EOR India: Employer of Record Services to Hire Without a Local Entity
EOR India (Employer of Record India) is a locally registered Indian company — typically a Private Limited — that legally employs your staff on your behalf, so you can hire employees in India without registering your own entity. AYP becomes the legal employer of record for your hires: we issue the India employment contract, run monthly payroll, make Employees’ Provident Fund (EPF) and Employees’ State Insurance (ESI) contributions, accrue gratuity, withhold Tax Deducted at Source (TDS) for the Income Tax Department, sponsor Employment Visas through the Bureau of Immigration, and keep you compliant with the four Labour Codes (2019–2020) and the relevant state Shops and Establishments Act. You direct the work; we carry the employment. You hire in days instead of the months it takes to set up a Private Limited.
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Introduction
An Employer of Record in India is a locally registered Indian company that legally employs workers on your behalf. You choose who to hire, set the salary, and manage the team day to day. The EOR takes on everything that legally has to sit with an Indian employer: the employment contract, monthly payroll, Employees’ Provident Fund (EPF) and Employees’ State Insurance (ESI) contributions, gratuity accrual under the Payment of Gratuity Act 1972, state-level professional tax (PT) and labour welfare fund (LWF), monthly TDS withholding remitted to the Income Tax Department, Employment Visa sponsorship through the Bureau of Immigration and FRRO, and compliance with the four Labour Codes plus the state Shops and Establishments Act that applies where the employee works.
The result: you build an India team in days, not the months it takes to incorporate your own Private Limited and complete EPFO, ESIC, professional tax and state registrations. EOR India suits companies hiring their first 1–50 employees, businesses testing the market before committing to an entity, and Global Capability Centres (GCCs) in their ramp-up phase.
What’s New for EOR India in 2026
The four Labour Codes — the Code on Wages 2019, the Industrial Relations Code 2020, the Code on Social Security 2020, and the Occupational Safety, Health and Working Conditions Code 2020 — consolidate 29 central labour laws into four. State-by-state implementation has continued through 2026, with most states having now notified their rules. The practical changes that matter for EOR India: a national floor-wage concept, fixed-term employment formally recognised, gratuity extended pro-rata to fixed-term employees, women permitted on night shifts with safeguards, and the new tax regime under Section 115BAC now the default for FY 2025–26 with a standard deduction of INR 75,000. An Employer of Record applies all four Codes based on the employee’s work-state and defaults to the new tax regime unless the employee opts back to the old one in writing.
Quick Facts: Hiring in India (2026)
Employer of Record (EOR) India 2026
Who Uses an EOR in India?
Companies that hire through an Employer of Record in India usually fall into three groups. The first is overseas tech firms — US, UK, EU and Australian companies — hiring their first engineers, product staff, designers and customer-success teams in Bengaluru, Hyderabad, Pune or Delhi/NCR. The second is APAC-headquartered companies, especially Singapore regional offices, building India teams without opening a new entity. The third is founders and scaleups testing the India market for 12–24 months before incorporating. Global Capability Centres increasingly run their first year of ramp-up on EOR India, then transition to their own entity once headcount passes the 100-plus mark.
EOR India vs. Setting Up a Local Entity
If you are hiring fewer than fifty people, ramping a GCC, or testing the market, EOR India is the route. If you are committing to India as a customer-facing entity — local invoicing, GST registration, SEZ or STPI tax incentives — a Private Limited is the right long-term move. Many AYP clients run EOR India for the first 12–24 months, then incorporate once headcount and revenue justify it. For companies that already have an Indian entity and only need HR and payroll run for them, see our Professional Employer Organisation (PEO) services.
Industries Hiring Through EOR India in 2026
Technology and Global Capability Centres. Overseas tech firms scale engineering, product, data, AI/ML and customer-success teams in Bengaluru, Hyderabad, Pune and Delhi/NCR. India hosts the world’s largest concentration of GCCs.
IT services and SaaS. Foreign SaaS companies hire sales, customer success, support and engineering staff, drawing on India’s deep English-speaking talent base.
Pharma and biotech. Global pharma companies and contract research organisations hire clinical research, regulatory, manufacturing and quality staff in Hyderabad, Mumbai and Ahmedabad.
Fintech and financial services. Banks, insurers and payments operators hire engineering, risk, compliance and operations staff in Mumbai (BKC) and Bengaluru.
