Third-party payroll services — you pick the person, we hold the employment.
You have found the person, the budget is approved, and the headcount freeze says no. Third-party payroll services close that gap: the employee works with your team and reports to your manager, while Godstone Consultech is the legal employer — issuing the appointment letter, running payroll, depositing PF and ESI, filing returns and sending you one invoice a month instead of a new line on your headcount plan.
Headcount, city and CTC band are enough for a firm per-head quote.
Headcount flexibility without a compliance hole.
This is the model for hires you have already chosen but cannot carry on your own rolls — contractors made permanent-ish, project staff, retainers, trial hires, and teams in cities where you have no registered establishment.
- ✓Headcount-freeze and budget-line workarounds
- ✓Project and fixed-term professional staff
- ✓Teams in cities where you have no entity
- ✓Retired or retainer specialists back on payroll
- ✓Trial hires before a permanent decision
The quiet risk in paying people as vendors
Paying an individual against an invoice is simple until someone asks who their employer is.
Fixed hours, your equipment, your manager, monthly payments. On any labour or tax test that is employment, whatever the contract calls it.
PF and ESI reassessment on disguised employment lands on the principal employer with interest and damages, and the individual has no payslip, no PF account and no ESI card to show for years of work.
We become the legal employer: appointment letter, payslips, statutory enrolment, TDS, insurance and exit settlement, with a monthly compliance pack for your auditor.
Get per-head pricing →
What sits inside the per-head fee
The slider shows an indicative monthly outflow including wages and statutory dues. It is a planning figure only: the fee shown assumes an illustrative 12% of cost, not our rate. Your actual service fee — a flat charge per head or a percentage of cost — is set out in the rate card and shown as its own line on the invoice.
Everything from attendance input to payslip.
Third-party payroll, payroll outsourcing, EOR or contract staffing?
Four arrangements are routinely sold under the same words. The difference that matters is whose name is on the appointment letter and whose PF code the contributions go to — that decides who carries the employer's liability.
| Third-party payroll (this page) | Payroll outsourcing | Employer of record (EOR) | Contract staffing | |
|---|---|---|---|---|
| Who finds the person | You | You | You | We do |
| Legal employer | Godstone Consultech | Your company | Godstone Consultech | Godstone Consultech |
| PF / ESI code used | Ours | Yours | Ours | Ours |
| Typical buyer | Indian company with an entity but a headcount cap or a short-tenure need | Indian company that wants to keep staff on its own rolls | Foreign company with no Indian entity | Employer who needs people sourced, screened and deployed |
| Day-to-day direction | Your manager | Your manager | Your manager | Your supervisor, or ours on a managed site |
| Where to read more | Below | Payroll outsourcing services | Employer of record in India | Contract staffing services |
If the people will stay on your rolls and you only want the monthly processing done, you need payroll outsourcing, not third-party payroll. Moving employment to us makes sense only when you genuinely want the employment relationship held outside your entity.
How third-party payroll works under the Labour Codes
Since 21 November 2025 the four Labour Codes have replaced the older Acts. For a third-party payroll arrangement, three of them decide who owes what. Several States are still notifying their own rules; until they do, the Central rules and the older State rules continue to the extent they are not inconsistent with the Codes.
We are a contractor; you are the principal employer
Where 50 or more contract workers are engaged on any day in the preceding twelve months, the contract-labour chapter of the Occupational Safety, Health and Working Conditions Code applies: the contractor needs a licence and the establishment is covered by its OSH Code registration. This replaced the licensing regime of the Contract Labour (Regulation and Abolition) Act, 1970.
Unpaid wages can still reach you
If a contractor fails to pay wages, the principal employer can be required to pay and recover the amount from the contractor. That is why we send you proof of wage credit and challans every month, not just an invoice.
