For companies hiring their first employees in India
Employer of Record (EOR) in India
Reviewed by the NNRoad HR/Legal Compliance team. Last reviewed 8/3/2026.
Can you hire in India without opening your own entity?
Yes. Through an Employer of Record arrangement, you can hire an employee in India without registering your own legal entity there. NNRoad’s local team and local partner handle the employment contract, statutory registrations, and payroll on the ground, while you keep direct control over the person’s role, day-to-day work, and performance.
Before you promise a start date, check two things. First, Indian offers are built around a figure called Cost to Company (CTC): the employer’s total yearly cost for the role, not the employee’s take-home pay or a number you can compare directly to a salary in another country. Second, check which Indian state the person will work from. Both change the numbers and the paperwork, and both are covered below.
Before you promise a start date, check two things. First, Indian offers are built around a figure called Cost to Company (CTC): the employer’s total yearly cost for the role, not the employee’s take-home pay or a number you can compare directly to a salary in another country. Second, check which Indian state the person will work from. Both change the numbers and the paperwork, and both are covered below.
What an India EOR arrangement actually covers
NNRoad’s local team manages the employment agreement, Provident Fund and Employees’ State Insurance registrations where they apply, payroll processing, and statutory filings. You continue to direct the employee’s work, set goals, and manage performance the same way you would for any other team member.
The one thing to check before you promise a start date
CTC is the number most Indian candidates negotiate on and the number your budget will be built around, so it’s worth understanding what it actually bundles before you finalize an offer. The next section breaks that down.
Is EOR the right route for this hire?
EOR is not the right fit for every India hiring case. Three common situations point to a different NNRoad service instead.
You already have an entity and need payroll only
If your company already has an Indian entity and only needs salary processing, tax withholding, and statutory filings, India payroll outsourcing is usually the simpler, less expensive route, since it doesn’t require setting up a new employment relationship.
The hire is a foreign national
If the person is not an Indian national, the case runs on a visa and immigration timeline rather than a standard local hire. Expat employment in India coordinates the employment visa, FRRO registration, and payroll steps together.
eThe work is really project-based or contractor delivery
If you need defined deliverables or short-term capacity rather than an ongoing employee relationship, on-demand talent avoids building a long-term employment structure for short-term work. Treating a long-term role as a contractor to save cost is a common source of misclassification risk in India.
| Your situation | Better-fit service |
|---|---|
| You have an entity and need salary processing only | India Payroll Outsourcing |
| The hire is a foreign national | Expat Employment in India |
| You need defined deliverables or short-term capacity | On-Demand Talent |
| You need an ongoing employee relationship without your own entity | Employer of Record (this page) |
What your candidate's CTC number isn't telling you
Consider a mid-size software company hiring its first engineer in India. The offer letter quotes a CTC figure, and both sides tend to read it as if it were a salary number. It isn’t, and the gap between what CTC actually contains and what people assume it means is where most first-time India hiring plans go wrong.
Why CTC and take-home pay are not the same conversation
Cost to Company already includes items many countries bill separately: the employer’s Provident Fund contribution, gratuity accrual, and insurance.
Take-home pay is what remains after the employee’s own PF contribution, professional tax where applicable, and income tax withheld under Section 192. Comparing an India CTC figure directly to a take-home figure from another country compares two different things.
Take-home pay is what remains after the employee’s own PF contribution, professional tax where applicable, and income tax withheld under Section 192. Comparing an India CTC figure directly to a take-home figure from another country compares two different things.
The new statutory floor under CTC design
The Code on Social Security’s wage definition took effect on 21 November 2025 and requires that allowances outside basic pay stay under 50% of total remuneration, with anything above that added back into the wage base used for PF, gratuity, and bonus calculations.
NNRoad’s India payroll processing already reflects this current definition, so CTC structures built with our local team account for it from the first payslip.
NNRoad’s India payroll processing already reflects this current definition, so CTC structures built with our local team account for it from the first payslip.
What NNRoad's local team handles vs. what you control
NNRoad’s local team and local partner manage the employment contract, statutory registrations, payroll processing, and required filings in India.
You continue to direct the employee’s day-to-day work, set objectives, manage performance, and decide when the role changes or ends. Compensation changes, extended leave, and termination typically need your approval before the local team acts on them.
You continue to direct the employee’s day-to-day work, set objectives, manage performance, and decide when the role changes or ends. Compensation changes, extended leave, and termination typically need your approval before the local team acts on them.
Building the real cost of an India hire
A well-built CTC figure already prices in most of what follows; this section puts numbers on the components it bundles, plus what sits outside CTC entirely. Employer-side costs for an India hire typically include:
- The employer’s Provident Fund contribution, currently 12% of the PF wage base
- Employees’ State Insurance, 3.25% of gross wages, where the role and location fall under the ₹21,000 monthly wage ceiling
- Gratuity accrual and, for eligible roles, an annual statutory bonus of 8.33% to 20% of wages
- NNRoad’s onboarding and recurring service fees for local administration, which sit outside CTC and are billed separately
These figures move with wage level, sector, and state. For a full breakdown, use our calculator; for state-by-state filing detail, see India payroll outsourcing.
