Date:

June 16, 2026

Last updated:

June 16, 2026

Introduction

Hiring your first employee in India looks straightforward until the compliance stack appears. You are suddenly dealing with EPF and ESI registration, TDS withholding, gratuity, state-specific Shops and Establishments rules, and the four new Labour Codes that came into force in November 2025. One misstep with any of them invites penalties from the Income Tax Department or the labour authorities.

An employer of record in India removes that burden. An EOR is a locally registered company that legally employs staff on your behalf, managing payroll, statutory contributions, and compliance, while you direct the day-to-day work. It lets you hire without setting up an Indian entity.

This guide walks through what you need to know: how to hire, onboarding and contracts, payroll and taxes, statutory benefits and leave, working hours, visas and work permits, termination rules, and how incorporation compares with using an EOR.

India at a glance

Population size: 1.47 billion

Currency: Indian Rupee (INR)

Capital city: New Delhi

Languages spoken: Hindi and English (21 other recognized languages)

GDP: USD 3.91 trillion (nominal)

One platform to grow your global team

Hire and pay talent globally, the hassle-free way with Skuad.

Talk to an expert

How to hire employees in India

There are three main paths to hiring employees in India:

1.Setting up a subsidiary to hire directly, which means you are not using any employer of record services in India.

2.Hiring via “professional employer organizations” (PEO).

3.Working through an “employer of record” (EOR) in India.

Direct hiring via a subsidiary

To establish a subsidiary in India, employers must file with the Ministry of Corporate Affairs and submit the following documents:

Application for Reservation of Name (Form INC-1)
Director Identification Number (DIN) and Digital Signature Certificate (DSC)
Memorandum of Association (MoA)
Articles of Association (AoA)
Form INC-22 (address registration)
Form DIR-12 (appointment of directors)

Incorporating a subsidiary in India typically takes 2 to 6 weeks, after which you can begin operations directly.

Before hiring, interview candidates to evaluate how well their skills and qualifications match the posted job descriptions. Many organizations use technical and HR panels, for example, to assess aptitude and fit.

Upon selection, candidates must sign a written employment contract in compliance with local labor laws.

Hiring via EOR in India

Setting up a subsidiary in India means filing with the Ministry of Corporate Affairs, securing a DIN (Director Identification Number) and DSC (Digital Signature Certificate), drafting the MoA (Memorandum of Association) and AoA (Articles of Association), and committing to ongoing compliance, often weeks of setup before your first employee starts.

Skuad helps remove that dependency. Skuad acts as the legal employer in India, so your company can hire, onboard, and pay employees without entity setup, local legal counsel, or in-house Indian payroll infrastructure.

Here is what Skuad helps with:

Employment contract generation across 160+ countries, aligned with local labor laws and statutory requirements
Statutory contribution workflows across supported markets, covering applicable social insurance and pension obligations
Payroll processing in 70+ currencies with tax withholding and statutory deductions

For a deeper country breakdown, see Skuad's India hiring guide

General Employer of Record service terms

Taxes that apply to invoices	Rates are dependent on salary thresholds and employer contributions, including Provident Fund (12%) and Employee State Insurance (3.25%).
Minimum duration of service	There is no fixed duration of service; a standard probation period of six months applies. Termination during probation or later must comply with Indian labor laws.
Currency Accepted	Indian rupee.
Required Details and Documents	For Indian Citizens: PAN card, Aadhaar card, residential proof, CV, bank account details, and job description. For Expatriates: CV, passport, work visa, proof of residence, educational qualifications, and employment contract.

For more details about how hiring would work for your particular company, speak to a Skuad expert now.

Hiring via PEO

A Professional Employer Organization (PEO) offers HR support in recruitment, payroll, benefits, and employee management, but differs from an EOR. With a PEO, employees are legally employed by your company, and you make all HR decisions. While this offers you greater control, it can be time-consuming, especially during expansion.

Onboarding and agreements

The first step in successful onboarding is drafting an employment agreement that complies with Indian labor laws. Contracts must outline key terms, including working hours, compensation, payment methods, leave entitlements, and termination conditions.

