and documentation
• Keeps you compliant with 40+ Indian labor regulations

You focus on running your team while your Employer of Record partner handles the legal employer responsibilities. That's how EOR services in India work.

How to hire employees in India using an EOR? Step-by-Step [toc=How EOR Works]

We've onboarded employees for several global companies in India and processed over $20M in monthly payroll, so we know exactly how this works. Here's the complete step-by-step process of how EOR in India operates:

1. Choose Your EOR Provider and Start Hiring

Pick an EOR service provider that owns its legal entity in India. Once you select a candidate, you send the job offer while the EOR prepares the legal employment contract following Indian labor laws. This process takes 1-2 days.

2. Employment Contracts and Legal Compliance

The Employer of Record in India drafts contracts compliant with the Indian Contract Act, Minimum Wages Act, and state Shops and Establishments Acts. Each contract includes salary structure, working hours (max 48 hours/week), notice periods (minimum one month), IP ownership terms, and termination clauses.

The EOR also handles worker classification under the 2020 Social Security Code to prevent misclassification risks that lead to penalties.

Curious how worker classification actually plays out in India? Check out our deep-dive on Independent Contractor vs EOR Employee in India.

3. Employee Onboarding and Documentation

The EOR company collects required documents like PAN card, Aadhaar, bank details, educational certificates, and completes background verification (5-7 days). They register employees for EPF, ESI, and set up payroll systems. Equipment procurement (laptops, software) is coordinated if needed.

Want a plug-and-play process for smoother onboarding in India? Grab our Detailed Onboarding Checklist for Remote Employees with EOR in India.

4. Payroll Processing and Tax Compliance

Every month, we process your payroll in INR, generate salary slips, calculate all statutory deductions, and file the required tax returns. This includes TDS based on Income Tax Act slabs, Professional Tax (up to ₹2,500/year), Form 16 issuance by June 15, and expense management for HRA and travel allowances.

You don't touch any of this, we make sure salaries go out on time and every rupee is accounted for with Indian tax authorities.

Want payroll done right (and without tax-season migraines)? Dive into our guide on Payroll Compliance in India.

5. Statutory Benefits and Social Security

We manage every mandatory benefit your employees are entitled to under Indian law. That means the 12% EPF contribution for retirement, ESI registration for health and social security, all paid leave (sick, casual, earned) plus Maternity Benefit Act requirements, bonus and gratuity calculations, and local health insurance coverage.

Your employees get everything they're legally entitled to, and you stay 100% compliant without lifting a finger.

6. Ongoing HR Support and Workforce Management

We handle the daily HR tasks so you can focus on managing your team's work. This includes tracking paid leave and national holidays, processing employment changes like promotions or raises, maintaining employee records for three years, helping foreign nationals with Employment Visas and work permits, and managing equipment and benefits. Think of us as your India HR department, we handle the admin while you run the business.

7. Compliance Monitoring and Updates

We track changing Indian employment laws, update policies as regulations shift, and maintain employee records post-termination. We handle all government filings and serve as the local entity for statutory requirements.

2026 Compliance Updates: EOR providers must ensure compliance with the Digital Personal Data Protection Act (DPDP) for secure handling of employee data. They also need to keep up with India’s changing regulatory requirements.

8. Offboarding and Termination

When employment ends, we manage compliance with the Industrial Disputes Act including one-month notice for confirmed employees, full and final settlement (unused leave, gratuity after 5+ years), experience letters, and proper documentation to reduce compliance risks.

That's the complete process of how EOR services work in India, from hiring to offboarding, with full compliance at every step.

Want a more detailed walkthrough? Our comprehensive guide on How to Hire Employees in India covers each step in depth, including sample documents, timelines, and common pitfalls to avoid.

