India Employer of Record (EOR): 2026 Guide

Introduction

An employer of record (EOR) in India is a locally registered company that acts as the legal employer of your staff, handling payroll, statutory contributions, and compliance while you direct their day-to-day work. It lets a foreign company hire employees in India without first setting up its own Indian entity.

Hiring in India carries a real compliance load: Employees' Provident Fund (EPF) and Employees' State Insurance (ESI) registration, Tax Deducted at Source (TDS) withholding, gratuity, state-specific Shops and Establishments rules, and the four new Labour Codes that took effect on 21 November 2025. An EOR carries that load on the company's behalf, reducing the risk of penalties from the Income Tax Department or state labour authorities.

This guide walks through what you need to know about hiring remote employees in India: how to hire, onboarding and contracts, payroll and taxes, statutory benefits and leave, working hours, visas and work permits, termination rules, and how incorporation compares with using an EOR.

Skuad helps companies hire and pay employees in India without first setting up a local entity. Teams can manage employment contracts, payroll, statutory contribution workflows, and employee administration through one platform, with support across 160+ countries and payroll in 70+ currencies.

Book a demo to discuss your India hiring requirements.

India at a glance

Population size: 1.47 billion

Currency: Indian Rupee (INR)

Capital city: New Delhi

Languages spoken: Hindi and English (21 other recognized languages)

GDP: USD 3.91 trillion (nominal)

What is the difference between an EOR and a PEO in India?

An employer of record (EOR) acts as the legal employer of your staff in India through its own registered entity, so your company needs no Indian entity to hire.

A professional employer organization (PEO) works through co-employment, where your company remains the legal employer of record and needs an existing Indian entity, while the PEO only handles HR administration, payroll processing, and benefits. Without an Indian subsidiary, branch, or liaison office, a PEO is not a viable option, while an EOR lets you hire immediately.

Compliance liability follows the same split. It sits fully with the EOR's Indian entity under an EOR arrangement, but it stays shared between your company and the PEO under co-employment.

India has no statutory framework that formally recognizes co-employment the way the United States does, which is one reason most foreign companies entering India for the first time choose the EOR route.

1. Legal employer status

With an EOR, the EOR provider is the legal employer of your staff in India. It holds the employment agreement, runs payroll through its own registered entity, files EPF and ESI contributions, withholds TDS, and takes on the compliance liability. Your company has a services agreement with the EOR, while the employee's formal employer on record is the EOR's Indian entity.

With a PEO, the arrangement is co-employment. Your company remains the legal employer (or co-employer), and the PEO handles HR administration, payroll processing, and benefits management on your behalf. The compliance liability does not fully transfer; it is shared.

2. Entity requirement

An EOR does not require you to have a registered entity in India. A PEO does.

If your company has no Indian subsidiary, branch office, or liaison office, PEO is not a viable option. You would need to incorporate first, which, as outlined above, takes weeks to months and commits you to ongoing ROC (Registrar of Companies) filings, statutory audits, and annual compliance costs.

3. Compliance liability

Under the EOR model, the EOR's Indian entity is directly liable for compliance with the Industrial Relations Code, the Code on Social Security, state Shops and Establishments Acts, and other applicable labor regulations.

Under a PEO arrangement, your company shares that liability as co-employer. If the PEO makes a filing error, your company still carries exposure.

When each model fits

The deciding factor is whether your company already has a registered entity in India: an EOR needs none and carries full compliance liability, while a PEO only works once that entity exists, through shared co-employment liability.

Factor	EOR	PEO
Entity in India required?	No	Yes
Who is the legal employer?	The EOR provider	Your company (co-employment with PEO)
Compliance liability	Sits with the EOR provider	Shared between your company and the PEO
Speed to first hire	Days to weeks (no incorporation needed)	Months (must incorporate first, then engage PEO)
Best suited for	Market entry, small to mid-size teams, testing before committing to an entity	Companies that already have an Indian entity and want to outsource HR operations
Control over HR decisions	You direct the work; EOR handles employment compliance	You retain full HR control; PEO supports administration

India does not have a statutory framework that formally recognizes co-employment the way the United States does. That gap makes the PEO model less clearly defined from a regulatory standpoint, and it is one of the reasons most foreign companies entering India for the first time go the EOR route.

For companies without an Indian entity that want to hire compliantly and quickly, an EOR is typically the more practical path. For companies that already have an entity and want to offload HR administration while keeping full employment control, a PEO may fit.

EOR vs. setting up your own entity in India: which should you choose?

Choosing between an EOR and your own Indian entity depends on your expected headcount, how long you plan to operate in India, and whether building local infrastructure fits your business case.

An EOR lets you hire without setting up a separate entity: it acts as the legal employer, handles payroll and employment-related administration, and charges a per-employee fee on top of employment costs.

Setting up your own Indian entity gives you direct legal control as the employer, but it means managing incorporation, payroll infrastructure, statutory filings, and ongoing corporate administration yourself, either internally or through local providers, along with the associated setup and recurring costs.

An EOR typically fits initial hires, smaller teams, or market testing, while your own entity suits long-term operations with a larger, more established local presence.