PF, ESI and gratuity sit with us — verified by you
Contributions are paid under our EPFO and ESIC codes. A principal employer can be pursued for a contractor's unpaid dues, so the monthly pack includes the ECR and ESI statement mapped to your headcount. Fixed-term employees now qualify for gratuity after one year of continuous service.
Salary structure must pass the 50% test
Basic pay, dearness allowance and retaining allowance must together be at least half of total remuneration; the excess over 50% in excluded allowances is added back when PF, gratuity and bonus are calculated. We restructure offers that fail this test before the first payslip, not after an inspection.
Not a route to staff your core work indefinitely
The OSH Code restricts contract labour in core activities, with exceptions such as work that is not full-time, sudden spikes in volume, or work ordinarily done through contractors in the normal functioning of that establishment. We review the role list with you before onboarding and say so if a role belongs on your own rolls.
Paper alone does not make us the employer
Courts look at who appoints, pays, disciplines and can terminate. Under our agreement those powers sit with us and are exercised on documented inputs from your manager — which keeps the arrangement defensible if a worker ever claims direct employment.
This is a plain-English summary for planning, not legal advice. For a written opinion on your specific establishment, see labour law advisory.
A worked cost example for one employee
Illustration for one employee on a gross salary of ₹20,000 a month, with wages (basic + DA) set at ₹12,000 so the salary passes the 50% rule. ESI applies because gross is within the ₹21,000 ceiling. Your own figures depend on the State minimum wage, the salary structure and whether PF is paid on actual wages or capped at the statutory wage ceiling — raised from ₹15,000 to ₹25,000 a month with effect from 17 September 2026.
| Line item | Basis | ₹ per month |
|---|---|---|
| Gross salary | Paid to the employee (before employee PF, ESI, PT, TDS) | 20,000 |
| Employer EPF + EPS | 12% of ₹12,000 wages (EPS share 8.33%, well within the new ₹2,083 monthly cap) | 1,440 |
| EDLI + EPF admin charges | 0.5% + 0.5% of ₹12,000 | 120 |
| Employer ESI | 3.25% of ₹20,000 gross | 650 |
| Statutory bonus provision | 8.33% of ₹7,000, the calculation ceiling under the old Bonus Act. The Code on Wages uses the amount the Government notifies or the State minimum wage, whichever is higher, so this line is often larger | 583 |
| Gratuity provision | 15/26 × wages ÷ 12 ≈ 4.81% of ₹12,000 | 577 |
| Cost before service fee | Pass-through: shown line by line on the invoice | 23,370 |
| Service fee | Flat per head or a % of cost — quoted, not hidden in the lines above | As agreed |
| GST | 18% on the taxable value of the manpower service (normally the whole invoice, not just the fee); creditable if you are GST-registered | On total |
Leave encashment, Labour Welfare Fund, group health or accident insurance and any shift or attendance allowances are added where they apply. Employee-side deductions (12% PF, 0.75% ESI, professional tax, TDS) come out of the ₹20,000 and do not add to your cost. Model other salaries with the CTC breakup calculator or the PF calculator.
Onboarding, step by step
Timelines assume you have selected the person and agreed the CTC. Background verification can run in parallel and does not have to hold up the joining date for low-risk roles.
Scope and rate card signed
Role list, locations, CTC bands, notice terms, conversion terms and the service fee agreed in one statement of work.
Offer structured and issued
CTC broken into wages and allowances that pass the 50% test; appointment letter from Godstone Consultech naming the client site and reporting manager.
Documents, consent and KYC
Identity, bank, education and previous-employment details collected with the employee's written consent; existing UAN linked or a new one generated.
Statutory enrolment
EPF and ESIC registration of the employee, professional tax and LWF set up for the work State, insurance cover started.
First payroll run
Attendance from your manager or HRMS, salary credited by the 7th of the following month, payslip issued, invoice raised with the proof pack.
Changes, exits and conversion
Increments, transfers and exits on written input from you; full and final settlement within two working days of separation, as the Code on Wages now requires.
