Employer of record in India: hire your first people without setting up an entity
You have found the person in Pune. You do not have an Indian entity, a PAN, a PF code or a payroll process. As employer of record we employ them on our entity, on your terms, and invoice you monthly — while you direct the work exactly as you would any other team member.
Headcount, states and current setup. We aim to send a costed proposal within one working day.
The legal employer is us. The manager is you.
An EOR arrangement separates employment from management. We take the statutory and contractual employer obligations; you keep the work, the goals and the relationship.
- ✓Employment contract on our Indian entity, drafted to your terms
- ✓Payroll, PF, ESI, Professional Tax, LWF and TDS with monthly filings
- ✓Group medical, accident and term insurance enrolment
- ✓Leave policy administration, payslips and Form 130 (formerly Form 16)
- ✓Statutory gratuity, bonus and maternity benefit administration
- ✓Onboarding, asset coordination, exit, notice and full and final settlement
- ✓Optional: NDA, IP assignment and non-solicit clauses aligned to your global template (post-exit non-competes are generally unenforceable in India)
Incorporation is the wrong first step for a team of three
A private limited company in India means capital, directors, statutory audit, board filings, PF and PT registration, a payroll process and a compliance calendar — for three employees.
Incorporation, registrations, bank account, then permanent audit, ROC filings and a compliance calendar that needs someone local who knows it.
Paying an individual as a vendor while directing their daily work invites both tax exposure and an employment claim, with no PF or insurance for the person.
Your person is a properly employed, insured, PF-covered Indian employee from day one. One invoice, no incorporation, and the option to migrate to your own entity later.
Get a quote →
Onboarding, running, exit
EOR is priced per employee per month, either as a flat fee or a percentage of salary, on top of the employee's loaded cost.
The candidate experience matters — they are joining your company, not a vendor.
EOR, your own entity, or an independent contractor?
For a foreign company, the right answer usually changes with headcount and with what the people will do. A candid comparison:
| Employer of record | Own Indian subsidiary | Independent contractor | |
|---|---|---|---|
| Time to first hire | About a week once documents are in | Months: incorporation, bank, tax and labour registrations | Days |
| Legal employer | The EOR's Indian entity | Your subsidiary | Nobody — a service contract |
| PF, ESI, gratuity, TDS | Handled by the EOR | Your team or payroll provider | Not provided; reclassification risk if the person works like an employee |
| Tax-presence (PE) risk | Lower, if roles and authority are managed | Not relevant — you are present | Higher when the person works exclusively for you |
| Ongoing overhead | One monthly invoice | Statutory audit, ROC and tax filings, compliance calendar | Low — until a dispute or audit |
| Usually right for | 1–20 people, testing the market, or bridging to an entity | Larger, long-term teams, or revenue booked in India | Genuinely independent, project-based work |
Already have an Indian entity and only want certain people employed outside it? That is third-party payroll. Want the staff on your own entity with payroll run for you? That is payroll outsourcing.
Worked example: a ₹1,00,000-a-month engineer
Illustration for one employee on ₹12 lakh a year gross, with basic pay at 50% so the salary passes the Labour Code wage test. Assumes the employee is an existing PF member and contributions are restricted to the statutory wage ceiling, which rose from ₹15,000 to ₹25,000 a month on 17 September 2026.
| Line item | Basis | ₹ per month |
|---|---|---|
| Gross salary | Paid to the employee before PF, professional tax and TDS | 1,00,000 |
| Employer PF (EPF + EPS) | 12% of ₹25,000 ceiling | 3,000 |
| EDLI and PF admin charges | 0.5% + 0.5% of ₹25,000 | 250 |
| Gratuity provision | 15/26 × basic ÷ 12 ≈ 4.81% of ₹50,000 | 2,405 |
| ESI and statutory bonus | Not applicable: wages above ₹21,000 | 0 |
| Employer cost before insurance and fee | 1,05,655 | |
| Group health and accident insurance | As per the policy you choose | Varies |
| EOR service fee | Flat per employee per month | As quoted |
GST: 18% applies where the service is taxable in India; an invoice to a client outside India may qualify as a zero-rated export depending on how the contract is structured — confirm with your tax adviser. Global EOR platforms publish India list prices of roughly US$400–700 per employee per month; India-based providers often quote less. Model other salaries with the CTC breakup calculator and gratuity calculator.
What a foreign employer should know before the offer
Indian employment law is now built on four Labour Codes (in force since 21 November 2025) plus State Shops and Establishments Acts. The points that most often surprise overseas HR teams:
No at-will employment
Termination needs a contractual and lawful reason, notice or pay in lieu, and settlement of dues within two working days of exit under the Code on Wages. Notice periods of 30 to 90 days are common.