In India, employment contracts are categorized as follows:

Indefinite Contracts: Full-time agreements detailing long-term employee roles, responsibilities, and benefits.
Part-Time Contracts: For employees working limited hours, often without full-time benefits.
Freelance Agreements: Contracts for project-based work, specifying deliverables and payment terms.
Zero-Hour Contracts: Flexible agreements without fixed working hours, mainly used in industries like hospitality and retail.
Consultancy Agreements: For self-employed professionals hired for specific projects or durations.

To enhance the onboarding experience, ensure that you take the following steps to prepare:

Confirm new hires with HR
Send a welcome email
Inform existing staff, and
Prepare necessary tools and equipment.

Taxes

Tax / Regulation	Explanation
Tax year	The financial year runs from 1 April to 31 March.
Income tax (new regime, default)	Slabs for FY2025-26: nil up to ₹4,00,000; 5% on ₹4–8 lakh; 10% on ₹8–12 lakh; 15% on ₹12–16 lakh; 20% on ₹16–20 lakh; 25% on ₹20–24 lakh; 30% above ₹24 lakh. A Section 87A rebate makes income up to ₹12 lakh effectively tax-free (₹12.75 lakh for salaried, after the ₹75,000 standard deduction).
Health & Education Cess	4% is charged on the total of income tax plus any applicable surcharge.
Corporate tax	Domestic companies: 30% default, 25% where turnover does not exceed ₹400 crore, with concessional rates of 22% (Section 115BAA) and 15% for new manufacturers (Section 115BAB). Foreign companies: 35% (reduced from 40%), with 50% on certain old royalty or technical-service agreements.
Provident Fund (EPF)	The employee pays 12% of Basic + Dearness Allowance. The employer also pays 12%, split into 3.67% to EPF and 8.33% to the Employees' Pension Scheme (EPS). Mandatory only up to ₹15,000 Basic + DA.
Employees' State Insurance (ESI)	The employee pays 0.75%, and the employer pays 3.25% of gross salary. Applies only when gross salary is ₹21,000 per month or less.
Withholding tax (TDS)	Dividends are taxable in the recipient's hands, with TDS of 10% for residents and 20% for non-residents, subject to treaty relief.

Compliance

Employment laws in India are governed by a combination of central and state-specific laws, including the Labour Code on Wages (2019), and other labor reforms introduced in recent years. These laws, like those in the table below, establish the rules and standards regarding employment policies, wage rates, working hours, statutory employee benefits, and workplace conditions.

Compliance requirement	What an employer must do under the Labour Codes
Appointment letters	Issue a mandatory written appointment letter to every worker, stating designation, wages, and social security entitlements. This formalises employment and establishes job security.
Minimum wage and floor wage	Pay every worker at least the statutory minimum wage, benchmarked to the National Floor Wage set by the Central Government (Code on Wages, 2019).
Timely wage payment	Pay wages on time, with no unauthorised deductions. For IT and ITES roles, salary must be released by the 7th of every month.
Provident Fund (EPF)	Register and contribute to the Employees' Provident Fund and the Employees' Pension Scheme (Code on Social Security, 2020).
ESIC coverage	Provide ESIC coverage, now extended PAN-India. Mandatory for establishments with even one employee in a hazardous process, and voluntary for establishments with fewer than 10 employees.
Gratuity	Provide gratuity, with fixed-term employees now eligible after one year of continuous service instead of five.
Fixed-term employment parity	Give fixed-term employees the same wages, leave, medical, and social security benefits as permanent staff.
Annual health check-up	Provide a free annual health check-up to all workers above the age of 40.
Equal pay and non-discrimination	Ensure equal pay for equal work and gender-neutral pay. Discrimination is prohibited, including against transgender persons.
Women in night shifts	Permit women to work night shifts and all types of roles, subject to their written consent and mandatory safety measures.
Grievance redressal	Provide a grievance mechanism for the timely resolution of harassment, discrimination, and wage disputes, with mandatory women's representation on grievance committees.
Annual leave accrual	Allow workers to avail annual leave after 180 days of work in a year.

