Complete Guide to Employer of Record (EOR) India 2025

‍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 employs your staff on your behalf, allowing you to hire talent without setting up a local entity. The EOR handles complex administrative tasks like payroll, taxes, and benefits compliance with India's labor laws, freeing you to focus on managing the employee's day-to-day work. This service is a cost-effective alternative to establishing a foreign subsidiary, which is often time-consuming and expensive.

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

An Employer of Record (EOR) in India essentially takes on all the administrative and legal responsibilities of employment, managing the entire employee lifecycle from onboarding to offboarding, while ensuring total adherence to all Indian labor laws and local employment regulations.

Here is a detailed breakdown of the key services and responsibilities of an EOR in India:

1. Legal Compliance and Contract Management

• Drafting Employment Contracts: The EOR is responsible for drafting employment contracts that are fully compliant with Indian statutes, including the Indian Contract Act, the Minimum Wages Act, and the state-specific Shops and Establishments Act. This includes setting out details for basic salary, working hours, and termination clauses.
• Employment Agreement: An employment agreement is the legally binding contract between the employee and the EOR that outlines salary, role expectations, confidentiality, IP ownership, notice periods, and termination terms. Since the EOR is the legal employer in India, this agreement ensures every clause complies with Indian labor laws and state-specific regulations, protecting both the foreign company’s interests and the employee’s rights.
• Ensuring Compliance: The EOR continuously monitors and updates policies to ensure compliance with India's evolving local labor laws and acts as the legal entity for all employment-related filings. The EOR assumes the legal responsibility for avoiding non-compliance penalties, which can be severe.
• Worker Classification: They correctly classify staff, preventing the risk of misclassifying contract workers or freelancers as full-time local employees, a major cause of compliance risks for foreign employers.

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

2. Payroll and Tax Management

• Indian Payroll Management: The EOR handles full-service payroll management, ensuring accurate and timely disbursement of salaries to local employees in Indian Rupees.
• Tax Compliance and Filing: This is a major responsibility, involving the calculation and deposit of all required withholdings. This includes income tax (Tax Deducted at Source or TDS) as per the Income Tax Act, and state-level taxes like Professional Tax. The EOR is responsible for filing payroll taxes and issuing the necessary tax documents (like Form 16) to employees. They also manage compliance related to the Goods and Services Tax (GST), where applicable to their service fee.
• Expense Management: EORs often integrate expense management into their services, processing employee reimbursements in line with local regulations and tax rules.

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

3. Benefits Administration and Statutory Contributions

Mandatory Benefits Administration: The EOR ensures all statutory benefits are provided and correctly administered. These are crucial components of India's labor laws and include:

• Employees Provident Fund (EPF): Managing and making mandatory employer contributions to the Provident Fund scheme for retirement benefits under the Employees' Provident Funds & Miscellaneous Provisions Act, 1952.
• Employee State Insurance (ESI): Registering employees and making contributions for health and social security benefits.
• Paid Leave: Administering mandatory sick leave, casual leave, and earned leave, as well as managing the Maternity Benefit Act requirements for female employees.
• Bonus and Gratuity: Calculating and processing payments under the Bonus Act and gratuity for eligible employees.

Health Insurance: They typically manage and provide local health insurance coverage that meets local market standards and expectations.

4. HR and Employee Management Support

• Onboarding and Offboarding: The EOR handles the seamless onboarding of new hires, which includes background checks, documentation & equipment procurement (laptops, software licenses, etc.), and the complex administrative and legal processes for termination, ensuring adherence to the Industrial Disputes Act to minimize the risk of legal disputes and maintain job security standards.
• Workforce Management: They manage day-to-day HR administration, such as tracking paid leave, ensuring compliance with national holidays, and providing documentation for changes in the employment agreement.
• Visa Support: For foreign nationals, a good employer of record will assist in securing the necessary employment visa and work permits.

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

By taking on these intricate and time-consuming functions, the employer of record India acts as a crucial partner for enabling companies to establish and maintain employment relationships in the Indian subcontinent successfully.

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

An Employer of Record (EOR) in India offers immediate market access and complete legal and administrative relief, ensuring your global business can hire employees compliantly without establishing a local entity.

Based on our extensive research and client feedback, here are the key benefits of using EOR services in India:

• Faster Market Entry: An EOR enables you to start hiring employees in India almost immediately, bypassing the lengthy and expensive process of establishing a local legal entity.
• Legal and Regulatory Compliance: The EOR ensures your company is fully compliant with India's complex and varying labor laws, tax regulations, and statutory benefits requirements, such as Employees Provident Fund (EPF) and Employee State Insurance (ESI) contributions. This significantly reduces compliance risks.
• Cost Savings: By avoiding the costs associated with setting up a local subsidiary, such as legal and registration fees, you can achieve substantial cost savings on your expansion.
• Comprehensive HR & Admin Management: An EOR takes payroll, tax filings, compliance paperwork, benefits administration, contracts, onboarding and offboarding, and daily HR ops off your plate. This cuts the administrative drag to near zero and lets your team focus on growth, performance, and building your India talent strategy.
• No Risk of Permanent Establishment (PE): The EOR acts as the legal employer, preventing your foreign company from accidentally triggering a Permanent Establishment (PE) in India. This shields you from unexpected, higher corporate tax liabilities related to transfer pricing and ensures service fee adherence under the Income Tax Act.