Red flags in a third-party payroll proposal — and when not to use the model
Third-party payroll is only as safe as the vendor's own compliance, because their gaps travel to you. These are the checks worth making before signing, whoever you choose.
Red flags in the vendor
- ✕Cannot show its own EPFO and ESIC registration, or challans for existing clients on request
- ✕Quotes a price that is lower than wages plus statutory cost for the salaries you shared
- ✕Offers to keep part of the salary outside PF by inflating allowances above 50%
- ✕No contract-labour licence where the 50-worker threshold is crossed
- ✕Refuses audit rights, or sends only a monthly self-declaration of compliance
- ✕Charges GST only on the service fee without a documented basis
When third-party payroll is the wrong answer
- ✓The role is permanent, full-time core work you will need for years — hire directly
- ✓You want us to find the people as well — use contract staffing
- ✓You have no Indian entity — use an employer of record
- ✓The only goal is to cut statutory cost — it will not; the same PF, ESI and gratuity apply
- ✓Your manager will hire, fire and set pay without us — that is direct employment in substance
Third-party payroll FAQs
Who employs, who directs, what it costs and how exits work.
Get per-head pricing →What are third-party payroll services?+
An arrangement where you select and direct the employee while a staffing company employs them on paper. Godstone issues the appointment letter, runs payroll, deposits PF and ESI, files returns and invoices you monthly for cost plus a per-head fee.
How is third-party payroll priced?+
As a flat fee per employee per month or a percentage of cost, as set out in the rate card. Wages and statutory contributions are pass-through costs shown separately on the invoice, so the fee is visible rather than bundled.
Who is the legal employer, and who directs the work?+
We are the legal employer and hold all employment obligations. You direct the day-to-day work, approve leave and manage performance. Termination decisions are taken jointly and executed by us with proper notice and settlement.
Can employees be transferred to our rolls later?+
Yes. Service continuity, PF transfer and settlement are handled by us. Any conversion fee and any minimum billing period before conversion are agreed in your contract.
Is third-party payroll the same as contract staffing?+
No. In contract staffing we also source and select the workers. In third-party payroll you have already chosen the person and only the employment, payroll and compliance move to us.
Does a third-party payroll provider need a contract labour licence?+
Under the OSH Code, a contractor needs a licence where 50 or more contract workers are engaged on any day in the preceding twelve months; the Code allows a single licence covering more than one State. Below that threshold the contract-labour chapter does not apply, but PF, ESI, wage and bonus obligations still do.
Is GST charged on the whole invoice or only on the service fee?+
For manpower supply, GST at 18% is normally charged on the full taxable value, which includes the wages and statutory cost the vendor pays, not just its fee. If you are GST-registered and the service is used for business, you can usually claim input tax credit.
Can the employee be moved to our own rolls later without losing PF or gratuity?+
PF moves with the UAN, so the balance simply transfers to your code. Gratuity service with us is settled at exit if it is due, or carried over only if you agree in writing to recognise past service. We set this out in the conversion clause before the first hire.
Can third-party payroll staff work in our core production activity?+
The OSH Code restricts contract labour in core activities, subject to exceptions such as non-full-time work, sudden increases in volume, or work ordinarily done through contractors in the normal functioning of the establishment. We review the roles at the scoping stage and flag any that should sit on your own rolls.
Who issues Form 16 (now Form 130) and handles income tax?+
We do, because we are the employer deducting tax at source. Employees submit investment declarations to us (Form 124, formerly Form 12BB), we deduct and deposit TDS by the 7th of the following month, file the quarterly salary TDS return (Form 138, formerly Form 24Q) and issue the annual certificate — Form 130 under the Income-tax Rules, 2026, which replaced Form 16 from tax year 2026-27.
Related services and hubs
Someone waiting on a headcount approval?
Send the CTC band, city and start date. We aim to close onboarding within 48 hours.