Contract staffing services in India, with the compliance risk on us.
A line stops because eleven operators did not turn up, and the fix — hiring, verifying, enrolling, paying and defending an audit — sits with a team that already has a day job. Godstone Consultech runs contract staffing as an outsourced function: we source and screen the workers, employ them on our payroll, deposit PF and ESI, keep the contract-labour records the OSH Code requires, and put a supervisor on your floor. You approve headcount and output, and receive one invoice.
No obligation, no fee to see numbers. A staffing manager replies with an indicative rate card.
One contract for sourcing, employment, payroll and contract-labour compliance.
Contract staffing is not manpower supply with an invoice attached. Every worker on your floor is enrolled with EPFO and ESIC before the first shift, carries a verified Aadhaar and bank record, appears on a biometric attendance sheet, and is paid before the 7th of the following month — the Code on Wages deadline — whether or not your payment cycle has closed.
- ✓Sourcing, trade tests and background verification
- ✓Appointment letters, PF, ESI, professional tax, LWF
- ✓Site supervisor, roster and shift-handover discipline
- ✓Monthly compliance pack: challans, returns, wage registers
- ✓Replacement target of 15 days, attrition tracked per site
Why in-house contract hiring quietly gets expensive
Most plants do not lose money on the wage bill. They lose it on the gap between a vacancy and a productive worker, and on the paperwork that follows.
A local vendor sends twelve of forty operators, no trade test, half without PF numbers. Your supervisor becomes a recruiter, and the SOP date slips.
Short shifts get covered by overtime at premium rates. Then a labour inspection asks for the contractor licence, wage registers and PF challans for workers whose vendor has changed twice. Liability for unpaid dues lands on the principal employer.
Godstone employs the workers, mobilises in scheduled waves, and hands your auditor a monthly pack: wage proof, PF and ESI challans, attendance and registers.
Get an indicative rate card →
What contract staffing costs per month, before you talk to anyone
Move the sliders. The estimate starts from the worker's monthly gross wage, adds the employer's statutory contributions and applies an illustrative 12% service fee (your actual fee is set out in the rate card) — the same lines your invoice will show, before GST. Real quotes move with State minimum wages, the wage structure and role scarcity.
Indicative only. For a firm rate card, send the requisition or read how staffing agency fees work in India.
How a contract staffing requisition becomes people on your floor
Six stages, each with an owner and a target time. We aim to have wave one report on day seven.
Role, headcount, shift pattern, site city. We aim to send an indicative bill rate within a day.
Job portals, our candidate records, and local referral and ITI channels within travel distance of your gate.
Aadhaar, bank, licence and address verification. Skill test where the role needs one.
Appointment letter, PF and ESI enrolment, induction — all before day one on site.
Workers report to your line manager with our site supervisor on the ground.
Biometric attendance, wages by the 7th, challans and returns your auditor can sign.
Contract staffing under the Labour Codes: what changed for principal employers
The Contract Labour (Regulation and Abolition) Act, 1970 was folded into the Occupational Safety, Health and Working Conditions Code, 2020 when the four Labour Codes came into force on 21 November 2025. The Central Rules followed on 8 May 2026. If your vendor agreement still quotes CLRA section numbers, these are the points to re-check.
The threshold is now 50 contract workers
The contract-labour chapter of the OSH Code applies to establishments engaging, and contractors employing, 50 or more contract workers — up from 20 under CLRA — and States can no longer vary that number.
One contractor licence, valid five years
A contractor with 50+ contract workers needs a licence under the OSH Code (formerly the CLRA licence). It is a single licence that can cover several States, applied for online and valid for five years under the Central Rules.
Common registration for your establishment
Establishments with 10 or more workers register once under the OSH Code. The separate CLRA principal-employer registration is folded into that single registration.
Core activities have written exceptions
Contract labour is barred from core activities unless the work is ordinarily done through contractors, is not full-time for most of the day, or is a sudden, time-bound surge in volume. Security, sanitation, canteen and maintenance are listed as non-core.
You remain the backstop for wages
If the contractor does not pay wages on time, the principal employer must pay them and recover the amount from the contractor; the Central Rules set the time within which the principal employer must step in. Welfare facilities follow the same backstop logic.
Wages by the 7th, exits in two working days
Under the Code on Wages, monthly wages are due before the 7th of the following month, and dues on resignation, removal or retrenchment within two working days — not the 30–45 days many agreements still allow.
PF ceiling is ₹25,000 from 17 September 2026
EPFO raised the statutory wage ceiling from ₹15,000 to ₹25,000 a month (S.O. 5109(E)). Workers earning up to ₹25,000 now need mandatory EPF, EPS and EDLI cover, so many contract bill rates rise from the September 2026 wage month.