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

An EOR in India gives you faster market entry, handles all compliance requirements, and saves you significant setup and operational costs. Here's what that means for your business:

• Faster market entry: Start hiring within 2 days using the EOR's existing entity instead of waiting 3-6 months for incorporation and compliance registrations
• Full legal and tax compliance: The EOR manages payroll taxes, PF, ESI, TDS filings, and ensures compliance with Indian labor laws across all states
• Significant cost savings: Avoid ₹10-15 lakhs in setup expenses and ₹5-10 lakhs annually for legal, accounting, and administrative staff
• Better employee experience: Your team receives timely salary payments, statutory benefits (EPF, ESI, health insurance), and professional HR support
• No Permanent Establishment risk: The Employer of Record acts as the legal employer, protecting your company from PE status and Indian corporate tax obligations

Not sure if your India operations trigger PE? Answer 7 quick questions about your India presence, revenue sources, and decision-makers to get your PE risk assessment.

Now that you understand when to choose an Employer of Record (EOR) for India expansion, let's walk through exactly how the hiring process works from start to finish.

What are the costs of using an EOR in India? Pricing breakdown [toc=EOR India Costs]

Understanding the total cost of hiring through an Employer of Record in India requires looking at several components. Typically, the cost of EOR in India ranges from $99 to $200 per employee per month with local providers, while global EORs charge around $499 to $699 for the same role, which is largely a premium for branding rather than real value.

Here's a complete breakdown of what you'll actually pay:

1. EOR service fee: Fixed monthly fee per employee for payroll, HR, and compliance.( ₹8,000-₹35,000 ($100-$400) per employee/month)
2. Pricing model: Flat monthly fee or 6%-15% of employee’s gross salary
3. Employee salary: You pay the agreed salary separately, this is the main cost.
4. Statutory employer costs: Mandatory contributions like PF, ESI, gratuity, bonus (Around 15%-20% of salary).
5. Benefits & add-ons (optional): Health insurance, visas, advanced HR tools, charged extra if chosen.
6. Setup or onboarding fee : One-time cost with some providers (₹50,000-₹4,00,000, often waived)

In short:

Total cost = Salary + statutory contributions + EOR fee (+ optional add-ons).

Explore more: "What is the Cost of Employer of Record (EOR) in India?"

Try our fully loaded cost calculator now and take the first step towards building your world-class team in India: Salary Calculator India: Simplify Your Take-Home Pay Calculation.

What are the key considerations when choosing an EOR in India?[toc=Key Considerations]

Choosing the right EOR provider directly impacts your compliance, payroll accuracy, and overall operations in India. Here's what to evaluate:

• Entity ownership and local operations: Choose an EOR with its own local entity in India for direct control over payroll and compliance, not one relying on third-party partners.
• Compliance expertise in Indian labor laws: Ensure the Employer of Record provider understand state-specific regulations and manage compliance with India's 1,536+ Acts and 69,233 obligations without needing your legal team.
• Transparent pricing with no hidden fees: Look for clear fee structures and watch for additional charges like FX markups, onboarding fees, or benefits management costs.
• Comprehensive service scope: Verify they handle payroll, tax compliance (TDS, Professional Tax), statutory benefits (PF, ESI), health insurance, employment contracts, and contractor-to-employee conversions.
• Strong technology and local support: Check for accurate payroll systems, responsive customer service, data security compliance, and proven experience with foreign companies hiring in India.

When evaluating EOR service providers in India, consider established companies like Wisemonk, Deel, Multiplier, Papaya Global, Rippling, Velocity Global, Remote, Oyster HR, Globalization Partners, and Atlas HXM.

For a detailed comparison of features, pricing, and India-specific capabilities, read our comprehensive guide on the Best EOR Service Providers in India.

What are the key aspects of payroll in India?[toc=Payroll in India]

Managing payroll in India is a critical responsibility for any employer and, in our experience supporting global teams, we have found that Indian payroll is uniquely complex due to frequent regulatory updates and strict local compliance requirements. An Employer of Record (EOR) in India takes over this burden, ensuring every aspect is handled accurately and on time.

1. Employee salaries structures in India

In India, employee salaries follow the Cost to Company (CTC) model, which includes fixed pay (basic salary, HRA, conveyance allowance), variable pay (bonuses, commissions), statutory benefits (EPF contributions, health insurance), and deductions that determine the final take-home pay. Understanding how CTC breaks down into gross and net salary helps you structure competitive compensation packages.

Learn more about Indian salary components in our detailed guide on Paystubs in India.