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

Choosing the right employer of record in India determines how smoothly your team operates and how safely your company stays within Indian labor laws. A strong EOR services protects you from compliance risks, payroll mistakes, and legal responsibility while letting you hire employees confidently in the Indian market.

Here are the core factors global companies should evaluate before selecting an EOR services in India:

1. Entity Ownership: Prefer providers that operate their own Indian legal entity for better control, consistency, and fewer delays caused by third party partners.
2. Compliance Expertise: Look for deep knowledge of state specific labor laws, minimum wage rules, and major regulations like the Industrial Disputes Act, the Shops and Establishments Act, the Indian Contract Act, the Maternity Benefit Act, and other Indian labor laws.
3. Transparent Pricing: Understand the fee model clearly, whether flat fee or percentage of payroll, and watch for hidden costs like onboarding charges, FX markups, benefits processing fees, or extra support costs.
4. Service Scope: Confirm the EOR covers everything you need, including payroll management, tax compliance, statutory benefits, health insurance, employment contracts, provident fund, Employee State Insurance, and support for hiring employees or converting contractors.
5. Technology and Reliability: Ensure the provider has strong local operations, accurate payroll systems, global payroll compatibility, responsive support, and a track record of managing employees for foreign companies.

Many global providers operate in India, but foreign companies often see better results with specialists who understand India’s employment regulations, compliance risks, and workforce expectations at a deeper level. This is where an India-focused EOR provider like Wisemonk fits in, giving global teams the advantage of strong local expertise without complicating their operations.

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 are typically structured around the Cost to Company (CTC), which represents the total cost incurred by the employer. The salary structure includes both fixed and variable components, alongside allowances and non-cash benefits.

• Fixed Pay: Includes basic salary, which forms the foundation for other benefits, and allowances such as House Rent Allowance (HRA), Conveyance Allowance, and Leave Travel Allowance (LTA).
• Variable Pay: This includes performance-based components like bonuses and commissions.
• Benefits: Non-cash benefits, such as employer contributions to the Employees’ Provident Fund (EPF), health insurance, etc.
• Gross Salary: The total of basic salary, allowances, and bonuses.
• Net Salary: The take-home pay after deductions.

2. Wages in India

‍Wages in India represent the total monetary compensation an employee earns for their work, including basic salary, allowances, bonuses, and statutory components. Wage structures are influenced by federal and state-level regulations such as minimum wage laws, professional tax rules, and social security contributions, which makes accurate payroll handling essential for compliance.

3. Statutory Deductions and Contributions

• Provident Fund (EPF): Both employer and employee must contribute to the Employees’ Provident Fund, a mandatory retirement savings scheme.
• Employee State Insurance (ESI): Required for employees earning below a specific threshold, covers medical and disability benefits.
• Professional Tax: Levied by some states, deducted from the employee's salary each month.
• Tax Deducted at Source (TDS): Income tax withheld from salaries as per individual tax slabs and deposited with the government.

‍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.

4. Payroll Cycles

‍Payroll cycles in India refer to the recurring schedule on which employees are paid, typically monthly but sometimes bi-weekly depending on company policy. These cycles must align with statutory deadlines for TDS deposits, PF and ESI contributions, and other mandatory filings, which is why consistent, compliant processing is crucial for employers.

Cost-to-Company Calculator for Hiring Employees in India[toc=CTC Calculator]

Looking to hire employees in India but unsure about the total cost?

Our fully loaded cost calculator makes it easy for you to estimate your expenses. Simply enter the gross salary of your potential employee, and our calculator will provide you with a comprehensive breakdown of the total cost, including our Employer of Record (EOR) fees.

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 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]

In our experience working with businesses expanding into India, we’ve seen that employee benefits are a critical part of hiring and talent retention. Indian labor law mandates certain statutory benefits for most employees, and many companies also offer additional perks to remain competitive.

1. Statutory Benefits

Statutory benefits in India are legally mandated and include the Employees’ Provident Fund (EPF), Employees’ State Insurance (ESI), gratuity for long service, paid statutory leave, and maternity benefits. These core protections ensure employees have retirement savings, healthcare coverage, and job security during key life events.

2. Supplementary Benefits

Supplementary benefits go beyond legal requirements and often include life or health insurance, performance bonuses, flexible work options, meal or transport allowances, and wellness programs. These extras help companies attract and retain top talent in a competitive market.

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.

