Employer of Record

An Employer of Record (EOR) is a locally registered organisation that becomes the legal employer of your staff in India, while you direct their daily work, set priorities, and manage output. The EOR signs the India-compliant employment contract, runs payroll in rupees, deducts and deposits statutory dues, administers benefits, and handles labour-law compliance. You receive the people and the work; the EOR carries the employment paperwork and the legal obligations. This lets you build a team in India without forming your own entity.

Yes. A foreign company can employ staff in India through an EOR without incorporating a subsidiary, branch, or liaison office. The EOR is the registered Indian employer on record, so it can issue a valid local employment contract, which a foreign company without Indian registration cannot do on its own. You keep control of the work and the working relationship, while the EOR holds the legal employment relationship and the statutory responsibilities that come with it.

Yes. The EOR model is permitted in India. The EOR is a registered Indian entity that lawfully employs workers and meets obligations under the labour codes, provident fund, ESI, professional tax, and income tax rules. There is no single EOR licence; legality rests on the EOR being a properly registered employer that complies with these statutes. We structure each engagement so the employment contract, payroll, and statutory registrations sit correctly with us as the legal employer.

Both outsource employment administration, but the legal structure differs. With an EOR, the EOR is the sole legal employer, so you need no Indian entity. With a Professional Employer Organisation (PEO), you and the provider co-employ the staff, which requires you to already hold your own registered Indian entity. An EOR suits a company entering India or hiring a small team without incorporating. A PEO suits a company that already has an Indian entity and wants to outsource HR and payroll for existing staff.

It depends on timeline, team size, and long-term intent. An EOR lets you hire in days to a couple of weeks with no incorporation, which suits market testing, urgent roles, or small teams. Setting up your own entity takes several weeks plus ongoing corporate, tax, and annual filing obligations, and suits a long-term commitment or a larger team where those fixed costs are justified. Many companies start with an EOR and incorporate later once the India operation is established. We can model both paths for your situation.

An EOR reduces this risk but does not automatically remove it. Because the EOR is the legal employer, your India-based staff are not your employees, which helps keep you outside a permanent establishment. The exposure that remains depends on what the person actually does. If an India-based individual habitually negotiates and concludes contracts that bind your company, a dependent-agent permanent establishment can still arise under the applicable tax treaty, regardless of whose payroll they sit on. We review roles and contract terms so the arrangement supports your position rather than relying on a blanket assurance.

EOR cost has three layers. First, the employee's gross salary. Second, the employer's statutory contributions, mainly provident fund and gratuity, which typically add around 15% to 22% on top of salary. Third, the EOR service fee, charged per employee. Against this, you avoid the cost of incorporating and maintaining your own Indian entity, including registration, ongoing compliance, and annual filings. We provide a clear cost breakdown for your specific roles before you commit.

Onboarding through an EOR usually takes a few days to about two weeks, against four to eight weeks to register your own Indian entity before you can hire at all. The timeline depends on how quickly the candidate provides documents and completes statutory enrolment for provident fund and ESI. Because the EOR is already a registered employer, the long lead time of incorporation is removed, which is the main reason companies use an EOR for urgent or first hires in India.

Employees hired through an EOR receive the statutory benefits Indian law requires. These include Provident Fund, where employee and employer each contribute 12% of wages; Employees' State Insurance for employees within the wage limit; Professional Tax where the state levies it; and gratuity, payable at 15 days' wages for each completed year of service after five years, or after one year for fixed-term contracts. Group medical and accident cover is commonly added. The EOR calculates, deducts, deposits, and reports each of these as the legal employer.

As the legal employer, the EOR handles salary tax at source under Section 192 [ITA 2025: s. 392]. The EOR computes the monthly deduction, deposits it by the 7th of the following month and, for a March deduction, by 30 April under Rule 30 [ITR 2026: r. 218], files the quarterly return in Form 24Q [ITR 2026: Form 138], and issues each employee the annual salary certificate in Form 16 [ITR 2026: Form 130] by 15 June following the relevant year. The applicable section, rule and form depend on the period and the repeal-and-savings rules.

India's four labour codes have come into force, with key social-security rules notified from late 2025. The most significant payroll effect is the broadened wage definition, under which at least 50% of total pay must be treated as wages for provident fund and gratuity. This raises employer contribution costs where salary structures previously kept basic pay low. The EOR builds compliant salary structures and recalculates contributions under the current definition, so your hires stay covered as the regime settles.

Notice periods in India are generally longer than in many Western markets, commonly 30 to 90 days, set by the contract and the applicable state Shops and Establishments rules. Termination must follow due process, and for certain categories the Industrial Disputes Act adds procedure and severance requirements. Immediate exit usually requires payment in lieu of notice. As the legal employer, the EOR manages the exit process and any statutory dues, and we factor notice and severance exposure into your planning before you hire.

Engaging individuals as independent contractors to avoid employment obligations carries misclassification risk. If a contractor works fixed hours, reports to your team, and uses your systems, Indian authorities can reclassify the relationship as employment and pursue back contributions for provident fund and ESI, plus interest and penalties. For genuine, project-based freelance work, a contractor arrangement can be appropriate. For ongoing full-time roles, employment through an EOR removes this exposure. We assess each role to recommend the correct classification.

Yes, though foreign-national hiring carries extra steps beyond standard payroll. The individual needs the correct employment visa, now classified as E-1 for general employment, E-2 for intra-company transfers, and E-3 for certain non-profit roles. A foreign national intending to stay beyond 180 days must register with the Foreigners Regional Registration Office through the e-FRRO portal, and 2026 amendments tightened this timeline by removing the earlier grace period. Tax residency also matters, since a qualifying foreign national may hold Resident but Not Ordinarily Resident status, under which foreign income is generally outside Indian tax for a limited period. We track visa, registration, and residency alongside payroll.

You direct the work. The EOR holds the legal employment relationship, but you set tasks, priorities, performance expectations, and working hours, and the employee integrates with your team. Confidentiality and intellectual property are handled through the employment contract and a supporting assignment arrangement, so that work product and IP created by the employee flow to your business. We align the contract terms with your requirements during onboarding, so operational control and IP protection sit where you expect.