Factor	EOR	Own Indian entity
Entity setup	No separate client entity needed for employees hired through the EOR	Company establishes its own Indian entity
Legal employer	EOR is the legal employer	Your Indian entity is the legal employer
Payroll administration	Supported through the EOR	Managed by your company or local providers
Ongoing administration	EOR supports employment-related administration	Company manages corporate and employment administration
Typical fit	Initial hires, smaller teams, or testing the Indian market	Long-term operations with a larger or more established local presence
Cost structure	Per-employee EOR fees plus employment costs	Entity setup and ongoing corporate, payroll, HR, tax, and administrative costs

The right model depends on expected headcount, how long you plan to operate in India, and whether maintaining your own local infrastructure supports the business case.

Hiring remote employees in India? See what entity setup costs versus EOR fees look like for your India headcount. Book a demo with Skuad today

How to hire employees in India?

There are three main paths to hiring employees in India:

Setting up a subsidiary to hire directly, which means you are not using any employer of record services in India.
Hiring via “professional employer organizations” (PEO).
Working through an “employer of record” (EOR) in India.

Direct hiring via a subsidiary

To establish a subsidiary in India, employers must file with the Ministry of Corporate Affairs and submit the following documents:

Application for Reservation of Name (Form INC-1)
Director Identification Number (DIN) and Digital Signature Certificate (DSC)
Memorandum of Association (MoA)
Articles of Association (AoA)
Form INC-22 (address registration)
Form DIR-12 (appointment of directors)

Incorporating a subsidiary in India typically takes 2 to 6 weeks, after which you can begin operations directly.

Before hiring, interview candidates to evaluate how well their skills and qualifications match the posted job descriptions. Many organizations use technical and HR panels, for example, to assess aptitude and fit.

Upon selection, candidates must sign a written employment contract in compliance with local labor laws.

Hiring via EOR in India

Setting up a subsidiary in India means filing with the Ministry of Corporate Affairs, securing a DIN (Director Identification Number) and DSC (Digital Signature Certificate), drafting the MoA (Memorandum of Association) and AoA (Articles of Association), and committing to ongoing compliance, often weeks of setup before your first employee starts.

Skuad helps remove that dependency. Skuad acts as the legal employer in India, so your company can hire, onboard, and pay employees without entity setup, local legal counsel, or in-house Indian payroll infrastructure.

Here is what Skuad helps with:

Employment contract generation across 160+ countries, aligned with local labor laws and statutory requirements
Statutory contribution workflows across supported markets, covering applicable social insurance and pension obligations
Payroll processing in 70+ currencies with tax withholding and statutory deductions

For a deeper country breakdown, see Skuad's India hiring guide

General Employer of Record service terms

Taxes that apply to invoices	Rates are dependent on salary thresholds and employer contributions, including Provident Fund (12%) and Employee State Insurance (3.25%).
Minimum duration of service	There is no fixed duration of service; a standard probation period of six months applies. Termination during probation or later must comply with Indian labor laws.
Currency Accepted	Indian rupee.
Required Details and Documents	For Indian Citizens: PAN card, Aadhaar card, residential proof, CV, bank account details, and job description. For Expatriates: CV, passport, work visa, proof of residence, educational qualifications, and employment contract.

What could a $50,000 annual hire in India cost through an EOR?

Consider an employee earning the equivalent of $50,000 per year. Using Skuad’s published EOR starting price of $199 per employee per month, the EOR service fee would be $2,388 per year. Skuad notes that actual service pricing can vary by location and hiring requirements.

For this illustrative example, assume the employer’s EPF contribution is capped at the ₹15,000 monthly statutory wage ceiling. EPFO states that the employer is required to make a matching contribution up to ₹15,000. At 12%, this equals ₹21,600 per year.

Using an illustrative exchange rate of ₹95.2135 per US dollar, the ₹21,600 annual EPF contribution converts to approximately $227.

Cost item	Illustrative annual cost
Gross salary	$50,000
EOR service fee	$2,388
Employer EPF contribution	Approximately $227
Employer ESI contribution	$0 in this example, because the assumed salary is above the ₹21,000 monthly ESI wage ceiling
Illustrative annual total	Approximately $52,615

This example is for budgeting purposes only. Actual employment costs can vary based on the employee’s salary structure, EPF treatment, benefits, gratuity, location-specific requirements, exchange rates, and the EOR’s applicable commercial terms.

ESIC currently lists the employer contribution rate at 3.25% for covered employees, while its published materials reference a ₹21,000 monthly wage ceiling for coverage.

For more details about how hiring would work for your particular company, speak to a Skuad expert now.

Hiring via PEO

A Professional Employer Organization (PEO) offers HR support in recruitment, payroll, benefits, and employee management, but differs from an EOR. With a PEO, employees are legally employed by your company, and you make all HR decisions. While this offers you greater control, it can be time-consuming, especially during expansion.

What are the onboarding and agreement requirements in India?

The first step in successful onboarding is drafting an employment agreement that complies with Indian labor laws. Contracts must outline key terms, including working hours, compensation, payment methods, leave entitlements, and termination conditions.