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

Based on our extensive experience managing employee terminations in India, we've identified five key steps for a compliant and smooth process:

1. Serve Notice Period: In India, employees with at least one year of service are typically entitled to a 30-90 day notice period. We've found that clearly defining this in the employment agreement helps avoid disputes. Alternatively, employers can offer payment in lieu of notice.
2. Follow Due Process for Termination for Cause: When terminating for misconduct or poor performance, it's crucial to follow proper disciplinary procedures. Our legal team advises conducting a thorough investigation, issuing warnings, and providing the employee an opportunity to respond before making a final decision.
3. Provide Full and Final Settlement: Upon termination, employers must settle all dues, including outstanding salary, unused leave encashment, and reimbursements. For employees with 5+ years of service, gratuity payment is also mandatory. We've seen that prompt and accurate settlements significantly reduce the risk of legal disputes.
4. Issue Necessary Documentation: It's essential to provide a formal termination letter stating the reason and last working day. Additionally, issue a relieving letter and experience certificate. Our clients have found that clear, comprehensive documentation helps maintain professional relationships and minimizes potential conflicts.
5. Comply with EOR Responsibilities: For companies using an Employer of Record (EOR), the EOR manages the termination process, ensuring compliance with Indian labor laws. In our experience, this significantly reduces legal risks and administrative burdens for the client company.

What are the various types of terminations in India?

‍Our HR experts have identified four main types of termination in India:

Note: Larger Companies using EOR services should be aware that terminating a significant number of employees (usually 100 or more) may require additional scrutiny or government notification. This is in accordance with the Industrial Disputes Act, 1947, which mandates government approval for layoffs, retrenchment, or closure in industrial establishments with 100 or more workmen. Pregnant women and those on maternity leave have special protections.

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 visa & 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 is Wisemonk the preferred choice for EOR 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. Wisemonk 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 is why Wisemonk is ideal for EOR services in India:

• Fast hiring and onboarding: Supporting 500+ 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.

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!

‍FAQs

Is employer of record legal in India?

‍Yes, Employer of Record (EOR) services are fully legal in India. An EOR acts as the legal employer for your team, managing all HR, payroll, compliance, and statutory benefits in line with Indian labor laws. By partnering with an EOR, global companies can hire and manage employees without the need to set up a local entity, ensuring compliance with local employment regulations.

What is the cost of employer of record in India?

‍The cost of Employer of Record (EOR) in India typically ranges between $99 to $499 per employee per month, depending on the provider and the services included, such as payroll management, tax compliance, benefits administration, and more. Additional services, like recruitment or employee onboarding, can affect pricing.

Who is the best employer of record in India?

Wisemonk is the best India-specialist Employer of Record (EOR) platform for foreign companies hiring in India. It’s built entirely around the Indian employment landscape, with deep expertise in labor laws, payroll requirements, state-level compliance, PF/ESI administration, tax withholding, and locally competitive benefits. This India-first focus enables faster onboarding, accurate payroll, and dependable compliance for teams across every major Indian city.

For companies that also need international EOR coverage, platforms such as Deel, Rippling, and Globalization Partners offer strong global reach. But for India-focused hiring, Wisemonk is the dedicated specialist that global founders, CEOs, and HR leaders rely on.

What is the future of EOR in India?

‍The future of EOR in India looks promising, as more companies turn to flexible, cost-effective solutions to hire and manage talent without setting up local entities. With India being a hub for tech talent and innovation, businesses will increasingly rely on EOR providers to navigate complex legalities and scale quickly. The rise of remote work and digital transformation will further drive the adoption of EOR services, enabling companies to hire efficiently and compliantly in India.

How much overtime is allowed by law in India?

In India, overtime regulations are governed by the Factories Act of 1948 and the Shops and Establishments Act, which vary by state. Generally, employees are entitled to overtime pay if they work more than 48 hours a week, with the overtime rate being at least twice their normal hourly wage. The maximum number of overtime hours an employee can work is typically capped at 50 hours per quarter, although this can vary based on specific industry regulations or state laws.

Visit our article on "Legal Working Hours & Overtime Pay Rules in India" for more details.

How does EOR differ from PEO?

An Employer of Record (EOR) and a Professional Employer Organization (PEO) both assist businesses with HR functions, but they operate differently. An EOR legally hires employees on behalf of a company, assuming responsibility for compliance, payroll, taxes, and benefits, while the client company manages day-to-day work. In contrast, a PEO typically enters into a co-employment relationship, where both the PEO and the company share responsibility for employees. In a PEO setup, the client company still retains control over employee management but shares legal responsibilities with the PEO.

To learn more, check out our detailed article on "PEO vs EOR".

How does an EOR ensure my IP is protected when I hire employees in India?

The EOR ensures robust IP (Intellectual Property) protection by integrating legally sound clauses into the written employment contract, adhering to the Indian Contract Act and local IP laws. The EOR, acting as the legal employer, includes explicit IP assignment provisions that legally mandate all IP (code, designs, etc.) created by the local employees during their service is immediately and unequivocally assigned to your company.