‍

Independent contractors vs full-time employees

India’s education system produces over 78 million graduates annually, including 2.6 million STEM graduates. Many of these workers specialize in IT and creative fields. Apprenticeships for these workers are governed by the Apprentices Act 1961.

The Labour Code protects two primary employee categories in India through employment contracts: definite employment contracts and indefinite employment contracts

	Full-time employee	Independent contractor
Responsibilities	Determined by the role for which they are hired.	Determined by the scope of the project for which they are hired
Working Hours	Fixed, as per labor laws.	Flexible, based on project needs.
Benefits	Eligible for Provident Fund, ESI, and gratuity.	Minimum wage and safety provisions under the Contract Labour Act.
Selection	Hired directly for long-term roles.	Recruited through contractors for short-term tasks.
Protections	Protected against unfair dismissal.	No job security or union representation.

Classifying a worker as a contractor or a full-time employee in India changes everything downstream, including EPF and ESI contributions, gratuity eligibility, and exposure under the Contract Labour Act. Misclassification is where the risk sits, and Indian courts apply control and integration tests to decide.

Skuad supports both hiring models from a single platform:

EOR for full-time employees

Acts as the legal employer across 160+ countries, so you can hire without setting up a local entity
Supports employment contract generation aligned with local labor laws across supported markets
Facilitates statutory contribution workflows covering applicable social insurance and pension obligations
Supports payroll processing in 70+ currencies with tax withholding and statutory deductions
Assists with termination and offboarding, including notice periods and final settlements as required locally

Contractor management

Helps onboard contractors with locally compliant agreements that reduce misclassification exposure
Supports invoice generation, approval workflows, and payment processing across supported markets
Helps flag classification risk early with built-in worker classification checks
Facilitates multi-currency payouts across 70+ currencies with no manual reconciliation
Helps manage contractor records, contracts, and payment history from one dashboard alongside full-time employees

Full-time or contractor. Skuad supports both. See pricing

Benefits and compensation

Gratuity

Item	Detail
Eligibility	Regular employees with at least five years of continuous service. Fixed-term employees are eligible after one year of continuous service.
Calculation	Roughly 15 days' last-drawn wages for every completed year of service.
Governing law	Now under the Code on Social Security, 2020 (which subsumes the Payment of Gratuity Act, 1972).

Provident fund (EPF)

Item	Detail
Contribution	Employee pays 12% of basic wages plus dearness allowance and retaining allowance. The employer matches 12%, split 3.67% to EPF and 8.33% to the pension scheme.
Purpose	Retirement savings, with provisions for withdrawals during emergencies.
Governing law	Now under the Code on Social Security, 2020 (which subsumes the EPF & MP Act, 1952).

Insurance (ESI)

Item	Detail
Contribution	Employer pays 3.25%, and the employee pays 0.75% of gross wages.
Coverage	Applies to employees earning ₹21,000 per month or less. Provides medical, sickness, maternity, disability, and dependant benefits.
Governing law	Now, under the Code on Social Security, 2020 (which subsumes the ESI Act, 1948), ESIC coverage is extended PAN-India.

Bonus

Item	Detail
Applicability	Establishments with 20 or more employees (factories with 10 or more).
Eligibility	Employees earning ₹21,000 per month or less (basic + DA), after at least 30 days of work in the year.
Amount	Minimum 8.33% or ₹100, whichever is higher; maximum 20%. Calculated on a capped wage (₹7,000 or the state minimum wage, whichever is higher), not on full annual wages.
Governing law	Now under the Code on Wages, 2019 (which subsumes the Payment of Bonus Act, 1965).

Rise of remote work

The popular surge of remote work has expanded the talent pool, enabling companies to hire without geographical constraints. Digital work models are increasingly popular among many businesses.

Employment contracts

Though not mandatory, clear employee contracts defining wages, roles, and terms are strongly recommended to ensure compliance and minimize disputes. India’s evolving workforce laws and remote hiring trends offer vast opportunities for businesses willing to adapt.

