Hire employees with the No.1 EOR in India

What is an EOR in India?[toc=What is an EOR]

An Employer of Record (EOR) in India is a third-party organization that acts as the legal employer for a company's employees in the country. The employer of record assumes the responsibilities of hiring, onboarding, managing payroll, and ensuring compliance with local labor laws and regulations. This allows companies to quickly and compliantly hire talent in India without establishing a legal entity.

How to Hire & Onboard Employees in India?[toc=Hire in India]

Step 1: Determine Your Hiring Options

When expanding your workforce in India, the first step is evaluating your hiring options. This involves two key decisions:

1. Whether to hire full-time employees or contractors.
2. Whether to set up a local entity or partner with an Employer of Record (EOR).

These decisions define your international hiring strategy and impact how you manage compliance, payroll, and employee benefits.

Decide Between Full-time Employees and Contractors:

Based on our experience assisting businesses in India, we've found that the choice between hiring full-time employees or contractors depends on factors such as the nature of the role, duration of engagement, budget, and level of control required.

• Full-Time Employees: Full-time employees provide stability and long-term commitment. They are easier to manage and train for core roles but require statutory benefits, higher overhead costs, and are harder to terminate.
• Contractors: Contractors offer specialized skills, flexibility, and lower costs since they don't receive benefits. However, they may lack loyalty to the company and pose risks of misclassification penalties. Contractors are ideal for short-term projects requiring niche expertise.

Click here to learn more: Remote Hiring in India: Independent Contractor vs EOR Employee Explained.

Choose Between Setting Up a Legal Entity or Using an Employer of Record (EOR):‍

Once you've determined whether to hire full-time employees or contractors, the next step is deciding how to structure your operations in India, either by setting up a legal entity or partnering with an Employer of Record (EOR).

• Setting Up a Legal Entity:
  Establishing a legal entity involves registering your business in India, setting up offices, and complying with local employment laws. This approach provides full control over operations but is time-consuming, costly, and complex, especially for businesses unfamiliar with Indian regulations.
• Using an Employer of Record (EOR):
  Partnering with an EOR simplifies hiring by acting as the legal employer for your workforce. The EOR handles payroll, compliance, statutory benefits administration, and other HR tasks. This option is faster and more cost-effective for companies looking to hire without establishing a physical presence in India. For companies with an established presence in India, considering a professional employer organization (PEO) in India service can further streamline HR operations and reduce administrative burdens.

Ultimately, the choice depends on the company's resources, timeline, and risk tolerance. Click here to learn more: Employer of Record vs Own Entity: Choose the Right Global Hiring Strategy

‍Step 2: Choose the Best EOR Service Provider

When choosing an EOR in India, consider your hiring needs and long-term goals. If you plan to build a dedicated team in India, partnering with an India-exclusive EOR solution, such as Wisemonk, It offers deep local expertise, on-the-ground presence, and cost-effective, tailored services. While global EOR providers streamline international payroll and employee management, specialized EOR partners bring the local networks and market knowledge essential for success in India. Selecting the right EOR ensures your business benefits from both comprehensive support and a strong foothold in the Indian market.

To help you make an informed decision and choose the right EOR in India, we’ve created a detailed comparison of the best EOR providers in India. Check out our article: Best Employer of Record (EOR) Services in India [2025].

Step 3: Hire and onboard your Indian Employees

Welcoming new hires is a critical moment that shapes their first impressions and sets the tone for their employee experience. In India, a well-structured onboarding process ensures a smooth transition, compliance with local laws, and integration into the company culture.

Key processes:

1. Share Role & Candidate Details
2. Employment Contract & Background Checks
3. Onboarding & First Day Process
4. Integration & Ongoing Support

Click here to learn more: Detailed Onboarding Checklist for Remote Employees in India

Step 4: Running Payroll

With years of experience managing payroll for international companies in India, we've found that accurate and timely employee compensation requires handling complex tasks like salary calculations, statutory deductions (TDS, Provident Fund, professional tax), and generating detailed pay slips. Many companies struggle with these processes due to India's evolving tax laws and compliance requirements. By partnering with an EOR, companies benefit from expert payroll management, compliance assurance, and prompt salary disbursement, all tailored to Indian regulations.

