Payroll Onboarding Compliance Support by EOR Provider for Existing India-Based Employees of Global Companies
Existing India based employees payroll and compliance is a legal exposure for any foreign company that pays Indian staff as contractors or through informal arrangements. Missed PF, ESI and TDS filings bring penalties and disputes. An Employer of Record becomes the legal employer and takes over contracts, onboarding, payroll and statutory registrations, and the team keeps working without interruption.
Why Informal Arrangements Create Risk
Many foreign companies start with Indian freelancers or contractors who later work like full time staff. Fixed hours, one client and company managed tasks can make a contractor look like an employee in law. The result can be unpaid PF and ESI, missing TDS filings and disputes over benefits and notice.
| Warning sign | Risk |
| Works fixed hours for one client for a long period | Misclassification as an employee |
| No PF or ESI contributions | Back payments and penalties |
| No payslips or Form 16 | Tax filing problems for the worker and the payer |
| No written notice or exit terms | Disputes at termination |
| Staff in several states | Missed state level registrations and taxes |
What the Employer of Record Takes Over
| Area | What changes |
| Contracts | New compliant employment agreements replace informal terms |
| Payroll | Monthly payroll, payslips, TDS and year end Form 16 |
| PF | Employer share at 12% of wages plus 0.5% EDLI and 0.5% admin charges; employee share 12% (CorpReady) |
| ESIC | Employer 3.25% and employee 0.75% of wages for employees earning up to ₹21,000 a month |
| Onboarding | Offer letters, ID and background checks, tax and benefit forms |
| Exit | Notice, final settlement and records |
The new labour codes took effect on 21 November 2025. Full and final settlement now has to be completed within two working days of an exit, and fixed term employees become eligible for gratuity after one year of service under the Industrial Relations Code. Source: DLA Piper. An employer of record keeps contracts and exit processes in line with these rules.
How to Move an Existing Team
- List the team. Record each person’s role, location, pay, start date and current contract terms.
- Review classification. Identify who works like an employee and who is a genuine contractor.
- Agree the new pay structure. Break salary into components so PF, ESI and tax apply correctly.
- Issue new contracts. The employer of record sends compliant offer letters and collects documents.
- Set a switch date. Start payroll from a clean month so records are continuous.
- Keep the work going. Daily tasks, tools and reporting lines stay the same.
Genuine contractors, such as an analyst team on a defined project, can stay on fixed term or project contracts, which an employer of record can also issue.
Questions About Existing India Based Employees
Can existing contractors be moved to an employer of record?
Yes. They are reissued compliant contracts and placed on payroll, usually without a break in work.
Do past periods need to be fixed?
That depends on the facts. Take legal and tax advice on past contributions and filings before the switch.
Who controls the team after the move?
The client company. The employer of record handles employment administration only.
Can the team move to the company’s own entity later?
Yes. Employees transfer with fresh contracts and records when the entity is ready.