Tests to determine employment status in India

Understanding employment status is crucial for legal and organizational clarity. Below are the key tests used to evaluate this status:

Test	Description
Control Test	Examines whether a master-servant relationship exists, focusing on the employer's control over the work performed and how it is completed.
Integration Test	Evaluates whether the worker is fully integrated into the employer’s organization or remains independent of it.

Additional factors for court consideration

Factor	Explanation
Appointing Authority	Who has the authority to appoint the worker?
Nature of Establishment	The type of organization or business in which the worker is employed.
Dismissal Authority	Who holds the power to dismiss the worker?
Provision of Tools	Whether the employer or the worker provides the tools/equipment required for the job.
Degree of Control	The extent of control and supervision exercised by the employer over the worker.
Nature of Job	The inherent characteristics of the job, such as whether it involves skilled or professional work.

IP protection in India

Intellectual property (IP) refers to any brand, invention, design, or other kind of creation over which a person or business entity has legal rights. In India, some of the most common types of IP include:

Copyright: Currently, all intellectual property rights are administered by the Department for Industrial Property and Promotion.
Patents: Matters related to patents are handled according to the provisions of India’s Patents Act of 1970, the 2016 Patent Amendment Rules, and the 2003 Patent Rules.
Designs: The Designs Act 2000 and the Design Rules 2001 are the primary laws that govern designs.‍
Trade Marks: Indian trademark laws comprise the Trade Marks Rules of 2002 and 2017 and the 1999 Trade Marks Act.

Visa types in India

Visa type	Purpose
Work Visa (Employment Visa)	For skilled or qualified foreign professionals taking up employment in India. Not granted for routine, ordinary, clerical, or secretarial roles.
Business Visa	For foreign nationals visiting India for business activities such as meetings, setting up a venture, or trade, without taking up local employment.
Family Visa (for dependents)	For dependents and family members of a foreign national already holding a valid Indian visa (often referred to as the entry/X visa).
Student Visa	For foreign nationals pursuing full-time studies, courses, or academic programmes at recognised Indian institutions.
Medical Visa	For foreign nationals travelling to India for medical treatment at recognised hospitals or facilities.
Medical Attendant Visa	For family members or attendants accompanying a patient travelling on a Medical Visa.
Tourist Visa	For foreign nationals visiting India for tourism, sightseeing, or casual visits to friends and family.
Journalist Visa	For professional journalists and media representatives travelling for work.
Conference Visa	For foreign nationals attending conferences, seminars, or workshops held in India.
Transit Visa	For foreign nationals passing through India en route to another country.
Official Visa	For foreign nationals travelling to India on official government business.
Diplomatic Visa	For holders of diplomatic passports travelling on diplomatic assignments.
Miscellaneous Visa	For purposes that do not fall under the standard categories above.

Work permits

Foreign nationals seeking employment in India must obtain an Employment Visa. The application process involves submitting the following documents:

Valid Passport: Must be valid for at least six months beyond the intended stay and have at least two blank pages.
Employment Contract: A detailed contract specifying the terms of employment.
Proof of Qualifications: Documentation of professional skills and qualifications relevant to the position.
Visa Application Form: Completed and signed application form.
Employer's Registration Documents: Proof of the employer's registration in India.
Passport-sized Photographs: Recent photographs must meet the specified requirements.

It's important to note that Employment Visas are not granted for routine, ordinary, or secretarial/clerical jobs. The visa is typically valid for the duration of the employment contract, up to a maximum of five years, and can be extended in India.

Nationals from certain countries, such as China, Afghanistan, or Pakistan, may face additional scrutiny. Therefore, they are advised to apply well in advance, preferably two months before the intended travel date.

Hiring a foreign national in India means securing an Employment Visa, registering with the Foreigners Regional Registration Office (FRRO), and meeting documentation and salary-threshold requirements, with extra processing time for certain nationalities. The sequence adds lead time to any international hire.