In India, employment contracts fall into two primary categories, along with a few additional types:

Primary contract types

Indefinite Contracts: These are full-time agreements with no fixed end date, covering long-term employee roles, responsibilities, and benefits. The contract continues until either party, or both by mutual agreement, ends it through resignation, termination, or retirement.
Definite Contracts: These are written agreements for a fixed period, formally recognized under the Industrial Relations Code, 2020, which took effect on 21 November 2025. The contract runs for the stated term and ends automatically when that period is up, with no retrenchment notice or compensation required. There is no statutory cap on renewals, but tribunals have reclassified workers as permanent employees where an employer strings together repeated renewals without a genuine, documented business reason.

Other contract types

The following may also apply depending on the role, industry, or state. Check current government regulations before using them, since not every EOR provider supports all of these arrangements.

Part-Time Contracts: For employees working limited hours, often without full-time benefits.
Freelance Agreements: Contracts for project-based work, specifying deliverables and payment terms.
Zero-Hour Contracts: Flexible agreements without fixed working hours, mainly used in industries like hospitality and retail.
Consultancy Agreements: For self-employed professionals hired for specific projects or durations.

To enhance the onboarding experience, ensure that you take the following steps to prepare:

Confirm new hires with HR
Send a welcome email
Inform existing staff
Prepare necessary tools and equipment.

What taxes apply to employment in India?

Employment in India brings together income tax and a 4% health and education cess on salaries, mandatory EPF and ESI contributions split between employer and employee, withholding tax on payments like dividends, and corporate tax on the employer's own profits, each governed by its own rates, thresholds, and filing rules.

Tax / Regulation	Explanation
Tax year	The financial year runs from 1 April to 31 March.
Income tax (new regime, default)	Slabs for FY2025-26: Nil up to ₹4,00,000 5% on ₹4–8 lakh 10% on ₹8–12 lakh 15% on ₹12–16 lakh 20% on ₹16–20 lakh 25% on ₹20–24 lakh 30% above ₹24 lakh A Section 87A rebate makes income up to ₹12 lakh effectively tax-free (₹12.75 lakh for salaried individuals, after the ₹75,000 standard deduction).
Health & Education Cess	4% is charged on the total of income tax plus any applicable surcharge.
Corporate tax	Domestic companies: 30% default 25% where turnover does not exceed ₹400 crore 22% under Section 115BAA 15% for new manufacturers under Section 115BAB Foreign companies: 35% (reduced from 40%), with 50% on certain old royalty or technical-service agreements.
Provident Fund (EPF)	The employee pays 12% of Basic + Dearness Allowance. The employer also pays 12%, split into 3.67% to EPF and 8.33% to the Employees' Pension Scheme (EPS). Mandatory only up to ₹15,000 Basic + DA.
Employees' State Insurance (ESI)	The employee pays 0.75%, and the employer pays 3.25% of gross salary. Applies only when gross salary is ₹21,000 per month or less.
Withholding tax (TDS)	Dividends are taxable in the recipient's hands, with TDS of 10% for residents and 20% for non-residents, subject to treaty relief.

What are the key compliance requirements in India?

Employers in India must meet a set of Labour Code obligations covering written appointment letters, minimum and timely wage payment, EPF and ESI registration, gratuity and fixed-term employment parity, annual health check-ups for workers over 40, equal pay and non-discrimination, safeguards for women on night shifts, grievance redressal mechanisms, and annual leave accrual after 180 days of work, enforced through a combination of central Labour Codes and state-specific rules.

Compliance requirement	What an employer must do under the Labour Codes
Appointment letters	Issue a mandatory written appointment letter to every worker, stating designation, wages, and social security entitlements. This formalises employment and establishes job security.
Minimum wage and floor wage	Pay every worker at least the statutory minimum wage, benchmarked to the National Floor Wage set by the Central Government (Code on Wages, 2019).
Timely wage payment	Pay wages on time, with no unauthorised deductions. For IT and ITES roles, salary must be released by the 7th of every month.
Provident Fund (EPF)	Register and contribute to the Employees' Provident Fund and the Employees' Pension Scheme (Code on Social Security, 2020).
ESIC coverage	Provide ESIC coverage, now extended PAN-India. Mandatory for establishments with even one employee in a hazardous process, and voluntary for establishments with fewer than 10 employees.
Gratuity	Provide gratuity, with fixed-term employees now eligible after one year of continuous service instead of five.
Fixed-term employment parity	Give fixed-term employees the same wages, leave, medical, and social security benefits as permanent staff.
Annual health check-up	Provide a free annual health check-up to all workers above the age of 40.
Equal pay and non-discrimination	Ensure equal pay for equal work and gender-neutral pay. Discrimination is prohibited, including against transgender persons.
Women in night shifts	Permit women to work night shifts and all types of roles, subject to their written consent and mandatory safety measures.
Grievance redressal	Provide a grievance mechanism for the timely resolution of harassment, discrimination, and wage disputes, with mandatory women's representation on grievance committees.
Annual leave accrual	Allow workers to avail annual leave after 180 days of work in a year.

