Employing in India

An employer of record, sometimes known as an international PEO can help you quickly hire and onboard workers in the India – often with just two weeks’ notice. Establishing your own local entity without risk and saving costs, this type of service makes an EOR in India worth checking out!

The captivating, colourful country of India has long been known for its mix of traditions, renowned local cuisine and stunning sites — perfect for modern-day adventurers looking to explore. But for international businesses, India also offers a unique opportunity to become a part of the globe’s fifth-largest economy and the second-most populous country.

India has the fastest growing economy in the world, spending billions on infrastructure, and has increased its size by six times since 2000! It’s often described as a developing market economy and has been identified as one of the world’s largest emerging economies — known as the ‘BRICS nations’ (along with the likes of Russia, Brazil, China and South Africa). Many international companies move to India to take advantage of the country’s huge pool of both skilled and unskilled labour, which is available at a comparatively moderate cost. However, many organisations that expand into India for the costs tend to stay for the quality and investments in innovation.

Most opportunities can be found in the major northern cities, such as the financial centre of Mumbai and India’s political capital New Delhi. The southern megacity of Bengaluru is also home to the India’s high-tech industry — while arts, retail and hospitality tend to be centred around the coastal tourist hotspots, such as Goa in the west. Foreign companies needn’t worry too much about settling in and establishing connections, either: the main business language is English.

PEO in India

An overview of employing in India

Salary Information

Indian rupee (₹)

On or before the seventh of the next month if the employee’s salary is above 1000INR per month. Otherwise, it will be on or before the 10th day of the month per the statutory norm. However, best practice is to pay on the last working day of the month.

The tax deducted at source from the salary TDS is required to be paid on the seventh of the next month, or else incur a penalty.

The usual minimum wage is approximately 176INR, but in India, the minimum wage changes depending on what state the work is taking place in and at what skill level the employee in question has.

Salary is paid out in 12 equal instalments.

Not required by law.

General Benefits

Healthcare and pension contributions are mandated by the government to make up the social security system in India.

In India, Employee State Insurance Corporation (ESIC) runs the employee health insurance scheme for employees who receive monthly salary equal to or less than 21.000INR.

The employee gets medical services provided by hospitals that are run by the government. The employee also receives life insurance coverage for death while working in the company premises.

If an employee’s salary is more than 21000INR per month, there’s no state health insurance, and most companies provide an insurance cover to the employees using any of the major providers on the market.

Total employer cost is 16% of the employee’s gross wages. This is made up of 4% for healthcare and 12% goes towards pension (provident fund).

Pension fund is known as EPF (Employees’ Provident Fund Organisation) and is managed by central government. Contribution to this fund is made by the employee and the employer equally. Each employee is provided a Universal Account Number (UAN), meaning the employee’s provident fund contribution remains in one account even in the occurrence of multiple job changes.

Holiday Entitlement in India

In accordance with local law, employees are entitled to 21 paid days off in a year which includes:

  • Earned leave of 15 days (1.25 per month) and
  • Six casual leaves (six per year)

An employee can carry over unused holiday days to the following year, although they cannot carry over more than 30 days.

There are three nationally observed public holidays in India: Republic Day (26 January), Independence Day (15 August) and Mahatma Gandhi Jayanti (2 October). The remaining holiday dates will vary dependent on locality and religious and cultural observances. A list of the observed dates will be provided by TopSource Worldwide (dependent on work location) for the employee to select their preference, based on their entitlement.

Please note:
A gazetted holiday is a mandatory holiday, enforced by the government, meaning all banks, school etc. must be closed. Restricted holidays are holidays that an employee can choose a limited number of (this is to account for the cultural and religious differences throughout India).