Skuad supports the work permit process on your behalf, including:

Supporting employment visa applications for foreign employees joining your team
Helping coordinate visa documentation with the relevant local immigration authorities
Assisting with registration and residence steps as required by local immigration law
Helping track documentation requirements and deadlines across the full permit lifecycle
Helping keep your team aligned with requirements as renewals and regulations change

Payroll

In India, payroll is traditionally processed through cash, cheques, direct deposits, pay cards, or mobile wallets. While this is simple for small teams, managing multiple employees can quickly become complex, requiring strict compliance with tax regulations and additional administrative tasks.

Process	Details
Applying for a Tax Deduction Account Number or Tax Collection Account Number (TAN)	Register online or at a Tax Information Network Facilitation Center. A processing fee and 18% GST are applicable.
Choosing a Payroll System	Select a system that considers factors like employee benefits (e.g., health insurance), business requirements, and growth vision.
Set Up Provident Fund	Ensure 12% of salary is contributed to the Provident Fund. Employees must complete a withholding allowance certificate.
Note Employee Information	Note details like wages, work hours, and personal information. Using software or cloud-based services simplifies data entry and maintenance.

Workers’ rights

The employment law in India lays down a few obligations and terms of employment that both employees and employers must follow. These include:

for a typical EOR hire. Industry-specific and ease-of-doing-business items are left out.

Right / Entitlement	What the OSH Code, 2020 provides
Appointment letters	Every employee must receive a formal appointment letter in the prescribed format, stating designation, category, wages, and social security details.
Working hours	No employee may work more than 8 hours a day and 48 hours a week. The appropriate Government fixes rest intervals and the spread-over period.
Flexible work schedules	Hours can be arranged as a 4-day week (up to 12 hours/day), a 5-day week (9.5 hours/day), or a 6-day week (8 hours/day), within the weekly cap.
Overtime	Work beyond the daily or weekly limit is overtime, paid at twice the normal wage rate and requiring the worker's consent.
Annual leave with wages	Paid leave accrues after 180 days of work in a calendar year, reduced from the earlier 240-day threshold.
Free annual health check-up	Every employee is entitled to a free annual health check-up.
Women's right to all work and night shifts	Women may work in all establishments and all types of work, including before 6 a.m. and after 7 p.m., with their consent and employer-provided safety, facilities, and transport.
Contract worker protection	The principal employer is responsible for the welfare, health, and safety of contract workers, and must pay their wages if the contractor fails to do so.
Safety committees	Workers are represented on mandatory safety committees in larger establishments (factories with 500+ workers, and lower thresholds for construction and mines).

Remote and hybrid work

To enable practical remote work in India, companies must address three key factors:

Flexible work arrangements: Develop policies supporting remote work, including clear communication, collaboration, time management, and performance evaluation guidelines.
Technology and Infrastructure: Ensure access to suitable hardware (laptops, mobile devices), reliable internet, and secure software to maintain productivity outside the office.
Data privacy and security: Implement strong security measures to protect sensitive data and comply with data protection regulations.

Understanding labor laws and creating a remote-ready environment to maximize flexibility and efficiency is vital.

Salary

In India, salary structures typically include various allowances such as house rent allowance (HRA), leave travel allowance (LTA), phone allowance, special allowance, and others tailored to specific job roles. Many of these components are calculated as a percentage of the basic salary.

Employees may also negotiate specific salary allocations, such as contributions to the Provident Fund (PF) or other benefits, depending on their preferences and requirements.

To stay competitive and make fair offers, use Skuad’s Salary Insight Tool. This tool provides up-to-date information on salary trends and comparisons, helping you attract and retain top talent.