Hiring in India can involve central and state-level requirements across payroll, statutory contributions, employment documentation, and workforce administration. See how Skuad can support your India hiring workflow.

Book a demo

What happens if you hire in India without complying with EPF, ESI, payroll, or labor law requirements?

Missing an EPF, ESI, payroll tax, or wage payment in India triggers interest, monetary damages, and in serious cases, imprisonment for the employer. EPFO, the Income Tax Department, and labor courts enforce these penalties under the Code on Social Security, the Income Tax Act, and the Code on Wages, the frameworks now governing employer compliance in India.

EPF: 12% annual interest on the overdue amount, plus damages of 1% of the arrears per month, capped at 100% of what's owed. Withholding an employee's own deducted contribution is a criminal offense under the Code on Social Security, punishable with up to three years' imprisonment, with a mandatory minimum of one year and a ₹1,00,000 fine.
ESI: the same Code on Social Security structure, up to three years imprisonment for unpaid contributions, with the same one-year minimum and ₹1,00,000 fine where the employee's deducted share was never deposited.
TDS on salaries: 1% monthly interest for late deduction, 1.5% for late deposit, a penalty equal to the full TDS amount under Section 271C, and prosecution under Section 276B carrying three months to seven years of rigorous imprisonment for willful non-payment.
Wages: a fine of up to ₹50,000 for a first underpayment offense under the Code on Wages, rising to imprisonment up to three months or a fine up to ₹1,00,000 for a repeat offense within five years.

See how Skuad's Shield supports EPF, ESI, and payroll compliance for your India hires

What is the difference between independent contractors and full-time employees in India?

The core difference is how each is engaged and protected under Indian labor law. A full-time employee is hired directly for a long-term role, with responsibilities fixed by that role, working hours set by labor law, and statutory entitlement to Provident Fund, ESI, and gratuity, plus protection against unfair dismissal.

An independent contractor is engaged through a contractor for a defined project scope, works flexible hours based on project needs, and falls under the Contract Labour Act's minimum wage and safety provisions instead of EPF, ESI, or gratuity, with no job security or union representation.

Getting this classification wrong carries real downstream consequences: EPF and ESI contributions, gratuity eligibility, and exposure under the Contract Labour Act all follow from it.

Indian courts resolve disputed classifications using control and integration tests, looking at how much direction the company exercises over the work and how integrated the worker is into the business, rather than what the contract calls them.

Factors	Full-time employee	Independent contractor
Responsibilities	Determined by the role for which they are hired.	Determined by the scope of the project for which they are hired.
Working Hours	Fixed, as per labor laws.	Flexible, based on project needs.
Benefits	Eligible for Provident Fund, ESI, and gratuity.	Minimum wage and safety provisions under the Contract Labour Act.
Selection	Hired directly for long-term roles.	Recruited through contractors for short-term tasks.
Protections	Protected against unfair dismissal.	No job security or union representation.

Classifying a worker as a contractor or a full-time employee in India changes everything downstream, including EPF and ESI contributions, gratuity eligibility, and exposure under the Contract Labour Act. Misclassification is where the risk sits, and Indian courts apply control and integration tests to decide.

Skuad supports both hiring models from a single platform:

EOR for full-time employees

Acts as the legal employer across 160+ countries, so you can hire without setting up a local entity
Supports employment contract generation aligned with local labor laws across supported markets
Facilitates statutory contribution workflows covering applicable social insurance and pension obligations
Supports payroll processing in 70+ currencies with tax withholding and statutory deductions
Assists with termination and offboarding, including notice periods and final settlements as required locally

Contractor management

Helps onboard contractors with locally compliant agreements that reduce misclassification exposure
Supports invoice generation, approval workflows, and payment processing across supported markets
Helps flag classification risk early with built-in worker classification checks
Facilitates multi-currency payouts across 70+ currencies with no manual reconciliation
Helps manage contractor records, contracts, and payment history from one dashboard alongside full-time employees

Full-time or contractor, Skuad supports both in India. See pricing

What benefits and compensation must employers provide in India?

Indian employers provide four statutory benefits: gratuity, calculated at roughly 15 days' last drawn wages for every completed year of service; Provident Fund contributions split 12% each between employer and employee; Employees' State Insurance for employees earning up to ₹21,000 a month, with the employer covering 3.25% and the employee 0.75% of gross wages; and an annual bonus of 8.33% to 20% of wages for employees below that same income threshold. All four now sit under the Code on Social Security, 2020, and the Code on Wages, 2019.

Gratuity

Item	Detail
Eligibility	Regular employees with at least five years of continuous service. Fixed-term employees are eligible after one year of continuous service.
Calculation	Roughly 15 days' last drawn wages for every completed year of service.
Governing law	Now under the Code on Social Security, 2020 (which subsumes the Payment of Gratuity Act, 1972).

Provident fund (EPF)

Item	Detail
Contribution	Employee pays 12% of basic wages plus dearness allowance and retaining allowance. The employer matches 12%, split 3.67% to EPF and 8.33% to the pension scheme.
Purpose	Retirement savings, with provisions for withdrawals during emergencies.
Governing law	Now under the Code on Social Security, 2020 (which subsumes the EPF & MP Act, 1952).