What are the key aspects of payroll in India?[toc=Payroll in India]

Managing payroll in India is a critical responsibility for any employer and, in our experience supporting global teams, we have found that Indian payroll is uniquely complex due to frequent regulatory updates and strict local compliance requirements. An Employer of Record (EOR) in India takes over this burden, ensuring every aspect is handled accurately and on time.

Statutory Deductions and Contributions

• Provident Fund (EPF): Both employer and employee must contribute to the Employees’ Provident Fund, a mandatory retirement savings scheme.
• Employee State Insurance (ESI): Required for employees earning below a specific threshold, covers medical and disability benefits.
• Professional Tax: Levied by some states, deducted from the employee's salary each month.
• Tax Deducted at Source (TDS): Income tax withheld from salaries as per individual tax slabs and deposited with the government.

Payroll Compliance

• Payroll must be compliant with all applicable regulations, such as the Payment of Wages Act and Minimum Wages Act.
• Accurate calculation and timely international payment of wages, overtime, bonuses, and leave encashment are essential to avoid legal risk.

Payroll Processing and Disbursement

• Wages are typically processed on a monthly basis.
• Payslips detailing gross salary, deductions, and net pay must be provided to employees.
• All statutory contributions and taxes must be deposited with respective government authorities within specified deadlines.

Reporting and Recordkeeping

• Employers must maintain detailed payroll records, including salary structure, attendance, statutory contributions, and tax filings, generally for at least three years.

Payroll elements can differ by state, such as professional tax rates, leave policies, and wage structures, so expertise in local, as well as national, rules is vital.

Cost-to-Company Calculator for Hiring Employees in India[toc=CTC Calculator]

Looking to hire employees in India but unsure about the total cost?

Our fully loaded cost calculator makes it easy for you to estimate your expenses. Simply enter the gross salary of your potential employee, and our calculator will provide you with a comprehensive breakdown of the total cost, including our Employer of Record (EOR) fees.

Try our fully loaded cost calculator now and take the first step towards building your world-class team in India: Salary Calculator India: Simplify Your Take-Home Pay Calculation

What are the benefits of using EOR services in India?[toc=EOR Benefits]

Based on our extensive research and client feedback, here are the key benefits of using EOR services in India:

1. Rapid market entry: EOR services enable companies to quickly establish a presence in India without setting up a legal entity. This significantly reduces the time and resources required to enter the Indian market, allowing businesses to seize opportunities promptly. We've seen companies reduce their market entry time by up to 70% using EOR services.
2. Full compliance with Indian employment laws: EOR providers ensure compliance with complex local regulations, including minimum wage laws, social security contributions, and tax requirements. This comprehensive compliance management minimizes legal risks and potential penalties for foreign companies.
3. Cost-effective solution: Using an EOR service is often more economical than establishing and maintaining a legal entity in India. Companies can avoid expenses related to entity setup, office space, and local legal services, while benefiting from transparent pricing models. On average, our clients save 40-60% on setup and operational costs in the first year.
4. Access to local expertise: EOR providers offer invaluable knowledge of Indian business culture, employment practices, and market conditions. This expertise helps companies make informed decisions and navigate the nuances of the Indian business landscape effectively.
5. Simplified HR administration: Employer of Record services streamline various HR processes, including payroll management, tax withholding, benefits administration, and leave management. Our clients report saving an average of 20 hours per week on HR administration tasks.

In our experience, companies utilizing EOR services in India are better positioned to move quickly, stay compliant, and establish a stable, professional environment for their local employees.

What taxes should employers and employees be aware of in India?[toc=Taxes in India]

In our extensive experience managing payroll and legal compliance in India, we’ve found that understanding Indian tax regulations is crucial for both foreign employers and local employees. Here’s a concise, up-to-date overview:

Income Tax

Income tax is a direct tax levied by the government on an individual's income. In India, the income tax rates for the financial year 2025-26 are based on a progressive tax system, where the tax rate increases as taxable income rises.

India has two income tax thresholds commonly known as the “Old Tax Regime” and “New Tax Regime” .

Surcharge for New Tax Regime:

• 10% if income exceeds ₹50 lakhs but not ₹1 crore.
• 15% if income exceeds ₹1 crore but not ₹2 crore.
• 25% if income exceeds ₹2 crore.

‍Additionally:

• Salaried individuals are eligible for a standard deduction of ₹75,000, effectively making incomes up to ₹12.75 lakh tax-free.
• A rebate under Section 87A ensures zero tax liability for taxable incomes up to ₹12 lakh.