See what this hire actually costs
Convert CTC into take-home pay and total employer cost for India.
From offer to exit: how employment runs in India
Before the offer and start date
Confirm the work location, the CTC breakdown, and whether the person needs a foreign-national review before finalizing the offer. Employers should issue a written appointment letter to every new hire, matching the actual role, pay structure, and benefits.
First payroll and every cycle after
Monthly wages are generally due before the seventh day of the following month under the Code on Wages, and NNRoad’s local team handles PF and ESI contributions, tax withholding, and wage-slip issuance for every payroll cycle, not just the first one.
Mid-employment changes and maternity leave
Eligible women employees are entitled to 26 weeks of paid maternity leave, and establishments with 50 or more employees must provide a crèche facility. Compensation, location, or role changes during employment should be documented and shared with the local team promptly, since several statutory figures depend on current pay and location.
What actually happens when someone resigns
Notice periods come from the contract and the relevant state’s Shops & Establishments Act, not one national rule, and a departing employee typically needs a relieving letter to onboard elsewhere. Post-employment non-competes are largely unenforceable under Section 27 of the Indian Contract Act. Fixed-term employees earn pro-rata gratuity after one year, and final settlement is generally due within two working days.
Where to hire?
Where You Hire Changes Who You Can Hire
Labour sits on India’s Concurrent List, so both the central government and each state legislate on employment, and requirements such as Shops & Establishments registration, working hours, and local holidays vary by state.
In practice, the choice of state is often a talent decision as much as a compliance one: engineering talent concentrates around Bengaluru, finance and commercial roles around Mumbai, and operations and support functions around Chennai and Hyderabad. NNRoad’s local team sets up registration and payroll for the state where the employee actually works, wherever in India that is.
In practice, the choice of state is often a talent decision as much as a compliance one: engineering talent concentrates around Bengaluru, finance and commercial roles around Mumbai, and operations and support functions around Chennai and Hyderabad. NNRoad’s local team sets up registration and payroll for the state where the employee actually works, wherever in India that is.
Compliance load grows with headcount
A hiring plan that looks simple at five employees can trigger new registration and documentation duties the moment a threshold is crossed. Reviewing planned headcount against these numbers before scaling avoids last-minute compliance work.
| Headcount | What changes |
|---|---|
| 10 or more employees | ESI registration generally becomes mandatory |
| 20 or more employees | Provident Fund registration generally becomes mandatory |
| 50 or more employees | Crèche obligations apply, and a contractor supplying 50 or more contract workers needs a licence |
| 300 or more workers (industrial establishments) | Standing-order obligations become significant |
Prepare for a Useful First Conversation
What we need to start your case review
To scope your India hire, share the following information with us:
- Candidate nationality and work-authorization status;
- Work location and sector;
- Role and responsibilities;
- Intended start date;
- Expected duration and contract type;
- CTC, currency, and benefits;
- Your company’s current entity status in India;
- If there is any plan to transfer the employee to your own entity later.
Ready to send us these details?
Share this information and NNRoad's local team will map out the compliant route and real cost for your India hire.
Common Questions About Hiring in India
Is it legal to use an employer of record in India?
The commercial label isn’t what matters legally. What matters is whether the arrangement is structured correctly under India’s employment, payroll, tax, and social-security rules. A properly structured EOR arrangement gives you a compliant way to hire without your own entity.
Do we owe gratuity if the employee leaves before one year?
Generally no for most permanent employees, since ordinary gratuity eligibility requires five years of continuous service. Fixed-term employees are the exception: they earn pro-rata gratuity once they complete one year of service, even if the contract ends there.
Why does state location matter in an India EOR setup?
India is not one uniform employment market. Labour is in the Concurrent List, so both central and state governments legislate in this area. That means an India EOR setup should be localized for the employee’s actual work location rather than copied across all states as if the compliance picture were identical.
What statutory items should we budget besides salary in India?
Employers in India should usually budget beyond headline salary. Depending on the case, the real employment cost may include salary withholding tax, EPF, ESI, bonus for eligible employees, gratuity exposure, maternity-related obligations, and other headcount-driven employer requirements. Wage-structure design also matters because the current labour-code definition of wages affects how statutory calculations are made.
Can we hire employees in more than one Indian state at once?
Yes. NNRoad’s local team registers and administers payroll for each employee’s actual state of work, so a distributed India team is workable, though each additional state adds its own registration and filing steps.
What if the employee is a foreign national who needs permission to work in India?
If the employee is a foreign national and visa or work authorization is central to the case, the cleaner route is usually Hire Foreigner in India. That allows employment-visa eligibility, FRRO timing, contract documentation, and local payroll onboarding to be coordinated together from the beginning.