Insurance (ESI)

Item	Detail
Contribution	Employer pays 3.25%, and the employee pays 0.75% of gross wages.
Coverage	Applies to employees earning ₹21,000 per month or less. Provides medical, sickness, maternity, disability, and dependent benefits.
Governing law	Now, under the Code on Social Security, 2020 (which subsumes the ESI Act, 1948), ESIC coverage is extended PAN-India.

Bonus

Item	Detail
Applicability	Establishments with 20 or more employees (factories with 10 or more).
Eligibility	Employees earning ₹21,000 per month or less (basic + DA), after at least 30 days of work in the year.
Amount	Minimum 8.33% or ₹100, whichever is higher; maximum 20%. Calculated on a capped wage (₹7,000 or the state minimum wage, whichever is higher), not on full annual wages.
Governing law	Now under the Code on Wages, 2019 (which subsumes the Payment of Bonus Act, 1965).

How has remote work changed hiring in India?

The popular surge of remote work has expanded the talent pool, enabling companies to hire without geographical constraints. Digital work models are increasingly popular among many businesses.

What should employment contracts include in India?

Though not mandatory, clear employee contracts defining wages, roles, and terms are strongly recommended to ensure compliance and minimize disputes. India’s evolving workforce laws and remote hiring trends offer vast opportunities for businesses willing to adapt.

How is employment status determined in India?

Understanding employment status is crucial for legal and organizational clarity. Below are the key tests used to evaluate this status:

Test	Description
Control Test	Examines whether a master-servant relationship exists, focusing on the employer's control over the work performed and how it is completed.
Integration Test	Evaluates whether the worker is fully integrated into the employer’s organization or remains independent of it.

What additional factors do India courts consider?

Factor	Explanation
Appointing Authority	Who has the authority to appoint the worker?
Nature of Establishment	The type of organization or business in which the worker is employed.
Dismissal Authority	Who holds the power to dismiss the worker?
Provision of Tools	Whether the employer or the worker provides the tools/equipment required for the job.
Degree of Control	The extent of control and supervision exercised by the employer over the worker.
Nature of Job	The inherent characteristics of the job, such as whether it involves skilled or professional work.

How is intellectual property protected in India?

Intellectual property (IP) refers to any brand, invention, design, or other kind of creation over which a person or business entity has legal rights. In India, some of the most common types of IP include:

Copyright: Currently, all intellectual property rights are administered by the Department for Industrial Property and Promotion.
Patents: Matters related to patents are handled according to the provisions of India’s Patents Act of 1970, the 2016 Patent Amendment Rules, and the 2003 Patent Rules.
Designs: The Designs Act 2000 and the Design Rules 2001 are the primary laws that govern designs.‍
Trade Marks: Indian trademark laws comprise the Trade Marks Rules of 2002 and 2017 and the 1999 Trade Marks Act.

What types of visas are available in India?

India offers twelve visa categories, each tied to a specific purpose, from Work and Business Visas to Student, Medical, Tourist, and Diplomatic Visas, among others. For employers, the one that matters most is the Work Visa, granted only to skilled or qualified foreign professionals, never for routine, clerical, or secretarial roles.

Visa type	Purpose
Work Visa (Employment Visa)	For skilled or qualified foreign professionals taking up employment in India. Not granted for routine, ordinary, clerical, or secretarial roles.
Business Visa	For foreign nationals visiting India for business activities such as meetings, setting up a venture, or trade, without taking up local employment.
Family Visa (for dependents)	For dependents and family members of a foreign national already holding a valid Indian visa (often referred to as the entry/X visa).
Student Visa	For foreign nationals pursuing full-time studies, courses, or academic programmes at recognised Indian institutions.
Medical Visa	For foreign nationals travelling to India for medical treatment at recognised hospitals or facilities.
Medical Attendant Visa	For family members or attendants accompanying a patient travelling on a Medical Visa.
Tourist Visa	For foreign nationals visiting India for tourism, sightseeing, or casual visits to friends and family.
Journalist Visa	For professional journalists and media representatives travelling for work.
Conference Visa	For foreign nationals attending conferences, seminars, or workshops held in India.
Transit Visa	For foreign nationals passing through India en route to another country.
Official Visa	For foreign nationals travelling to India on official government business.
Diplomatic Visa	For holders of diplomatic passports travelling on diplomatic assignments.
Miscellaneous Visa	For purposes that do not fall under the standard categories above.

What are the work permit requirements in India?

Foreign nationals seeking employment in India must obtain an Employment Visa. The application process involves submitting the following documents:

Valid Passport: Must be valid for at least six months beyond the intended stay and have at least two blank pages.
Employment Contract: A detailed contract specifying the terms of employment.
Proof of Qualifications: Documentation of professional skills and qualifications relevant to the position.
Visa Application Form: Completed and signed application form.
Employer's Registration Documents: Proof of the employer's registration in India.
Passport-sized Photographs: Recent photographs must meet the specified requirements.

