Employer of Record (EOR) in India
Employer of Record (EOR) in India enables companies to hire employees without establishing a legal entity. With a workforce of over 520 million people, India is one of the largest talent pools in the world. Businesses often hire through EOR services in India to access skilled professionals in IT, engineering, finance, pharmaceuticals, and manufacturing while ensuring compliance with India’s complex labor laws. An EOR in India manages employment contracts, payroll, benefits, taxation, and statutory contributions, allowing companies to expand quickly while reducing compliance risks.
About India
India, the world’s most populous country, is a rapidly growing economy and a major hub for technology, business services, manufacturing, healthcare, and finance. With its large English-speaking workforce, India is a global leader in IT outsourcing, software development, and back-office operations.
The country’s workforce is young, skilled, and cost-competitive, making it attractive for companies looking to establish offshore or remote teams. India has also invested heavily in infrastructure, digital transformation, and workforce upskilling, making it a global center for startups, R&D, and multinational operations.
Employment laws in India vary across states, with regulations covering wages, social security, termination, and benefits. Navigating these complexities can be challenging, which is why companies rely on EOR solutions for smooth market entry and compliant hiring.
Employment Terms and Regulations
Types of Contracts
- Permanent employment contracts
- Fixed-term contracts
- Contractual/temporary employment
- Apprenticeships
Working Hours
- Standard: 8–9 hours per day, 48 hours per week
- Overtime requires additional pay under the Factories Act and Shops & Establishments Act
Minimum Wage (2025)
- Varies by state and sector, ranges from INR 178–750 per day (~USD 2–9)
Probation Period
- Typically 3–6 months, depending on role and contract
Taxation and Contributions
- Employers deduct Tax Deducted at Source (TDS) from employee salaries
- Social contributions include Provident Fund (PF), Employee State Insurance (ESI), and Professional Tax (varies by state)
Types of Leave
Annual Leave:
12–18 days (depending on state law)
Public Holidays:
10–12 days (varies by state)
Maternity Leave:
26 weeks (paid)
Paternity Leave:
Not mandatory, though some employers provide 5–15 days
Sick Leave:
6–12 days annually (varies by law and company policy)
Employee Benefits
- Provident Fund (retirement savings)
- Gratuity (after 5 years of service)
- Health insurance (mandatory under ESI for eligible employees)
- Paid leave entitlements
- Bonus payments under the Payment of Bonus Act
Termination Process
- Notice period: 30–90 days depending on contract and company policy
- Termination must comply with Industrial Disputes Act and state-specific labor rules
- Severance pay may apply in cases of redundancy or retrenchment
Employer Taxes
Provident Fund (PF):
12% of basic wages
Employee State Insurance (ESI):
3.25% of gross salary (if wages ≤ INR 21,000/month)
Gratuity Contribution:
4.8% (approx.)
Other contributions:
Professional Tax, depending on state
Total Employer Contributions:
Typically 15%–18% of gross salary
EMPLOYER TAXES
15%–18% (Estimated)
FAQ's
How STM Manages Employment in India
Establishing an entity in every hiring location can be cost-prohibitive. STM simplifies the process by employing and paying your Indian talent on your behalf. We handle the intricate HR procedures and employment contracts in compliance with local laws. You can conveniently approve invoices through our platform. By partnering with an Employer of Record (EOR), you can efficiently and compliantly hire top talent globally.
Payment Processes for Indian Employees
We streamline payroll management for your Indian workforce. Employee hours, leaves, holidays, bonuses, and commissions are meticulously calculated. STM invoices you around the 15th of each month in your preferred currency, including US Dollars (USD), Euros (EUR), British Pounds (GBP), Canadian Dollars (CAD), or Singapore Dollars (SGD). This ensures your Indian employees receive their salaries promptly in Indian Rupees (INR). Simplify further by consolidating your global team’s salaries into a single payment.
Full-time Employees vs. Global Contractors
Contractors engage with multiple companies and are self-employed, while full-time employees focus solely on their employer and receive additional benefits like health insurance, equity, and time off. While hiring international contractors can be cost-effective, it comes with misclassification risks. Partnering with an EOR for contractor onboarding and payments ensures compliant and timely compensation.
Reliable Employee Support
Our platform offers accessible support for employees and employers with inquiries about benefits, visas, and global employment in India. Utilize the chat function to connect with our expert team. Additionally, every STM client is assigned a dedicated account manager, serving as the primary contact for global HR assistance.