E-commerce, logistics and consumer. Cross-border platforms hire country managers, marketing leads and operations talent across India’s major cities.
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Employment Landscape
Market Overview (2026)
India is the world’s fastest-growing major economy and the most important emerging talent market for global employers. The 2026 themes are GCC expansion, surging AI and engineering talent demand, and the bedding-in of the four Labour Codes. GDP is projected at around USD 4.3 trillion in 2026, growing 6.5–7.0% on Ministry of Statistics and Reserve Bank of India forecasts. The Rupee trades at roughly INR 84–88 per USD. Mid-to-senior tech and engineering salaries sit between INR 12 lakh and INR 60 lakh per year, with senior tech leaders and AI specialists reaching INR 80 lakh to INR 1.5 crore or more.
Where You’ll Be Hiring
Bengaluru. Asia’s largest tech talent pool and India’s startup capital. Home to most major GCCs. Electronic City and Whitefield are the main corridors.
Hyderabad. A fast-growing hub for tech, pharma and aerospace. HITEC City and Gachibowli host most GCCs, with strong English skills and a lower cost base than Bengaluru.
Mumbai and Pune. Mumbai (BKC) is the financial-services capital; Pune adds a strong tech, AI/ML and auto-manufacturing base.
Delhi / NCR (Gurugram, Noida). The capital region, strong in consulting, e-commerce, IT services and shared-services operations.
Chennai. Auto manufacturing, IT services and SaaS, with a deep talent pool and a high concentration of US-headquartered GCCs.
Why Singapore-Headquartered Companies Hire Here
Many Singapore-headquartered companies use EOR India to hire engineers, designers, customer-success leads and back-office staff in Bengaluru, Hyderabad and Pune without setting up an Indian Private Limited. The EOR holds the local employment contract, manages EPF, ESI, gratuity and TDS, and applies the correct state-level professional tax and labour welfare fund — none of which a Singapore entity can do directly. This keeps the Singapore Pte Ltd clean while the India team is built. See our EOR Singapore page for the regional-HQ view.
Laws & Compliance
Indian employment is governed primarily by the four Labour Codes — the Code on Wages 2019, the Industrial Relations Code 2020, the Code on Social Security 2020, and the Occupational Safety, Health and Working Conditions Code 2020 — which together replace 29 central labour laws. Each state’s Shops and Establishments Act still sets working hours, weekly off, leave and overtime for that state. The Payment of Gratuity Act 1972 governs gratuity. The Maternity Benefit (Amendment) Act 2017 sets 26 weeks of paid maternity leave. Tax runs through the Income Tax Act 1961. Social security is administered by the Employees’ Provident Fund Organisation (EPFO) and the Employees’ State Insurance Corporation (ESIC). Corporate matters sit with the Ministry of Corporate Affairs.
Critical Compliance Framework (2026)
Common Mistakes Foreign Employers Make in India
Treating India as one labour market. Each state has its own Shops and Establishments Act, professional tax slabs, labour welfare fund and working-hour rules. A contract that works in Karnataka may not satisfy Tamil Nadu. An EOR applies the correct state law for each employee’s work location.
Ignoring gratuity accrual. Gratuity is payable after 5 years at 15 days’ wages per year of service. Employers who do not accrue for it monthly face a large lump sum on exit. The EOR default is to accrue around 4.81% of basic salary every month.
Defaulting to the wrong tax regime. Since FY 2024–25 the new tax regime under Section 115BAC is the default. Employees who want the old regime, with HRA and 80C deductions, must opt in. Payroll systems that have not been updated may still default to the old regime.
Overlooking Permanent Establishment risk. A foreign parent that exercises too much operational control over an EOR-employed worker can create a Permanent Establishment in India, triggering corporate tax exposure. Direction of work should stay focused on tasks and outputs, not on micro-managing how and where the work is done.
Missing professional tax. Professional tax is a state-level tax, typically up to INR 2,500 per employee per year, applied in most southern and western states but not all. Missing it draws interest and penalties from the state Commercial Tax Department.
