India is the world's largest talent pool for tech and services, with employment rules split across central and state laws. All-in employer cost runs around 1.17x the gross salary. Here is what to know before your first Indian hire.
Employment is governed by a mix of central statutes (Provident Fund, ESI, Payment of Gratuity, Payment of Bonus) and state-specific Shops and Establishments Acts. Appointment letters are standard, and social-security registration is mandatory above size thresholds.
Minimum wages are set by state, skill level, and industry, so there is no single national figure, and they are revised periodically*. The applicable rate depends on the state and role.
Monthly payroll. A statutory annual bonus applies to eligible employees under the Payment of Bonus Act, between 8.33% and 20% of wages within limits.
Three national holidays plus a set of state and festival holidays, so totals vary widely by state.
Appointment letters are standard, and probation of three to six months is common. Registration for EPF and ESI is required where thresholds are met.
Employer costs sit around 17%, driven by Provident Fund and, for lower-wage staff, Employees' State Insurance, plus gratuity accrual for longer-tenured employees.
PF is mandatory up to a wage ceiling and voluntary above it; ESI applies only below a monthly wage limit. Gratuity vests after five years of continuous service.
Employees pay income tax on a progressive scale (old and new regimes) plus their PF share, deducted at source (TDS). Withholding is the employer's responsibility, which under EOR means ours.
Earned or privilege leave accrues under state Shops and Establishments Acts, commonly around 15 to 18 days a year, on top of casual and sick leave.
26 weeks of paid maternity leave for the first two children under the Maternity Benefit Act, funded by the employer.
There is no central statutory paternity leave in the private sector; some employers offer it by policy.
Casual and sick leave are set by state law, commonly a handful of days each per year, separate from earned leave.
Notice, commonly 30 to 90 days or pay in lieu, is set by contract and state law. 'Workmen' under the Industrial Disputes Act have added protections, including notice and government approval for larger establishments.
Retrenchment compensation under the Industrial Disputes Act is 15 days' average pay per year of service for covered employees, and gratuity is payable after five years.
Commonly three to six months, confirmed in writing, with shorter notice during the period.
Engaging a contractor who works like an employee can trigger PF and ESI dues, benefits, and reclassification, and the Contract Labour Act adds obligations for certain arrangements.
*All figures are estimates from public sources (2025-26), pending ops verification - same basis as the EOR cost calculator. Not tax or legal advice.
Compliant Indian appointment letter, payroll, PF/ESI, and benefits, handled. One invoice, flat $399 per month.