It's important to note that Employment Visas are not granted for routine, ordinary, or secretarial/clerical jobs. The visa is typically valid for the duration of the employment contract, up to a maximum of five years, and can be extended in India.

Nationals from certain countries, such as China, Afghanistan, or Pakistan, may face additional scrutiny. Therefore, they are advised to apply well in advance, preferably two months before the intended travel date.

Hiring a foreign national in India means securing an Employment Visa, registering with the Foreigners Regional Registration Office (FRRO), and meeting documentation and salary-threshold requirements, with extra processing time for certain nationalities. The sequence adds lead time to any international hire.

Skuad supports the work permit process on your behalf, including:

Supporting employment visa applications for foreign employees joining your team
Helping coordinate visa documentation with the relevant local immigration authorities
Assisting with registration and residence steps as required by local immigration law
Helping track documentation requirements and deadlines across the full permit lifecycle
Helping keep your team aligned with requirements as renewals and regulations change

How does payroll work in India?

Running payroll in India means calculating gross wages, deducting income tax at source (TDS) based on each employee's tax slab, processing statutory contributions like EPF and ESI where applicable, and staying current with central and state labor and tax rules as they change. Companies without an Indian entity or in-house payroll expertise typically use an EOR instead, since the EOR's Indian entity supports these calculations, deductions, and filings on the employer's behalf.

Process	Details
Applying for a Tax Deduction Account Number or Tax Collection Account Number (TAN)	Register online or at a Tax Information Network Facilitation Center. A processing fee and 18% GST are applicable.
Choosing a Payroll System	Select a system that considers factors like employee benefits (e.g., health insurance), business requirements, and growth vision.
Set Up Provident Fund	Ensure 12% of salary is contributed to the Provident Fund. Employees must complete a withholding allowance certificate.
Note Employee Information	Note details like wages, work hours, and personal information. Using software or cloud-based services simplifies data entry and maintenance.

What are workers' rights in India?

The Occupational Safety, Health and Working Conditions Code, 2020 sets out nine core rights for a typical EOR hire in India, covering appointment letters, working hours, overtime, paid leave, health check-ups, women's work rights, contract worker protection, and safety committees.

Right / Entitlement	What the OSH Code, 2020 provides
Appointment letters	Every employee must receive a formal appointment letter in the prescribed format, stating designation, category, wages, and social security details.
Working hours	No employee may work more than 8 hours a day and 48 hours a week. The appropriate Government fixes rest intervals and the spread-over period.
Flexible work schedules	Hours can be arranged as a 4-day week (up to 12 hours/day), a 5-day week (9.5 hours/day), or a 6-day week (8 hours/day), within the weekly cap.
Overtime	Work beyond the daily or weekly limit is overtime, paid at twice the normal wage rate and requiring the worker's consent.
Annual leave with wages	Paid leave accrues after 180 days of work in a calendar year, reduced from the earlier 240-day threshold.
Free annual health check-up	Every employee is entitled to a free annual health check-up.
Women's right to all work and night shifts	Women may work in all establishments and all types of work, including before 6 a.m. and after 7 p.m., with their consent and employer-provided safety, facilities, and transport.
Contract worker protection	The principal employer is responsible for the welfare, health, and safety of contract workers, and must pay their wages if the contractor fails to do so.
Safety committees	Workers are represented on mandatory safety committees in larger establishments (factories with 500+ workers, and lower thresholds for construction and mines).

How should companies approach remote and hybrid work in India?

To enable practical remote work in India, companies must address three key factors:

Flexible work arrangements: Develop policies supporting remote work, including clear communication, collaboration, time management, and performance evaluation guidelines.
Technology and Infrastructure: Ensure access to suitable hardware (laptops, mobile devices), reliable internet, and secure software to maintain productivity outside the office.
Data privacy and security: Implement strong security measures to protect sensitive data and comply with data protection regulations.

Understanding labor laws and creating a remote-ready environment to maximize flexibility and efficiency is vital.

How are salaries structured in India?

In India, salary structures typically include various allowances such as house rent allowance (HRA), leave travel allowance (LTA), phone allowance, special allowance, and others tailored to specific job roles. Many of these components are calculated as a percentage of the basic salary.

Employees may also negotiate specific salary allocations, such as contributions to the Provident Fund (PF) or other benefits, depending on their preferences and requirements.

To stay competitive and make fair offers, use Skuad’s Salary Insight Tool. This tool provides up-to-date information on salary trends and comparisons, helping you attract and retain top talent.

What is the leave policy in India?

India's leave policy covers six categories for a typical employee: national and festival holidays, Privilege Leave (21 days/year), Casual Leave (7 days/year), Sick Leave (9 days/year), Maternity Leave (26 weeks, up to 32 for a second child), and Paternity Leave (7 working days).

