How to Hire Employees in India: Costs, Labour Codes and EOR Options
Compare hiring through an entity, an employer of record or a contractor, with verified employer costs at three salary points, notice and severance rules, and the leave entitlements that changed under the labour codes.
By Three routes into India, and why timing matters now
An overseas employer has three practical routes into India: incorporate a private limited company, hire through an employer of record, or engage the person as an independent contractor. For a first team of under ten people the EOR route is usually right, and an entity starts to earn its overhead once headcount, IP ownership or a long-term India plan make running your own payroll worth the compliance load.
Employer statutory cost is low by international standards and falls as salary rises, because both social security schemes are capped: EPF stops at a ₹15,000 monthly wage and ESI stops entirely above ₹21,000 gross.
Employment terms and working conditions
The first group changed when the labour codes came into force, and it is where existing payroll practice most often breaks.
Cost of employing someone in India
Employer statutory cost falls as salary rises, because both social security schemes are capped and one of them stops entirely above ₹21,000 gross.
₹2,431 a month on top of salary. The only point where ESI applies and provident fund is charged on full wages rather than the ceiling, which is why the load is roughly four times a senior salary.
₹3,393 a month. ESI has dropped out and provident fund is fixed at ₹1,950. On full wages rather than the ceiling, the figure rises to ₹5,268, or 8.8%.
₹6,760 a month, of which gratuity accrual is ₹4,810. On full wages it rises to ₹17,385, or 8.7%, so ask which structure any provider quote assumes.
Provident fund at 12% of wages capped at ₹15,000 monthly, ceiling declared by notification dated 29 May 2026 under the Code on Social Security, 2020. EDLI at 0.5% capped at the same wage. ESI at 3.25% of gross wages up to ₹21,000. Gratuity accrued at 15 days of wages per completed year, or 4.81% of wages. Professional tax is deducted from the employee and is not an employer cost.
Price your hire, line by line
Pick a country and a salary. Every statutory contribution, ceiling and accrual is applied separately, so the total is close to what a provider will actually invoice.Compare other countries
Costs most calculators leave out
Private health cover, equipment stipend, meal or transport allowance.
Typically $0 to $2,000 depending on provider and country.
Refundable, but it ties up cash. Most providers hold one to two months.
Example. Change any field to make it yours.
Total employer cost, per employee per month
Monthly breakdown
Upfront and one-time costs
EOR or your own entity
Statutory rates current as of . Exchange rates indicative as of . Contribution ceilings, regional variation, employee age and collective agreements all shift the real figure. Use this to build a budget, then validate against a written quote.
Four ways to hire in India
The route you pick decides who runs payroll, who holds the registrations, and who pays if a hire is reclassified later.
Statutory leave and benefits
Earned leave accrues by days worked rather than as a fixed annual allowance, and the state layer sits on top of the central one for casual leave, sick leave and holidays.
OSH Code, 2020 section 32. Code on Social Security, 2020. Full rules are in the India maternity and paternity leave guide. Statutory bonus is not listed because the eligibility threshold and calculation base under the Code on Wages await notification.
Termination and offboarding
India is not an at-will jurisdiction, and what you owe depends less on tenure than on whether the person counts as a worker, which most senior hires do not.
Industrial Relations Code, 2020 sections 70, 77, 79 and 83. State thresholds are 3 months of continuous service in Delhi and 6 months in Karnataka, Tamil Nadu and Telangana, where a dismissal past that point also needs reasonable cause. Telangana adds service compensation of 15 days average wages per year after one year. A fixed-term employee needs no notice on expiry but takes pro rata gratuity after one year. All dues are payable within 2 working days of the exit date.
From decision to first payroll in four weeks
A first India hire through an employer of record typically runs from decision to first payroll in two to four weeks.
Pick the route
Entity or EOR, decided on headcount plan and IP ownership rather than cost alone. Incorporation runs 2 to 4 weeks before registrations begin.