What an EOR India Partner Is Legally Responsible For
When AYP is the Employer of Record in India, AYP carries direct responsibility for: the India employment contract compliant with the relevant state Shops and Establishments Act and the four Labour Codes; monthly statutory contributions to EPFO and ESIC; monthly gratuity accrual; state-level professional tax and labour welfare fund; monthly TDS withholding and remittance to the Income Tax Department; annual Form 16 issuance; Employment Visa sponsorship and FRRO registration where applicable; statutory leave administration; compliant payslips; record retention; response to any state Labour Department or EPFO inspection; and conduct of any termination in line with the Industrial Relations Code 2020 and state procedure. Your company directs the work and pays AYP a monthly fee.
Payroll & tax
Indian payroll runs through five statutory layers. The Employees’ Provident Fund Organisation (EPFO) administers the compulsory retirement savings scheme. The Employees’ State Insurance Corporation (ESIC) administers social health insurance for employees earning up to INR 21,000 a month. The Income Tax Department collects monthly TDS through employer withholding, with an annual Form 16. State Commercial Tax Departments collect professional tax where it applies. State Labour Welfare Boards collect the labour welfare fund where it applies. An Employer of Record registers your workforce with every relevant body. If you already have an Indian entity and only need payroll run for you, see our Asia Payroll service.
Employer Statutory Contributions (2026)
EPF, ESI and Gratuity Explained
EPF (Employees’ Provident Fund). India’s compulsory retirement savings scheme, administered by EPFO. The employer contributes 12% of basic wages and the employee contributes 12%. Of the employer’s 12%, 8.33% (capped) goes to the Employees’ Pension Scheme. Many employers contribute on full basic wages rather than the INR 15,000 statutory cap, because it improves the employee’s long-term savings.
ESI (Employees’ State Insurance). Social health insurance administered by ESIC. It applies to employees earning gross monthly wages up to INR 21,000. The employer contributes 3.25% and the employee 0.75%. Above that wage threshold, neither contributes.
Gratuity. A statutory exit payment under the Payment of Gratuity Act 1972, payable after 5 years of continuous service. The formula is (15 ÷ 26) × last drawn basic wages × completed years of service, with a tax-free cap of INR 20 lakh. The EOR accrues around 4.81% of basic salary monthly so the lump sum does not surprise the P&L. The Code on Social Security 2020 extends gratuity pro-rata to fixed-term employees.
Personal Income Tax (PIT) Rates
India runs two tax regimes side by side. Since FY 2024–25 the new tax regime (Section 115BAC) is the default, with lower rates and a standard deduction of INR 75,000. The old tax regime is available on opt-in and allows House Rent Allowance, Section 80C deductions and home-loan interest relief. Tax is administered by the Income Tax Department and withheld monthly through TDS, remitted by the 7th of the following month, with Form 16 issued annually. An EOR applies the new regime by default and switches to the old regime if the employee opts in writing.
2026 PIT Bands — New Tax Regime (FY 2025–26)
A standard deduction of INR 75,000 applies to salaried employees. The Section 87A rebate makes income up to INR 7,00,000 effectively tax-free. A surcharge applies on income above INR 50 lakh, and a 4% Health and Education Cess applies on top of all tax and surcharge.
Working Hours & Leave Entitlements
Working hours, overtime, leave and public holidays are set by the four Labour Codes — chiefly the Code on Wages 2019 and the OSH Code 2020 — and by the Shops and Establishments Act of the state where the employee works. State rules can be stricter than central rules, and the Ministry of Labour and Employment enforces the minimum standards.
Working Hours and Overtime
The standard work week is 48 hours, usually structured as 8 hours a day across 6 days or 9 hours a day across 5 days. A weekly rest of at least 24 consecutive hours is mandatory. Overtime is paid at twice the ordinary hourly rate, and maximum overtime is capped at 50–125 hours per quarter depending on the state. Under the OSH Code 2020, women may now work night shifts where the employer provides transport, a women supervisor and written consent.
Leave Entitlements
Public Holidays 2026
India observes 3 gazetted national holidays: Republic Day (26 January), Independence Day (15 August) and Gandhi Jayanti (2 October). Each state notifies a further 10–15 holidays based on regional festivals — Pongal in Tamil Nadu, Onam in Kerala, Durga Puja in West Bengal, Diwali across most states. Employers typically grant 10–14 holidays in total. An EOR applies the correct state holiday calendar for each employee’s work location.