2. Wages in India

Wages in India include basic salary, allowances, bonuses, and statutory components, regulated by federal and state-level minimum wage laws, professional tax rules, and social security contributions. Accurate payroll handling ensures compliance with these varying regulations across different states and industries.

For current wage requirements across Indian states, check our comprehensive India Minimum Wage Guide.

3. Statutory Deductions and Contributions

Indian payroll requires mandatory deductions including Provident Fund (EPF) for retirement savings, Employee State Insurance (ESI) for medical coverage, Professional Tax in applicable states, and Tax Deducted at Source (TDS) for income tax. Your EOR handles all these calculations and filings automatically to ensure full compliance.

Explore all employment regulations and statutory requirements in our India Employment Laws article.

4. Payroll Cycles and Filing Deadlines

Payroll cycles in India are typically monthly, with salaries paid by last working day or first week of following month. The EOR ensures compliance with statutory deadlines:

Monthly filings:

• TDS challan deposit: 7th of following month
• EPF and ESI remittance: 15th of following month
• Professional Tax deposit: varies by state (typically 20th-30th)

Quarterly filings:

• TDS returns (Form 24Q): July 31, October 31, January 31, May 31

Annual requirements:

• Form 16 issuance to employees: by June 15
• Annual bonus payment: within 8 months of financial year-end
• EPF annual returns: by April 30

‍Payroll elements can differ by state, such as professional tax rates, leave policies, and wage structures, so expertise in local, as well as national, rules is vital.

What taxes should employers and employees be aware of in India?[toc=Taxes in India]

In our extensive experience managing payroll and legal compliance in India, we’ve found that understanding Indian tax regulations is crucial for both foreign employers and local employees. Here’s a concise, up-to-date overview:

Income Tax

Income tax is a direct tax levied by the government on an individual's income. In India, the income tax rates for the financial year 2025-26 are based on a progressive tax system, where the tax rate increases as taxable income rises.

India has two income tax thresholds commonly known as the “Old Tax Regime” and “New Tax Regime” .

Surcharge for New Tax Regime:

• 10% if income exceeds ₹50 lakhs but not ₹1 crore.
• 15% if income exceeds ₹1 crore but not ₹2 crore.
• 25% if income exceeds ₹2 crore.

‍Additionally:

• Salaried individuals are eligible for a standard deduction of ₹75,000, effectively making incomes up to ₹12.75 lakh tax-free.
• A rebate under Section 87A ensures zero tax liability for taxable incomes up to ₹12 lakh.

Surcharge for Old Tax Regime:

• 10% if income exceeds ₹50 lakhs but not ₹1 crore.
• 15% if income exceeds ₹1 crore but not ₹2 crore.
• 25% if income exceeds ₹2 crore but not ₹5 crore.
• 37% if income exceeds ₹5 crore.

Additionally:

• A 4% Health and Education Cess is applied to the tax amount after adding surcharge in both regimes.

Tax Deducted at Source (TDS)

• Employers must deduct TDS from salaries each month based on the applicable tax slab and remit it to the government.
• TDS applies to salaries, professional fees, and certain allowances.
• Recent threshold updates benefit freelancers and contract workers by raising exemption limits.

Professional Tax

• Levied by state governments; not all states apply it.
• Deducted monthly from employees’ salaries and varies by location and income.
• Example: Maharashtra up to ₹200/month; Tamil Nadu up to ₹1,250/half-year.[Professional Tax Examples]

Provident Fund (EPF)

• Both employer and employee contribute 12% of basic salary.
• Provides retirement benefits; contributions are often tax-exempt up to ₹1.5 lakh/year under Section 80C.

Employee State Insurance (ESI)

• For employees earning ≤₹21,000/month.
• Employer contributes 3.25% and employee 0.75% of gross salary.
• Covers healthcare, maternity, and disability benefits.

Goods and Services Tax (GST)

• Applicable only if the company is providing taxable services and annual turnover exceeds prescribed thresholds (generally not affecting standard employment relationships).

Staying compliant with these taxes and deductions is essential for smooth operations in India. An Employer of Record (EOR) or specialized payroll provider handles all these requirements managing calculations, filings, remittances, and providing timely updates as regulations evolve.