Leave type	Entitlement	Accumulation/encashment	Key rules
National & Festival Holidays	3 national holidays (26 January, 15 August, 2 October) plus state-specific festival holidays	Not applicable	Festival holiday list follows the local festivals of each state and is published annually by 15 December for the following year.
Privilege Leave (PL)	21 working days per calendar year	Up to 60 days (joined on/after 1 Oct 2020); up to 120 days (joined on/before 30 Sep 2020, under 50); up to 240 days (over 50). Credited on 31 December. Encashable only on separation.	Maximum 30 days at a time. Minimum 4 days required when claiming LTA. Weekends and holidays within the leave are not counted.
Casual Leave (CL)	7 days per year	Cannot be accumulated or encashed	Maximum 3 days at a stretch; beyond that, treated as PL or leave without pay. Apply at least 24 hours in advance. Cannot be combined with sick or privilege leave.
Sick Leave (SL)	9 days per annum	Cannot be accumulated or encashed (effective 1 Jan 2021)	Medical certificate required for absences of more than 3 days; may be requested for shorter absences too. Extensions beyond 9 days subject to approval.
Maternity Leave	26 weeks (available twice in service tenure), plus an additional 6 weeks = up to 32 weeks for 2 surviving children	Not applicable	12 weeks for a 3rd surviving child; 12 weeks for adoption (child under 3 months) and commissioning mothers; up to 45 continuous days for miscarriage or medical termination. Governed by the Maternity Benefit Act and 2017 amendment.
Paternity Leave	7 working days (excluding holidays and intervening weekends)	Cannot be accumulated or encashed	Available for up to 2 children; not available if the employee already has two children at the time of joining.

What background checks are required when hiring in India?

When hiring employees in India, it is always advisable to run a thorough pre-onboarding background check to safeguard your company’s assets and employees from unnecessary threats.

The table below lists some of the most common verification checks performed in this country.

Criminal record check

When running a criminal record check in India, you must obtain a Police Clearance Certificate (PCC) issued by the local police or authorized government agencies.

This certificate provides critical insights into job applicants' criminal history (if any), enabling you to make well-informed hiring decisions.

Credit history check

A credit history check involves reviewing an individual's credit report to evaluate how responsibly they manage their finances, reflecting their reliability and trustworthiness.

In India, CIBIL (Credit Information Bureau India Limited) is the primary institution for handling credit reports. Under its policies, credit reports can only be accessed with explicit authorization from the candidate.

Education verification

An education verification is done to verify the accuracy of a candidate's academic claims, including degrees, diplomas, and certifications.

Employers may contact educational institutions directly or work with a third-party verification service to ensure the candidate possesses the qualifications.

Employment verification

Employment verification involves confirming a candidate's previous roles, tenure, responsibilities, and reasons for leaving.

This step helps validate their experience and ensures they fit the position well. Employers can connect directly with previous employers or use professional verification agencies for this process.

What are the termination and offboarding rules in India?

Terminating an employee in India requires one month's notice or pay in lieu under the Industrial Relations Code, 2020, plus retrenchment compensation of 15 days' average pay per year of service after one year, and a separate Re-skilling Fund contribution of 15 days' wages per retrenched worker. Government permission is needed only where the establishment has 300 or more workers. Contractors and freelancers fall outside this framework, governed instead by the Indian Contract Act, 1872.

For an employer of record, India has a few critical rules to be aware of when letting an employee go:

Topic	Explanation
Notice of termination	For a worker, one month's written notice or wages in lieu, under the Industrial Relations Code, 2020. For managerial and commercial establishment staff, notice follows the employment contract and the relevant state Shops and Establishments Act, commonly 30 days.
Retrenchment compensation	A worker with at least one year of continuous service is entitled to 15 days' average pay for every completed year of service.
Re-skilling Fund	The employer must also contribute 15 days' wages per retrenched worker to the Worker Re-skilling Fund, credited within 45 days, on top of retrenchment compensation.
Government permission threshold	Establishments with 300 or more workers need prior government permission before layoff, retrenchment, or closure. Below 300, no prior permission is needed, but notice and compensation obligations still apply.
Compliance records	Terminations must comply with the relevant state Shops and Establishments Act and the Industrial Relations Code. Non-compliance can lead to legal action, reinstatement, and penalties for wrongful termination.
Contractors and freelancers	Independent contractors and freelancers are governed by the Indian Contract Act, 1872. A breach may entitle them to compensation under Section 73 and the right to initiate legal proceedings.

Terminating an employee in India carries real exposure, with a typical 30-day notice or pay in lieu, state-specific Shops and Commercial Establishments Act rules, and protections under the Industrial Disputes Act that can lead to wrongful-termination claims if mishandled.

Skuad helps you stay aligned with these rules through local EOR infrastructure, so your team doesn't have to interpret Indian termination law state by state:

Supports notice period and final settlement calculations as required across supported markets
Helps document terminations in line with local labor requirements
Supports offboarding workflows, final pay, and statutory settlements across supported markets
Helps keep employment practices aligned with regulatory changes across 160+ countries

How does incorporating a company in India work?

If you plan to hire a larger team in India on a long-term basis, incorporating a private limited company is the traditional route. The entire process runs through the Ministry of Corporate Affairs (MCA) and its SPICe+ portal, which bundles name reservation, Director Identification Number (DIN), PAN, TAN, and GST registration into a single filing.