Leave is set by State law
Earned leave, sick leave and holidays follow the Shops and Establishments Act of the State where the employee works, so two people in Pune and Bengaluru can have different minimums.
Maternity benefit of 26 weeks
Paid maternity leave of 26 weeks for the first two children under the Code on Social Security, with work-from-home by agreement afterwards where the role allows.
Gratuity is mandatory
Payable after five years of continuous service (one year for fixed-term employees), at 15 days' wages per year of service.
Post-exit non-competes do not hold
Section 27 of the Indian Contract Act makes post-employment non-compete clauses generally unenforceable. Rely on IP assignment, confidentiality and non-solicitation instead.
Employee data can go to HQ
The DPDP Act, 2023 allows transfer of personal data outside India except to countries the government restricts, subject to notice and purpose limits.
What your India employee should and should not do
An EOR removes the need for an entity; it does not decide your tax position. That depends on what the person does. The main risk is a dependent-agent PE — someone in India habitually concluding contracts, or playing the principal role in concluding them, for your company.
Generally lower-risk roles and practices
- ✓Engineering, product, design, research and support work
- ✓Marketing and pre-sales that stop short of negotiating terms
- ✓Contracts approved and signed outside India
- ✓Home or co-working desks not held at your company's disposal
Practices that raise PE risk
- ✕Country-head titles with authority to bind the company
- ✕Negotiating price and terms that head office then rubber-stamps
- ✕An office leased or permanently used in your company's name
- ✕Invoicing Indian customers directly from the parent for work the employee delivers
This is general guidance, not tax advice. Your tax counsel should confirm the position under the relevant tax treaty before you hire into commercial roles.
Onboarding in about five working days
Target timings, counted from the day the candidate accepts and returns documents.
Offer and contract
Salary structured to Indian norms, employment contract on our entity with your role, reporting line and IP terms.
Consent and checks
Candidate consent taken for any background verification; identity, bank and tax details collected.
Statutory enrolment
UAN linked or created, ESI where eligible, professional tax set up for the work State, insurance started.
Start date
Welcome, equipment and access coordinated with your team; you manage the work from day one.
First payroll and invoice
Salary credited by the 7th of the following month; one invoice covering salary, statutory cost and fee.
Questions buyers ask before signing
Answers we give in the first call, written down so you can compare vendors on the same terms.
Get a quote →What is the difference between EOR and third-party payroll?+
In third-party payroll you usually already have an entity and simply outsource the employment and payroll of some workers. In EOR you have no Indian entity at all, so our entity is the legal employer for tax, PF and contractual purposes.
How is EOR priced?+
Per employee per month — either a flat fee or a percentage of salary — charged on top of the employee's loaded cost, which is gross salary plus PF, ESI, gratuity provision and insurance premium.
Does an EOR arrangement create permanent establishment risk for us?+
It reduces the risk that a directly engaged contractor creates, but PE analysis depends on what the employee actually does — sales concluded in India is different from engineering. We will tell you where the line is; your tax counsel should confirm it.
Can we convert EOR employees to our own entity later?+
Yes, once headcount justifies incorporation. We transfer employment with PF continuity on the same UAN, settle dues on our side and hand over documentation.
Who owns the intellectual property the employee creates?+
You do, provided the contract says so. We draft IP assignment, confidentiality and non-solicit clauses aligned to your global template and to Indian law.
Is employer of record legal in India?+
Yes. Indian law has no separate EOR licence; the EOR is simply the employer and must comply with the Labour Codes, the State Shops and Establishments Act and income-tax law like any other employer. The arrangement holds up when it is real — the EOR issues the contract, pays the salary and holds the formal employer powers — and when your use of the employee does not create a permanent establishment.
Are non-compete clauses enforceable in India?+
Restrictions during employment are generally enforceable, but post-employment non-compete clauses are usually void under section 27 of the Indian Contract Act. Confidentiality, IP assignment and non-solicitation clauses are the practical protection.
Can an EOR employee sell for us in India?+
They can support sales, but if they habitually negotiate and conclude contracts on your behalf, your company risks a dependent-agent permanent establishment in India. Keep pricing and signing authority outside India until you have taken tax advice or set up an entity.
How much notice is needed to end an EOR employee's employment?+
Whatever the contract says, subject to the State Shops and Establishments Act and any applicable standing orders — commonly 30 to 90 days or pay in lieu. Final dues must be paid within two working days of the exit date, and gratuity within 30 days where it is due.
Hire your first Indian employee this month
Send the role, salary and city. You get the loaded cost, the EOR fee and the onboarding timeline in one sheet.