Structure the offer
Keep excluded allowances within 50% of remuneration, and agree whether provident fund runs on the ₹15,000 ceiling or full wages.
Issue the appointment letter
Mandatory for every employee in the prescribed format, covering designation, wages and social security. Fix the notice period here.
Complete registrations
PAN, Aadhaar linkage, bank details, UAN generation, and ESI enrolment within 10 days of joining.
Run first payroll
Salary is due by the 7th of the following month, with provident fund and ESI remittances due by the 15th.
Best EOR providers in India
Four providers we have reviewed that employ in India. Full scoring and the ranked list sit on the India EOR page.
Singapore-based platform employing through entities it owns across most markets, with India among its deepest.
Lowest published rate of the four, running mostly through partner entities rather than its own.
Formerly Velocity Global. Handles immigration in-house and requires a security deposit at contract start.
Widest integration library of the four, employing through a mix of owned and partner entities.
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All guides for hiring in India
Hiring guides for other countries
Compare employer costs, dismissal rules and EOR options in 14 more countries. Each guide is checked against official sources.
FranceHiring guide, 41.5% employer cost
GermanyHiring guide, 22.5% employer cost
NetherlandsHiring guide, 27.4% employer cost
SpainHiring guide, 54.2% employer cost
United KingdomHiring guide, 15.9% employer cost
AustraliaHiring guide, 20.3% employer cost
PhilippinesHiring guide, 17.1% employer cost
SingaporeHiring guide, 17.2% employer cost
TaiwanHiring guide, 17.1% employer cost
Questions employers ask about hiring in India
The seven where published guidance is most often out of date or wrong.
Do the new labour codes actually apply yet?
Yes. All four codes came into force on 21 November 2025 and the central rules were notified on 8 May 2026. State rules are arriving on their own timelines, so registration steps, weekly rest and some leave rules still differ by state. The codes themselves are binding everywhere.
Does basic pay have to be 50% of CTC?
No, and this is the most repeated error in published guidance. The Code on Wages defines wages as basic pay plus dearness allowance plus retaining allowance. Where the excluded components exceed 50% of all remuneration, the excess is added back into wages for calculating provident fund, gratuity and bonus. It is a reclassification rule, not a mandate on how you structure salary.
What does an employee actually cost on top of salary?
Between 3% and 12% of gross at statutory minimums, falling as salary rises. Provident fund is capped at ₹15,000 of monthly wages and state insurance stops entirely above ₹21,000 gross, so a junior hire carries roughly four times the percentage load of a senior one. Employers who contribute provident fund on full wages rather than the ceiling land nearer 9% at senior salaries.
How much notice do I have to give?
It depends on whether the person is a worker under the Industrial Relations Code, which most managerial and supervisory hires are not. Workers with a year of service get one month plus severance. Everyone else is governed by the contract and the state shops and establishments act, which typically requires 30 days after a qualifying period. In Karnataka, Tamil Nadu and Telangana that act also requires reasonable cause, so notice alone does not make a dismissal lawful.
When does gratuity become payable?
After five years of continuous service for permanent employees, at 15 days of wages per completed year. Fixed-term employees qualify pro rata after one year. Whether service across renewed fixed-term contracts aggregates toward that year is not settled.
How fast do I have to pay a final settlement?
Within two working days of the exit date, under section 17 of the Code on Wages. This replaced a market norm of 30 to 45 days and applies to resignation, dismissal and retrenchment alike. Practitioners disagree over whether the two-day clock covers the entire settlement or only wages proper, so build your offboarding process around the shorter reading.
Can an employer of record sponsor a work visa in India?
Usually not. The employment visa must be sponsored by the entity that employs the person, and most providers restrict their India service to people who already hold the right to work. The visa also requires a gross annual package above the Ministry of Home Affairs threshold, currently stated as USD 25,000. Confirm sponsorship before building a relocation into a hiring plan.
Ready to hire in India?
Compare the providers that employ in India on pricing, entity ownership and onboarding speed.