Here is what entity setup requires:

At least two directors, with at least one resident Indian director who has lived in India for a minimum of 182 days in the preceding financial year
At least two shareholders (a single person can be both a director and shareholder)
A registered office address in India
Digital Signature Certificates (DSC) for all directors
Memorandum of Association (MoA) and Articles of Association (AoA), filed electronically
No minimum authorized capital requirement

For a domestic incorporation with clean documentation, the typical timeline is 7 to 15 working days from application submission. Foreign incorporations that involve apostille requirements or Reserve Bank of India (RBI) compliance commonly take 4 to 8 weeks from start to finish.

A straightforward domestic registration costs between ₹7,000 and ₹25,000, covering government fees, professional fees, and stamp duty combined.

Incorporation is only the beginning. First-year post-incorporation compliance, including auditor appointment (ADT-1), INC-20A (declaration of commencement of business), DIR-3 KYC, statutory audit, income tax return, and annual return filings, adds another ₹15,000 to ₹50,000.

Missing the INC-20A filing within 180 days of incorporation triggers a penalty under Section 10A of the Companies Act, 2013: ₹50,000 on the company, plus ₹1,000 per day on each defaulting director, capped at ₹1,00,000. Repeated non-compliance can lead to director disqualification or the Registrar striking the company off the register.

For companies testing the Indian market, hiring a small team, or scaling up before committing to ongoing entity maintenance, an EOR removes that entire administrative layer.

Skuad acts as the legal employer in India, so your company can hire, onboard, and pay employees without entity setup, RoC filings, or in-house Indian payroll infrastructure.

Here is what Skuad helps with:

Employment contract generation across 160+ countries, aligned with local labor laws and statutory requirements
Statutory contribution workflows across supported markets, covering applicable social insurance and pension obligations
Payroll processing in 70+ currencies with tax withholding and statutory deductions
Termination and offboarding support aligned with local labor requirements across supported markets
Background verification covering identity, employment history, and criminal records before onboarding

Customer story: How PureRED onboarded 65 hires across six countries with Skuad

PureRED is an integrated marketing and advertising agency serving global retail and consumer brands.

The company needed to compliantly onboard employees across six countries, including the UK, Spain, Croatia, Greece, Colombia, and India, each with its own labor laws and payroll rules.

Skuad supported localized employment contracts, multi-currency payroll, and ongoing compliance across all six markets from a single platform, bringing all 65 hires onto a unified HR and payroll dashboard.

"Skuad made our team expansion possible, handling the complex onboarding and payroll processes across six different countries with ease. Their local expertise ensured our compliance, letting us focus on what we do best — serving our clients." - Brian Butcher, EVP Corporate Development, PureRED

Read the full case study

When should you use an employer of record in India?

Hiring in India means staying on top of EPF and ESI contributions, TDS withholding, gratuity, state-specific Shops and Establishments rules, and the new Labour Codes, all at once.

Skuad handles the operational complexity of hiring in India, including employment contracts, statutory contributions, payroll in the local currency, statutory benefits, and background checks, so your team can focus on the work, not the paperwork.

Companies across SaaS, IT services, e-commerce, and technology use Skuad to support their entry into the Indian market, stay aligned with regulations as they change, and scale their team without building local HR infrastructure from scratch.

Compare EOR pricing or book a demo to discuss your India hiring requirements.

FAQs

1. What is an employer of record in India?

An employer of record in India is a third-party organization that legally employs workers on behalf of another company. The client manages the employee’s day-to-day work, while the EOR supports payroll, employment administration, statutory contributions, and other employer responsibilities.

2. How much does an employer of record cost in India?

EOR costs in India vary by provider, services, and employment requirements. Skuad’s EOR pricing currently starts at $199 per employee per month, with applicable employment costs charged separately. See EOR pricing.

3. Can a foreign company hire employees in India without a local entity?

A foreign company can generally use an EOR to hire employees in India without first establishing its own local employing entity. The EOR becomes the legal employer while the foreign company manages the employee’s work.

4. What is the difference between an EOR and a PEO in India?

The main difference is the employment structure and whether the client already has an Indian entity. An EOR typically becomes the legal employer, while a PEO generally supports HR and payroll administration for a company with an existing employing structure.

5. Should I use an EOR or set up a company in India?

An EOR may suit initial or limited hiring, while an owned entity may suit a longer-term and larger Indian operation. Compare expected headcount, operating duration, administrative requirements, and ongoing costs before choosing.

6. What statutory contributions apply when hiring employees in India?

Provident Fund and Employees’ State Insurance contributions may apply depending on the employee and establishment. The applicable amount depends on wages, eligibility, salary structure, and current statutory rules.

7. How long does it take to hire an employee through an EOR in India?

The hiring timeline varies based on the provider, employment documentation, background checks, and the employee’s circumstances. Using an EOR removes the need to complete your own entity incorporation before the covered hire.

8. What documents are needed to hire an employee through an EOR in India?

Typical documents can include identity, tax, address, banking, employment, and role-related information. The exact requirements depend on whether the worker is an Indian citizen or a foreign national and on the provider’s onboarding process.

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