What are the employee benefits in India?[toc=Employee Benefits]

From our experience helping hundreds of global companies expand into India, employee benefits are essential for keeping talent in a competitive hiring landscape. Indian labor law requires mandatory benefits for most employees, while extra benefits help attract top talent in the private sector.

1. Statutory Benefits

Statutory benefits in India include the Employees' Provident Fund (EPF) for retirement savings, Employee State Insurance (ESI) for healthcare coverage, gratuity after 5 or more years of service, paid annual leave (15 to 21 days depending on the state), sick leave (7 to 12 days), maternity leave (26 weeks for female employees for their first two pregnancies), and mandatory bonus payments. These benefits ensure job security and employee rights during significant life events.

Note: India does not have statutory paternity leave in the private sector.

2. Supplementary Benefits

Supplementary benefits and insurance that go beyond legal requirements include improved health insurance with family coverage, life insurance, performance bonuses, flexible work options, meal and transport allowances, wellness programs, and professional development. These perks help companies boost employee well-being and retention in competitive markets.

If you're looking to dive deeper into how these benefits can impact your talent strategy, check out our Employee Benefits in India: A Comprehensive Guide, it’s a handy resource to help you stay ahead in the competitive talent market.

What are the standard leave policies in India?[toc=Leaves Policies]

India’s labor laws mandate specific leave entitlements to ensure employee welfare and work-life balance. From our extensive experience managing HR compliance in India, here’s a clear summary of the key leave types employers must provide:

1. Earned Leave (Annual/Privilege Leave): Employees are typically entitled to 12-15 days of paid leave per year, which can be accrued and carried forward as per organization or state rules.
2. Sick Leave: Usually 7-12 days per year, sick leave is provided for health issues and may require a medical certificate for longer absences; policies can vary by company and state.
3. Casual Leave: Allotted for short-term personal or emergency needs, casual leave ranges from 7-10 days annually and usually cannot be carried over to the next year.
4. Maternity Leave: Female employees are entitled to 26 weeks of paid maternity leave for their first two children (12 weeks for subsequent children), as mandated by the Maternity Benefit Act.

For a deeper dive into leave entitlements, national holidays, laws, and best practices across India, check out our detailed guide: Understanding Leave Policy Laws and Holidays in India.

Explore our Holiday and Leave Policy Tool to discover state-wise public holidays in India.

How does an EOR ensure IP protection when hiring employees in India?[toc=IP Protection]

Employer of Record services India include comprehensive IP protection clauses in employment contracts to ensure all work created by your Indian employees belongs to your company, not the EOR or the employee.

• IP assignment built into employment contracts: The EOR includes clauses assigning all intellectual property rights (patents, trademarks, designs, copyrights) from employees to your company as part of standard employment agreements.
• Indirect IP assignment model: Employees assign IP to the EOR first, then the EOR immediately assigns it to your company through the Master Services Agreement, reducing permanent establishment and co-employment risks.
• Proper employee classification: Using an EOR ensures workers are correctly classified as employees rather than contractors, which matters because Indian contractors automatically own their IP unless contracts specify otherwise.
• Confidentiality and NDA protection: Employment contracts include non-disclosure agreements and confidentiality clauses enforced under the Indian Contract Act of 1872.
• Compliance with Indian IP laws: The EOR ensures contracts specify assignment territory and term (avoiding India's 5-year default limitation), include moral rights waivers under the Copyright Act, and follow all statutory requirements.

Your EOR handles the legal complexity of IP protection so you maintain full ownership of all innovations, code, designs, and other intellectual property created by your Indian team.

What are the key steps involved in terminating employees in India?[toc=Termination in India]

India doesn't recognize at-will employment, so termination procedures must follow the Industrial Relations Code, 2020 with proper notice periods and documentation. Here's what the process involves:

• Provide proper notice period: Give 30-90 days' notice for confirmed employees or 15 days for probationary employees, or offer payment in lieu of notice.
• Follow due process for misconduct cases: Issue a show-cause notice, conduct a domestic inquiry, document findings, and terminate only if misconduct is proven.
• Settle all dues within 2 working days: Pay final salary, unused leave encashment, reimbursements, statutory bonuses, and gratuity (15 days' wages per year for 5+ years of service, capped at ₹20 lakhs).
• Issue required documentation: Provide termination letter, experience certificate, full-and-final statement, and retain employee records for 3 years.
• Let your EOR handle the entire process: The EOR manages compliance with the Industrial Relations Code, calculates settlements, issues documentation, and retains records to eliminate legal risks.