Leave policy

Leave type	Entitlement	Accumulation / encashment	Key rules
National & Festival Holidays	3 national holidays (26 January, 15 August, 2 October) plus state-specific festival holidays	Not applicable	Festival holiday list follows the local festivals of each state and is published annually by 15 December for the following year.
Privilege Leave (PL)	21 working days per calendar year	Up to 60 days (joined on/after 1 Oct 2020); up to 120 days (joined on/before 30 Sep 2020, under 50); up to 240 days (over 50). Credited on 31 December. Encashable only on separation	Maximum 30 days at a time. Minimum 4 days required when claiming LTA. Weekends and holidays within the leave are not counted.
Casual Leave (CL)	7 days per year	Cannot be accumulated or encashed	Maximum 3 days at a stretch; beyond that, treated as PL or leave without pay. Apply at least 24 hours in advance. Cannot be combined with sick or privilege leave.
Sick Leave (SL)	9 days per annum	Cannot be accumulated or encashed (effective 1 Jan 2021)	Medical certificate required for absences of more than 3 days; may be requested for shorter absences too. Extensions beyond 9 days subject to approval.
Maternity Leave	26 weeks (available twice in service tenure), plus an additional 6 weeks = up to 32 weeks for 2 surviving children	Not applicable	12 weeks for a 3rd surviving child; 12 weeks for adoption (child under 3 months) and commissioning mothers; up to 45 continuous days for miscarriage or medical termination. Governed by the Maternity Benefit Act and 2017 amendment.
Paternity Leave	7 working days (excluding holidays and intervening weekends)	Cannot be accumulated or encashed	Available for up to 2 children; not available if the employee already has two children at the time of joining.

Background checks

When hiring employees in India, it is always advisable to run a thorough pre-onboarding background check to safeguard your company’s assets and employees from unnecessary threats.

The table below lists some of the most common verification checks performed in this country.

Criminal record check

When running a criminal record check in India, you must obtain a Police Clearance Certificate (PCC) issued by the local police or authorized government agencies.

This certificate provides critical insights into job applicants' criminal history (if any), enabling you to make well-informed hiring decisions.

Credit history check

A credit history check involves reviewing an individual's credit report to evaluate how responsibly they manage their finances, reflecting their reliability and trustworthiness.

In India, CIBIL (Credit Information Bureau India Limited) is the primary institution for handling credit reports. Under its policies, credit reports can only be accessed with explicit authorization from the candidate.

Education verification

An education verification is done to verify the accuracy of a candidate's academic claims, including degrees, diplomas, and certifications.

Employers may contact educational institutions directly or work with a third-party verification service to ensure the candidate possesses the qualifications.

Employment verification

Employment verification involves confirming a candidate's previous roles, tenure, responsibilities, and reasons for leaving.

This step helps validate their experience and ensures they fit the position well. Employers can connect directly with previous employers or use professional verification agencies for this process.

Termination and offboarding

For an employer of record, India has a few critical rules to be aware of when letting an employee go:

Topic	Explanation
Notice of termination	For a worker, one month's written notice or wages in lieu, under the Industrial Relations Code, 2020. For managerial and commercial establishment staff, notice follows the employment contract and the relevant state Shops and Establishments Act, commonly 30 days.
Retrenchment compensation	A worker with at least one year of continuous service is entitled to 15 days' average pay for every completed year of service.
Re-skilling Fund	The employer must also contribute 15 days' wages per retrenched worker to the Worker Re-skilling Fund, credited within 45 days, on top of retrenchment compensation.
Government permission threshold	Establishments with 300 or more workers need prior government permission before layoff, retrenchment, or closure. Below 300, no prior permission is needed, but notice and compensation obligations still apply.
Compliance records	Terminations must comply with the relevant state Shops and Establishments Act and the Industrial Relations Code. Non-compliance can lead to legal action, reinstatement, and penalties for wrongful termination.
Contractors and freelancers	Independent contractors and freelancers are governed by the Indian Contract Act, 1872. A breach may entitle them to compensation under Section 73 and the right to initiate legal proceedings.

Terminating an employee in India carries real exposure with a typical 30-day notice or pay in lieu, state-specific Shops and Commercial Establishments Act rules, and protections under the Industrial Disputes Act that can lead to wrongful-termination claims if mishandled.

Skuad helps you stay aligned with these rules through local EOR infrastructure, so your team doesn't have to interpret Indian termination law state by state:

Supports notice period and final settlement calculations as required across supported markets
Helps document terminations in line with local labor requirements
Supports offboarding workflows, final pay, and statutory settlements across supported markets
Helps keep employment practices aligned with regulatory changes across 160+ countries

Employer of Record in India: Hire faster without a local entity

Hiring in India means staying on top of EPF and ESI contributions, TDS withholding, gratuity, state-specific Shops and Establishments rules, and the new Labour Codes, all at once.