Work Permits & Visas
To hire a foreign national in India, the employer sponsors an Employment Visa (E Visa) through the Indian Mission abroad and registers the worker with the Foreigners Regional Registration Office (FRRO) on arrival. The Employment Visa requires a minimum annual salary of USD 25,000 and is granted to skilled, qualified professionals where Indian nationals are not readily available. When you use an Employer of Record in India, the EOR is the registered sponsor — your overseas company does not apply directly. For visa support in markets where AYP is not your EOR, see our Asia Mobility service.
How EOR India Handles Employment Visa Sponsorship
The EOR is the registered employer with the Ministry of Corporate Affairs and EPFO. It prepares the Employment Visa support letter for the Indian Mission abroad, registers the foreign worker with FRRO within 14 days of arrival, manages renewals, and coordinates dependant visas. The Employment Visa is granted for 1–5 years and is extendable. Foreign workers are not subject to EPF unless they come from a country with a Social Security Agreement with India.
Visa Categories
The USD 25,000 Employment Visa salary threshold is reviewed periodically — confirm the current figure with the relevant Indian Mission before submitting an application.
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Termination & Employee Exit
Termination in India is governed by the Industrial Relations Code 2020 for “workmen” (technical and manual roles) and by contract for “non-workmen” (managerial and supervisory roles). Disputes go through the Labour Commissioner’s office and the Industrial Tribunal. An Employer of Record absorbs this legal exposure on your behalf, manages the notice period, calculates gratuity and any retrenchment compensation, and documents the exit in line with the law.
Notice Period Requirements
Either party may pay salary in lieu of notice, subject to the contract.
Gratuity on Exit
Gratuity is paid to any employee with 5 or more years of continuous service on exit, except where dismissal is for proven misconduct. The formula is (15 ÷ 26) × last drawn basic wages × completed years of service, capped at INR 20 lakh. The Code on Social Security 2020 extends gratuity pro-rata to fixed-term employees without the 5-year minimum. In cases of death or disability, gratuity is payable regardless of length of service.
Retrenchment Compensation (Workmen Only)
For workmen retrenched under the Industrial Relations Code 2020, the employer pays 15 days’ average pay for every completed year of continuous service, plus 1 month’s notice or pay in lieu. Government permission is required for retrenchments above the state-specific threshold.
Legitimate Grounds for Termination
Indian law recognises termination for misconduct (after a documented inquiry — chargesheet, inquiry officer, findings), poor performance (after documented warnings), redundancy or retrenchment (with compensation for workmen), end of a fixed-term contract, and frustration of contract. An EOR manages the documentation, the inquiry process, the gratuity calculation and the final settlement end to end.
Why AYP
AYP Group is the Employer of Record partner of choice for companies hiring across Asia-Pacific. Three things define the EOR India experience.
Transparent, predictable pricing. EOR India runs on a clear monthly fee per employee, with no hidden setup fees and no surprise compliance charges. You see the full cost before you sign. Details are on our pricing page.
One partner, one contract, all of APAC. Hire in India today and in Singapore, Malaysia, Vietnam, the Philippines, Thailand, Indonesia or Hong Kong next quarter on the same contract, the same account team and the same monthly invoice. See EOR Singapore, EOR Malaysia, EOR Vietnam, EOR Thailand, EOR Indonesia, EOR Hong Kong, EOR Philippines and EOR Taiwan.
Labour Codes 2026-ready. AYP applies the four Labour Codes per the employee’s work-state, files EPFO and ESIC contributions on schedule, calculates state professional tax and labour welfare fund correctly, defaults to the new tax regime under Section 115BAC, and accrues gratuity monthly. See About AYP for our company background and APAC footprint.
Glossary of India Employment Terms
EPF — Employees’ Provident Fund. Compulsory retirement savings, 12% each side on basic wages. EPFO — Employees’ Provident Fund Organisation. Administers EPF, EPS and EDLI.
ESI — Employees’ State Insurance. Social health insurance for wages up to INR 21,000/month.
ESIC — Employees’ State Insurance Corporation.
Gratuity — Statutory exit payment; 15 days’ wages per year after 5 years. Cap INR 20 lakh.
TDS — Tax Deducted at Source. Monthly tax withholding by the employer.
PT — Professional Tax. State-level tax, up to INR 2,500/year. Not all states.
LWF — Labour Welfare Fund. Small state-level contribution. Not all states.
Form 16 — Annual TDS certificate issued by the employer to the employee.
Section 115BAC — The new default tax regime from FY 2024–25.