The 50% wage rule
Basic pay, DA and retaining allowance must make up at least half of total remuneration; any excess in allowances is added back to "wages" for PF, gratuity and bonus. Low-basic structures from before November 2025 usually need re-pricing.
What sits inside a contract staffing bill rate
Two quotes are only comparable when they carry the same lines. This is the structure your invoice should follow. Only the site costs and the service fee are really up for negotiation — the rest is set by law.
| Invoice line | What it covers | Basis (September 2026) | Negotiable? |
|---|---|---|---|
| Gross wages | Basic + DA, HRA and allowances for the role | Not below the State minimum wage for the skill category and zone, including the latest VDA revision | No — the floor is legal |
| Employer EPF / EPS | Provident fund and pension contribution | 12% of PF wages; mandatory on wages up to ₹25,000 a month from 17 Sep 2026 (8.33% of that goes to EPS) | No |
| EDLI + EPF admin | Insurance cover and EPFO administration charges | 0.5% + 0.5% of PF wages | No |
| Employer ESI | Medical and cash-benefit cover through ESIC | 3.25% of gross wages where gross is up to ₹21,000 a month (the worker pays 0.75%) | No |
| Bonus, leave, gratuity | Provisions for statutory bonus, earned leave and gratuity | Bonus 8.33%–20% for eligible workers; gratuity at 15/26 of monthly wages per year of service — for fixed-term staff after one year | Method yes, entitlement no |
| Labour welfare fund | State LWF, where the State levies it | Small fixed amounts set by each State | No |
| Site costs | Uniform, safety shoes, PPE, ID cards, transport, canteen | At actuals, as agreed in the contract | Yes |
| Service fee | Sourcing, replacement, payroll, filings, supervision and our margin | Agreed in the rate card; depends on volume, city and role scarcity | Yes |
| GST | Tax on the manpower supply service | 18% on the whole invoice value — wages included, not just the fee; creditable for most registered clients | No |
Indicative structure, not a quote. Rates and caps as notified by EPFO and ESIC as of September 2026; bonus eligibility and calculation ceilings follow the Code on Wages and the applicable rules. Try your own numbers in the contract vs permanent cost calculator or the PF calculator.
Contract staffing vs temporary, temp-to-hire and permanent hiring
Contract staffing suits steady, ongoing headcount you do not want on your own rolls. If the need has an end date, or you intend to hire the person eventually, another model usually costs less.
| Contract staffing | Temporary staffing | Temp-to-hire | Permanent recruitment | |
|---|---|---|---|---|
| Who employs the worker | Staffing company, on an ongoing basis | Staffing company, for a set window | Staffing company first, then you | You, from day one |
| Typical horizon | 12 months and beyond, renewed annually | Days to a few months | 3–6 month trial, then conversion | Open-ended |
| How you pay | Monthly bill: cost + service fee | Monthly or weekly bill for the window | Monthly bill, then a conversion fee (often waived after a minimum period) | One-time placement fee |
| Best for | Support functions, operators, facility and warehouse teams | Festive peaks, shutdowns, leave cover | Roles where fit is uncertain | Core roles you will keep for years |
| Read more | This page | Temporary staffing | Temp-to-hire | Permanent staffing |
How to vet a contract staffing company: eight questions and the red flags
Because the principal employer carries the backstop liability, choosing a contractor is a compliance decision as much as a price decision. Ask every shortlisted agency — including us — for these.
Eight questions to ask
- ✓Show your contractor licence under the OSH Code (or the State licence still in force) and the headcount it covers.
- ✓Share last month's EPF ECR and ESI challan for workers at my site, matched by UAN and IP number.
- ✓Is every wage at or above the current State minimum wage, including the latest VDA, and does Basic + DA meet the 50% rule?
- ✓Can the quote show wages, statutory costs, site costs, service fee and GST as separate lines?
- ✓If our payment is late, do workers still get paid by the 7th from your own funds?
- ✓What is the written replacement timeline for an exit or a no-show?
- ✓How are exits settled — within the two-working-day window?
- ✓Who supervises at site, at what ratio, and who is my escalation contact?
Red flags
- ✕A markup lower than the statutory load it has to fund — the gap is usually unpaid PF or bonus.
- ✕Wages paid in cash or into accounts that are not in the worker's name.
- ✕"PF is optional for this role" for anyone earning up to ₹25,000 a month.
- ✕One consolidated per-head rate with no breakup.
- ✕Workers asked to pay a registration, training or uniform fee.
- ✕No written replacement or exit-settlement terms.