  • 1 January – New Year’s Day (Restricted Holiday)
  • 13 January – Lohri (Restricted Holiday)
  • 14 January – Pongal (Restricted Holiday)
  • 14 January – Makar Sankranti (Restricted Holiday)
  • 20 January – Guru Govind Singh Jayanti (Restricted Holiday)
  • 26 January – Republic Day (Gazetted Holiday)
  • 16 February – Vasant Panchami (Restricted Holiday)
  • 19 February – Shivaji Jayanti (Restricted Holiday)
  • 26 February – Hazarat Ali’s Birthday (Restricted Holiday)
  • 27 February – Guru Ravidas Jayanti (Restricted Holiday)
  • 8 March – Maharishi Dayanand Saraswati Jayanti (Restricted Holiday)
  • 11 March – Maha Shivaratri/Shivaratri (Gazetted Holiday)
  • 28 March – Holika Dahana (Restricted Holiday)
  • 29 March – Holi (Gazetted Holiday)
  • 2 April – Good Friday (Gazetted Holiday)
  • 4 April – Easter Day (Restricted Holiday)
  • 13 April – Chaitra Sukhladi (Restricted Holiday)
  • 14 April – Vaisakhi (Restricted Holiday)
  • 14 April – Mesadi (Restricted Holiday)
  • 15 April – Bahag Bihu/Vaisakhadi (Restricted Holiday)
  • 21 April – Rama Navami (Gazetted Holiday)
  • 25 April – Mahavir Jayanti (Gazetted Holiday)
  • 7 May – Jamat Ul-Vida (Restricted Holiday)
  • 9 May – Birthday of Ravindranath (Restricted Holiday)
  • 14 May – Ramzan Id/Eid-ul-Fitar (Gazetted Holiday)
  • 14 May – Ramzan Id/Eid-ul-Fitar (Muslim, Common local holiday)
  • 26 May – Buddha Purnima/Vesak (Gazetted Holiday)
  • 12 July – Rath Yatra (Restricted Holiday)
  • 21 July – Bakr Id/Eid ul-Adha (Gazetted Holiday)
  • 15 August – Independence Day (Gazetted Holiday)
  • 16 August – Parsi New Year (Restricted Holiday)
  • 19 August – Muharram/Ashura (Gazetted Holiday)
  • 21 August – Onam (Restricted Holiday)
  • 22 August – Raksha Bandhan (Rakhi) (Restricted Holiday)
  • 30 August – Janmashtami (Gazetted Holiday)
  • 30 August – Janmashtami (Smarta) (Restricted Holiday)

Work-related injury leave is available to any employee who becomes temporarily disabled. They’ll receive 50% of their usual pay.

Maternity leave is only required to be given to employees who have worked for the employer at least six months prior to the delivery date. Women receive 100% of their average wages in the six months prior to the birth for a total of 26 weeks for their first two children and then for a total of 12 weeks for every child after that.

Paternity leave isn’t yet legalised in India but based on many employer decisions, the employer usually provides five to 15 days of paid leave to male employee as paternity leave.

The employer isn’t required to pay any sickness allowance to employees. However, employees are entitled to apply for paid sickness leave. They may have up to 15 paid sick days per year, paid at 70% of their average daily wage.

An employee must provide a medical certificate from a doctor if they’re absent from work for more than three consecutive days. In the case of an employee having an emergency or sudden sickness, they must notify the employer immediately.

Progressive employers offer health insurance policies from any well-known insurance agency for employees who aren’t covered under the ESIC scheme.

Contractual provisions


Notice period
30 days is the standard notice period given to any employee who has worked for an employer for more than three months. No notice period is required for employment contracts terminated due to employee misconduct.

Severance pay
Severance pay is only required if the employee in question has been working for the employer for two years or more and they’re being let go due to redundancies. The severance pay will vary depending on the length of employment and salary.

Important note: As the Employer of Record, the responsibility for assessing the legal basis and issuing appropriate legal documentation for a potential termination is the responsibility of TopSource Worldwide. It’s imperative that the employer (client) consults TopSource Worldwide prior to any individual discussions taking place around possible termination of contracts.

PEO services in India

Other Contractual provisions

It’s possible for contracts to be signed electronically and there’s no legal requirement to execute an original contract or for the contract to be signed prior to the hire date.

The probationary period in India is one to six months.

Normal working hours are considered 45 to 48 hours per week.

Most state laws require a rest break of 30 to 60 minutes every four to five hours of consecutive work. It’s normal to give employees an hour lunch break during a full working day.

Overtime is usually paid at 200% of the employee’s usual rate.

Work-related injury leave is available to any employee who becomes temporarily disabled. They’ll receive 50% of their usual pay.

Keen to engage an EOR in India? At TopSource Worldwide, we work with local experts to help you navigate the various admin and cost obstacles you may come across along your expansion journey

To find out how we can help your business with our employment solutions, contact us today.

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