Labour Codes — Four codes consolidating 29 central labour laws.
FRRO — Foreigners Regional Registration Office. Required for foreign workers within 14 days of arrival.
Private Limited (Pvt Ltd) — The standard Indian corporate structure registered with the MCA.
GCC — Global Capability Centre. A multinational’s offshore captive operation.
Legal disclaimer: this guide provides general information about India employment regulations and EOR services. Specific legal advice should be obtained from qualified professionals. Employment laws change, and many rules vary by state — seek state-specific advice for compliance in the relevant Indian state.
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EOR India stands for Employer of Record India — a locally registered Indian company (typically a Private Limited) that legally employs your staff on your behalf, so you can hire in India without setting up your own Pvt Ltd or branch office. The EOR holds the local employment contract, runs payroll, makes Employees’ Provident Fund (EPF) and Employees’ State Insurance (ESI) contributions, accrues gratuity monthly, withholds Tax Deducted at Source (TDS) for the Income Tax Department, applies state-level professional tax (PT) and labour welfare fund (LWF), sponsors Employment Visas through the Bureau of Immigration, and ensures full compliance with the four Labour Codes (2019–2020) and the relevant state Shops and Establishments Act.
The split of responsibility is clean: you handle the work, AYP handles the employment. You interview and choose the hire, set the salary, and manage their day-to-day tasks and performance. AYP issues the compliant employment contract, onboards the employee, registers them with EPFO and ESIC, runs payroll each month, withholds and remits TDS, accrues gratuity, and files the statutory returns. You get one monthly invoice covering salary plus the service fee, and you can transfer the employee to your own entity later if you decide to incorporate. For companies that already have an Indian entity and only need HR and payroll run for them, see our Professional Employer Organisation (PEO) services.
Yes. EOR India operates as a registered Indian Private Limited under the Companies Act 2013, registered with EPFO, ESIC and the relevant state Shops and Establishments authority. There is no separate “EOR licence” in India — the EOR is the legal employer under standard Indian company and labour law. The employment relationship sits between the employee and the EOR’s Indian company, while you direct the work. For the wider regional picture, see our Employer of Record APAC overview.
EOR India from AYP is a predictable monthly fee per employee, with no hidden setup fees and no per-filing surcharges. The fee covers the local employment contract, monthly payroll, EPF and ESI contributions, gratuity accrual, professional tax and labour welfare fund where applicable, TDS withholding and Form 16, Employment Visa sponsorship for foreign hires, and ongoing Labour Codes compliance. See our pricing page, or contact our team for a quote based on your roles and hiring volume.
Typically 5–7 working days from signed service agreement to first day, once standard onboarding documents are ready (Aadhaar, PAN, bank details, address and education proof). By comparison, incorporating your own Indian Private Limited with the Ministry of Corporate Affairs takes 4–8 weeks, plus a further 2–4 weeks for EPFO, ESIC, professional tax and state registrations.
EPF (Employees’ Provident Fund) is India’s compulsory retirement savings — 12% from each side on basic wages, with 8.33% of the employer share going to the Employees’ Pension Scheme. ESI (Employees’ State Insurance) is social health insurance for employees earning up to INR 21,000/month — 3.25% employer plus 0.75% employee. Gratuity is a statutory exit payment of 15 days’ wages per year of service, payable after 5 years and capped at INR 20 lakh. An EOR handles all three. See our Asia Payroll service for standalone payroll if you already have an Indian entity.
Yes. EOR India sponsors Employment Visas (E Visa) through the Bureau of Immigration and registers the foreign hire with the FRRO within 14 days of arrival, provided the role meets the USD 25,000 minimum annual salary threshold and is for a skilled, qualified professional. The Employment Visa is granted for 1–5 years and is renewable, and dependant visas for spouse and children are processed alongside.
Termination depends on whether the employee is a “workman” (technical or manual roles, covered by the Industrial Relations Code 2020) or a “non-workman” (managers and supervisors, covered by contract). For workmen, retrenchment requires 1 month’s notice or pay in lieu plus 15 days’ wages per completed year of service. For non-workmen, notice is by contract, typically 30–90 days. Gratuity of 15 days’ wages per year is payable on exit after 5 or more years. As the legal employer, the EOR absorbs Labour Commissioner and Industrial Tribunal exposure when terminations are handled correctly.
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