Note: Businesses with over 300 workers must get government approval for mass layoffs or closures under the regulations set to take effect in 2026.

2026 Compliance Note: Companies using EOR services in India should be aware that terminating 300+ workers requires prior government approval under the Industrial Relations Code, 2020 (threshold increased from 100 under previous Industrial Disputes Act, 1947). Female employees on maternity leave have special protections and cannot be terminated during pregnancy or maternity leave period except with specific government permission.

If you're looking to understand the legal process for employee termination, explore our comprehensive guide on "How to Terminate an Employee".

What are the work permit requirements in India?[toc=Visa & Work Permits]

In our experience handling visa and work permit processes for numerous international clients, obtaining the necessary documentation for foreign employees in India can be complex.

Work Permit (Employment Visa) Requirements:

1. Applicant must be a highly skilled professional, employed by a company registered in India.
2. Annual salary should be at least US $25,000, with some exceptions for certain professions.
3. Visa must be issued from the applicant's country of origin or domicile.
4. Applicant must comply with all legal requirements, such as payment of taxes.
5. Supporting documents include passport, photos, proof of employment, registration documents of the Indian company, and proof of professional expertise.

‍Useful Websites:

• Indian Visa Online: https://indianvisaonline.gov.in/visa/
• e-FRRO Portal: https://indianfrro.gov.in/eservices/home.jsp

Our team strongly recommends checking the latest requirements on official websites and consulting with the nearest Indian Embassy, High Commission, or Consulate for up-to-date information.

Why do global businesses trust Wisemonk for EOR Services in India?[toc=Why Choose Wisemonk]

Wisemonk is a leading India-specialist Employer of Record (EOR) platform that helps global companies hire, pay, and manage employees in India without setting up a local entity. We provide end-to-end EOR services built on deep local expertise, strong compliance capability, and a track record of managing large, distributed teams across India.

Here's how Wisemonk helps global businesses hire and manage employees in India:

• Fast hiring and onboarding: Supporting 300+ global companies with seamless hiring processes and quick employee onboarding backed by our India-first workflows.
• Dedicated HR support: Managing 2K+ employees with responsive, on-ground HR specialists who handle day-to-day needs, employee queries, and engagement.
• Comprehensive compliance management: Overseeing $20M+ in payroll with accurate PF, ESI, TDS, statutory filings, compliant contracts, and state-specific labor law coverage.
• Transparent and predictable pricing: Starting at $99 per employee per month with no hidden fees, no FX markups, and clean cost visibility that global teams can trust.
• Risk mitigation and full legal protection: Keeping global teams protected from misclassification, non-compliance penalties, labor disputes, and accidental Permanent Establishment (PE) exposure in India.

Wisemonk Client review/feedback:

“I've been working with Wisemonk as an EOR employee for past two years. The onboarding call was really good and they even helped my team onboarding as well. They helped me with the macbook, iphone devices procurement. Their interface is good and I can manage my team in a single interface”

- Felix S.
Senior Software Development Engineer
Read the full review on G2 →

“Wisemonk was instrumental in identifying and assisting in the recruitment of three successful senior executives. The team took a hands-on approach to solving the client's needs, and Wisemonk iterated multiple approaches to problem-solving based on the client's needs and directional shifts.”

- Hariher B
Co-Founder, BuyEazzy
Read the full review on Clutch →

Beyond EOR in India, Wisemonk also supports global teams with background verification, equipment procurement, payroll processing, tax optimization, contractor management, company registration and building offshore teams or Global Capability Centers (GCCs) in India for businesses planning long-term India operations.

Why wait? Book a Call Now and let our experts take the stress out of navigating Indian EOR services, so you can focus on what truly matters: growing your business!