Skuad supports the operational complexity of hiring in India with employment contracts, statutory contributions, payroll in local currency, statutory benefits, and background checks, so your team can focus on the work, not the paperwork.

Companies across SaaS, IT services, e-commerce, and technology use Skuad to support their entry into the Indian market, stay aligned with regulations as they change, and scale their team without building local HR infrastructure from scratch.

Book a demo to see how Skuad gets your first India hire onboarded in weeks, not months

Cultural Considerations

A crucial aspect of international hiring is evaluating whether the new employee aligns with the organization’s goals and values. Cultural compatibility significantly impacts employee morale, engagement, and productivity.

Below, we list some key elements of workplace culture in India that organizations should consider:

Respect for authority and hierarchical respect are fundamental aspects of Indian work culture. Employees often demonstrate deference to authority figures, such as managers and senior staff, particularly in formal settings.
Teamwork, collectivism, and collaboration are highly valued, emphasizing group success over individual achievements. Team-oriented approaches often dominate workplace dynamics.‍
Communication styles are essential and typically vary from formal to professional. However, start-ups and modern organizations may adopt a more casual and open communication style.

Conclusion

Hiring directly in India can be complex, requiring employers to navigate various labor laws, tax regulations, and compliance requirements. Ensuring adherence to these constantly evolving laws demands significant effort and input from legal and accounting teams.

This is where Employer of Record (EOR) platforms like Skuad become invaluable. By seamlessly managing compliance, payroll, and employment contracts, Skuad enables business owners to focus on sourcing top talent from India without the administrative burden.

‍Contact us today to discover how Skuad can streamline your operations and support your business growth in India.

FAQs

What is an employer of record in India?

An Employer of Record (EOR), like Skuad in India, is a service provider that legally employs individuals on behalf of another company. EOR solutions in India manage HR responsibilities such as payroll, taxes, benefits administration, and compliance with local labor laws, allowing client companies to focus on core business activities without establishing a regional entity.

Is it legal to use an employer of record in India?

Yes, using an Employer of Record is legal in India. It allows companies, especially foreign ones, to hire local employees without establishing a physical presence. This is an efficient solution for businesses expanding into India while avoiding the complexities of setting up a regional entity.

How long do employers keep employee records after termination in India?

In India, employers are required to retain employee records for at least three years after termination. These records, which include personal details, employment history, payroll, and government contributions, ensure compliance with Indian labor laws and are necessary for audits.

What is the difference between an EOR and payroll?

An EOR in India provides end-to-end employment solutions, including hiring, payroll, compliance, and HR management, and acts as the client's legal employer. Payroll services, on the other hand, only handle salary calculations, distributions, and reporting without taking on legal employer responsibilities.

How do you set up an EOR in India?

Setting up an EOR in India involves selecting a reliable service provider, like Skuad, who understands Indian employment laws. The process includes negotiating terms, defining service scope, and ensuring the EOR’s capabilities align with your needs, such as legal compliance, payroll management, and HR services.

What is the difference between an EOR and PEO?

The key difference between EOR and PEO services in India is the legal responsibility. An EOR acts as the legal employer on behalf of the client, managing all HR tasks and ensuring compliance with local laws. A PEO enters into a co-employment relationship where the client retains legal responsibility for employees while the PEO supports HR functions like payroll and benefits management.

What are the benefits of EOR?

An Employer of Record in India offers benefits such as cost savings, streamlined payroll, enhanced compliance, and access to local expertise. For instance, an EOR enables a foreign company to hire employees in India without establishing a regional entity, simplifying operations and ensuring compliance with Indian labor laws.

✨Limited Time Offer✨

Hire & Pay Globally without a local entity

Trusted by global leaders across industries

Book a demo

Wait! Before you go, why don't you book a call with our experts?

Employer of Record in India: A Complete Guide for 2026

Table of Content