Surcharge for Old Tax Regime:

• 10% if income exceeds ₹50 lakhs but not ₹1 crore.
• 15% if income exceeds ₹1 crore but not ₹2 crore.
• 25% if income exceeds ₹2 crore but not ₹5 crore.
• 37% if income exceeds ₹5 crore.

Additionally:

• A 4% Health and Education Cess is applied to the tax amount after adding surcharge in both regimes.

Tax Deducted at Source (TDS)

• Employers must deduct TDS from salaries each month based on the applicable tax slab and remit it to the government.
• TDS applies to salaries, professional fees, and certain allowances.
• Recent threshold updates benefit freelancers and contract workers by raising exemption limits.

Professional Tax

• Levied by state governments; not all states apply it.
• Deducted monthly from employees’ salaries and varies by location and income.
• Example: Maharashtra up to ₹200/month; Tamil Nadu up to ₹1,250/half-year.[Professional Tax Examples]

Provident Fund (EPF)

• Both employer and employee contribute 12% of basic salary.
• Provides retirement benefits; contributions are often tax-exempt up to ₹1.5 lakh/year under Section 80C.

Employee State Insurance (ESI)

• For employees earning ≤₹21,000/month.
• Employer contributes 3.25% and employee 0.75% of gross salary.
• Covers healthcare, maternity, and disability benefits.

Goods and Services Tax (GST)

• Applicable only if the company is providing taxable services and annual turnover exceeds prescribed thresholds (generally not affecting standard employment relationships).

Staying compliant with these taxes and deductions is essential for smooth operations in India. An EOR or specialized payroll provider handles all these requirements managing calculations, filings, remittances, and providing timely updates as regulations evolve.

What are the standard leave policies in India?[toc=Leaves Policies]

India’s labor laws mandate specific leave entitlements to ensure employee welfare and work-life balance. From our extensive experience managing HR compliance in India, here’s a clear summary of the key leave types employers must provide:

• Earned Leave (Annual/Privilege Leave): Employees are typically entitled to 12–15 days of paid leave per year, which can be accrued and carried forward as per organization or state rules.
• Sick Leave: Usually 7–12 days per year, sick leave is provided for health issues and may require a medical certificate for longer absences; policies can vary by company and state.
• Casual Leave: Allotted for short-term personal or emergency needs, casual leave ranges from 7–10 days annually and usually cannot be carried over to the next year.
• Maternity Leave: Female employees are entitled to 26 weeks of paid maternity leave for their first two children (12 weeks for subsequent children), as mandated by the Maternity Benefit Act.

For a deeper dive into leave entitlements, national holidays, laws, and best practices across India, check out our detailed guide: Understanding Leave Policy Laws and Holidays in India.

What are the employee benefits in India?[toc=Employee Benefits]

In our experience working with businesses expanding into India, we’ve seen that employee benefits are a critical part of hiring and talent retention. Indian labor law mandates certain statutory benefits for most employees, and many companies also offer additional perks to remain competitive.

Statutory Benefits

Statutory benefits in India are legally mandated and include the Employees’ Provident Fund (EPF), Employees’ State Insurance (ESI), gratuity for long service, paid statutory leave, and maternity benefits. These core protections ensure employees have retirement savings, healthcare coverage, and job security during key life events.

Supplementary Benefits

Supplementary benefits go beyond legal requirements and often include life or health insurance, performance bonuses, flexible work options, meal or transport allowances, and wellness programs. These extras help companies attract and retain top talent in a competitive market.

If you're looking to dive deeper into how these benefits can impact your talent strategy, check out our Employee Benefits in India: A Comprehensive Guide, it’s a handy resource to help you stay ahead in the competitive talent market.

What are the key steps involved in terminating employees in India?[toc=Termination in India]

Based on our extensive experience managing employee terminations in India, we've identified five key steps for a compliant and smooth process:

• Serve Notice Period: In India, employees with at least one year of service are typically entitled to a 30-90 day notice period. We've found that clearly defining this in the employment agreement helps avoid disputes. Alternatively, employers can offer payment in lieu of notice.
• Follow Due Process for Termination for Cause: When terminating for misconduct or poor performance, it's crucial to follow proper disciplinary procedures. Our legal team advises conducting a thorough investigation, issuing warnings, and providing the employee an opportunity to respond before making a final decision.
• Provide Full and Final Settlement: Upon termination, employers must settle all dues, including outstanding salary, unused leave encashment, and reimbursements. For employees with 5+ years of service, gratuity payment is also mandatory. We've seen that prompt and accurate settlements significantly reduce the risk of legal disputes.
• Issue Necessary Documentation: It's essential to provide a formal termination letter stating the reason and last working day. Additionally, issue a relieving letter and experience certificate. Our clients have found that clear, comprehensive documentation helps maintain professional relationships and minimizes potential conflicts.
• Comply with EOR Responsibilities: For companies using an Employer of Record (EOR), the EOR manages the termination process, ensuring compliance with Indian labor laws. In our experience, this significantly reduces legal risks and administrative burdens for the client company.

What are the various types of terminations in India?

‍Our HR experts have identified four main types of termination in India:

Note: Larger Companies using EOR services should be aware that terminating a significant number of employees (usually 100 or more) may require additional scrutiny or government notification. This is in accordance with the Industrial Disputes Act, 1947, which mandates government approval for layoffs, retrenchment, or closure in industrial establishments with 100 or more workmen. Pregnant women and those on maternity leave have special protections.

What are the visa and work permit requirements in India?[toc=Visa & Work Permits]

In our experience handling visa and work permit processes for numerous international clients, obtaining the necessary documentation for foreign employees in India can be complex. Here's a comprehensive guide to navigating this process:

‍Visa Application Process:

1. Determine the appropriate visa category (e.g., Employment Visa, Business Visa) based on the purpose of your visit.
2. Apply online through the official Indian Visa Online website (https://indianvisaonline.gov.in/visa/). Fill out the application form, upload required documents, and pay the visa fee.
3. Schedule an appointment at the nearest Indian Visa Application Center (IVAC) or Indian Mission/Post to submit your physical application, passport, and supporting documents.
4. Attend the visa interview, if required, and provide biometric information.
5. Track your application status online using the visa enquiry feature on the Indian Visa Online website.
6. Collect your passport with the visa stamp from the IVAC or Indian Mission/Post, or receive it by post.

Work Permit (Employment Visa) Requirements:

1. Applicant must be a highly skilled professional, employed by a company registered in India.
2. Annual salary should be at least US$25,000, with some exceptions for certain professions.
3. Visa must be issued from the applicant's country of origin or domicile.
4. Applicant must comply with all legal requirements, such as payment of taxes.
5. Supporting documents include passport, photos, proof of employment, registration documents of the Indian company, and proof of professional expertise.

‍Useful Websites:

• Indian Visa Online: https://indianvisaonline.gov.in/visa/
• e-FRRO Portal: https://indianfrro.gov.in/eservices/home.jsp

Our team strongly recommends checking the latest requirements on official websites and consulting with the nearest Indian Embassy, High Commission, or Consulate for up-to-date information.

Key Takeaways

• An Employer of Record (EOR) in India is a third-party organization that acts as the legal employer for your workforce, handling hiring, payroll, and compliance without establishing a local entity.
• Hiring employees in India involves: determine hiring strategy, choose EOR provider, conduct compliant onboarding, and manage ongoing payroll with statutory deductions.
• Payroll management in India includes Provident Fund, ESI, TDS, and professional tax, with EOR services ensuring accurate monthly processing and full compliance.

Need help with Employer of Record in India? Contact us now!

FAQs

Is EOR legal in India?

Yes, the EOR model is fully legal in India. Reputable EOR providers act as the legal employer for your team, ensuring total compliance with Indian labor laws and regulations.

What is the cost of EOR in India?

EOR services in India typically charge a monthly fee per employee. Pricing ranges from $99 (e.g., Wisemonk) to $499 per employee per month, depending on the provider and services offered.

For a detailed breakdown, including hidden costs and provider comparisons, read our dedicated article on the Cost of Employer of Record (EOR) in India.

What does EOR stand for?

EOR stands for Employer of Record, It is a third-party entity that legally employs workers on behalf of your business, handling payroll, taxes, and statutory obligations.

What is the future of EOR?

The EOR industry is expanding rapidly in India and globally, as more companies seek agile, compliant ways to hire remote teams and enter new markets without setting up local entities.

What is EOR approval?

EOR approval usually refers to internal company authorization to engage an EOR provider. In India, there are no special government approvals required to use EOR services, but businesses should ensure their provider fully complies with all regulatory standards.