The monthly file you should receive from any contractor
If an inspector or your statutory auditor asks tomorrow, this is what you need to be able to produce for contract workers at your premises. We send it as one pack each month; from another vendor, ask for the same.
- ✓Wage register and bank-transfer proof of wages paid before the 7th
- ✓EPF ECR and payment challan, with the member list for your site
- ✓ESI contribution challan and the list of insured persons
- ✓Attendance and overtime records reconciled to the invoice
- ✓Copies of appointment letters issued before deployment
- ✓Professional tax and labour welfare fund remittances where the State levies them
- ✓Joiners, leavers and exit settlements paid within two working days
- ✓Current copy of the contractor licence and any renewal or amendment
Workers already on your own rolls? See payroll and compliance services or third-party payroll.
When contract staffing is the wrong model
The role is core and perennial
A full-time job at the heart of your production process, needed all year, is exactly what the core-activity rule targets. Hire it permanently, or use temp-to-hire and convert.
You need one or two people
Below a handful of heads the service fee buys little. A one-time placement fee or payroll outsourcing is usually cheaper.
The need ends in weeks
A defined peak or shutdown is priced better as temporary staffing, with the release built into the plan.
You want to control every HR decision
If your managers will hire, fire and set pay themselves, the contractor is an employer in name only — a sham-contract risk. Put those workers on your own rolls.
Est. 2019 in Chennai, registered with GST, EPFO, ESIC and Udyam
Godstone Consultech has worked from Chennai since 2019 under two managing partners, with 300+ successful placements for 20+ clients across manufacturing and services. Before you sign, ask us for our registration certificates, a sample monthly compliance pack and a client reference.
Contract staffing FAQs
The questions procurement and HR ask before a first contract. Anything else, ask the staffing manager on the call.
Send a requisition instead →What are contract staffing services?+
Contract staffing services put workers at your site while the staffing company holds the employment. Godstone sources and screens the workers, issues appointment letters, runs payroll, deposits PF and ESI, and keeps the contract-labour records. You direct the work and approve headcount and output.
How much do contract staffing services cost in India?+
Billing is the worker's cost to company plus a service fee set out in the rate card, which depends on volume, city and role scarcity. The markup covers sourcing, replacement, payroll processing, statutory filings and site supervision. Wages, statutory contributions and service fee appear as separate invoice lines, so nothing is bundled out of sight.
Who is the legal employer in contract staffing?+
The staffing company is the legal employer: it issues the appointment letter, pays wages, enrols workers with EPFO and ESIC before day one and keeps the registers. You are the principal employer. Under the OSH Code, the contract-labour chapter and the contractor licence apply at 50 or more contract workers, your establishment registers once under the Code's common registration, and you remain liable to pay unpaid wages and recover them from the contractor.
How fast can contract workers be deployed?+
We aim for seven to twelve working days from signed requisition to first shift for blue-collar and facility roles, mobilised in waves. Skilled trades needing a trade test add three to five days. We aim to send an indicative bill rate within one working day of the requirement.
Can contract staff be converted to permanent roles?+
Yes. Temp-to-hire conversion is written into the agreement, with the conversion terms and any minimum billing period agreed in your contract. Attendance, output and disciplinary history travel with the conversion, so you decide on evidence rather than a fresh interview.
Can contract labour be used in core activities?+
Generally no. The OSH Code prohibits contract labour in core activities, with three exceptions: the activity is ordinarily done through contractors, it does not need full-time workers for most of the working day, or there is a sudden increase in volume that must be completed in a set time. Support work such as security, housekeeping, canteen and maintenance is treated as non-core.
Does a contractor need a licence for fewer than 50 workers?+
Under the OSH Code, the contract-labour licence applies to a contractor employing 50 or more contract workers; below that, no licence is required. Wages, PF, ESI and the other Codes still apply to every worker, whatever the headcount.
How does the ₹25,000 PF wage ceiling change contract staffing costs?+
From 17 September 2026, employees earning up to ₹25,000 a month must be covered by EPF, EPS and EDLI, and contributions are calculated on wages up to that level. For many contract workers this adds employer PF on a larger wage base, so expect revised bill rates from the September 2026 wage month, which EPFO splits at 17 September.
Is GST charged on the whole bill or just the service fee?+
On the whole bill. Manpower supply is taxed at 18% on the full invoice value, including the wages passed through. Registered businesses can usually claim input tax credit, so for most clients it is a cash-flow cost rather than a final cost.
Related staffing services, roles and cities
Ready to price a contract staffing requirement?
Send the role, headcount and site city. An indicative bill rate and mobilisation plan come back within one working day.