If you are planning to branch out your business overseas, handling diverse compliances in countries where you wish to employ talent may be quite a difficult task to handle. Having proper knowledge of compliances and tax rules prevailing in the new territory is crucial. To gain unparalleled peace of mind while at work, using the services of a third-party platform is going to be a prudent decision. Partnering with an EOR service provider can create wonders for your business. In that way, not only will you be able to free up your resources but also keep compliance violations at bay. Keep reading this blog to know about Employer of Record Services India and how an EOR partner can benefit you in cutting down costs while you embark on the journey of the expansion of your business.
Table of Contents
- Overview about India
- What is an Employer of Record in India
- Employer of Record vs Legal Entity
- What are the Use Cases for Availing of Services Under Employer of Record India?
- Laws and Compliance Best Practices to Hire Employees in India
- Best EOR Companies in India
- What are EOR Services in India
- How to Hire Employees Through an EOR India Partner
- Taxes in India
- CTC Calculator for Hiring Employees in India
- Key Considerations While Hiring Employee through EOR in India
- Employee Benefits in India
- Terminations in India
- How to Choose the Right EOR India Services?
- Benefits of Working With an Employer of Records Service Provider in India
- Visa Types in India
- Risks or Drawbacks of EOR India
- How Does Employer of Record India (EOR) Services Differ From an Usual HR Software?
- How much does it cost to avail Services Under EOR India?
- Conclusion: EOR India
- FAQs
Overview about India
India, with its dynamic economy and a large, skilled workforce, has become a hub for businesses looking to expand globally. The country boasts a rapidly growing technology sector, diverse industries, and a supportive government policy for foreign investment. However, navigating Indian labor laws, taxation, and employee benefits can be complex, making Employer of Record (EOR) services a valuable solution.
What is an Employer of Record in India
An Employer of Record (EOR) in India is a third-party organization that acts as the legal employer for a company’s employees in the country. The EOR takes on the responsibilities of hiring, onboarding, payroll management, and ensuring compliance with local labor laws and regulations. This allows companies to quickly and compliantly hire talent in India without establishing a legal entity.
Employer of Record vs Legal Entity
| Criteria | Legal Entity | Employer of Record (EOR) |
| Definition | A legal entity is a business or organization that is legally registered to operate in a specific jurisdiction and can hire employees directly. | An Employer of Record (EOR) is a third-party service provider that legally employs workers on behalf of another company. The EOR handles compliance, payroll, and legal responsibilities. |
| Ownership | Owned by the company setting it up or its shareholders. | EOR is the legal employer, but the client company maintains operational control. |
| Employment Contracts | Employees are directly employed by the legal entity, which sets their terms and conditions. | The EOR signs employment contracts with workers and ensures compliance with local laws. |
| Compliance Responsibility | The legal entity is fully responsible for local labor laws, tax compliance, benefits, and other regulatory requirements. | The EOR handles all compliance-related aspects, such as labor laws, taxes, and employee benefits. |
| Payroll & Benefits Management | Managed directly by the legal entity, which handles all payroll, taxes, and benefits. | The EOR manages payroll, taxes, and employee benefits, relieving the client company from these responsibilities. |
| Tax Liabilities | The legal entity assumes all tax liabilities, including local taxes, social security, etc. | The EOR assumes tax liabilities for employees, ensuring proper tax filing and payments in compliance with local laws. |
| Time to Set Up | Setting up a legal entity can take weeks or months due to registration, compliance, and operational setup. | The EOR can be set up quickly (typically in a few days or weeks), as the infrastructure is already in place. |
| Employee Onboarding | Managed by the legal entity, requiring HR processes, paperwork, and systems setup. | The EOR handles all aspects of employee onboarding, from contract creation to compliance checks. |
| Employment Law Expertise | The company needs internal expertise or external legal consultants to navigate local labor laws and tax compliance. | The EOR provides expert knowledge of local employment laws, reducing legal risks for the client company. |
| Risk & Liability | The company assumes all risks and liabilities related to employment and legal matters. | The EOR assumes the legal risks and liabilities associated with employment, protecting the client company. |
| Control Over Workforce | The legal entity has full control over recruitment, hiring, firing, and day-to-day employee management. | The client company retains operational control, but the EOR is the official employer and handles HR compliance. |
| Flexibility | Less flexible, as employees are directly hired by the legal entity, which might involve more complexity when scaling or expanding internationally. | Highly flexible, enabling the client company to quickly hire employees globally without establishing local entities. |
| Cost & Investment | Significant initial investment required for company registration, legal fees, HR setup, and ongoing operational costs. | Generally lower cost, as the client company does not have to set up local entities or hire an in-house HR team. |
| Global Expansion | Requires establishing a local entity in each country where the business intends to hire, which can be time-consuming and costly. | The EOR makes global expansion easy by managing local employment and compliance requirements, without setting up legal entities in each country. |
Pros and Cons of Setting Up EOR India Vs. Legal Entity
Employer of Record (EOR)
Pros
- Quick market entry without the need to establish a physical presence.
- Full compliance with Indian labor laws and regulations.
- Simplified payroll management in India.
- Reduced administrative burden for taxation and employee insurance.
- Access to local expertise and streamlined employee benefits in India.
Cons
- Limited control over direct employment and company branding.
- May not suit businesses looking for long-term, large-scale operations.
Legal Entity (LE)
Pros
- Complete control over business operations and branding.
- Suitable for long-term investments and scalability.
- Direct engagement with employees and stakeholders.
Cons:
- Lengthy and complex setup process involving registration and approvals.
- Compliance with Indian labor laws and taxation can be resource-intensive.
- Higher upfront costs for infrastructure and administration.
Suggested Read: EOR- A Detailed Guide on Employer of Record 2024
Choose Between an EOR India Partner and a Legal Entity
Legal Entity in India
Setting up a legal entity in India involves registering with local authorities, obtaining necessary licenses, and complying with labor and tax laws. While this option provides greater control, it requires significant investment in infrastructure, payroll management, and understanding Indian labor laws.
On the other hand, partnering with an EOR India provider ensures a seamless entry into the Indian market with reduced risks and administrative complexities. Businesses can leverage EOR services in India to streamline hiring, payroll, and compliance processes.
What are the Use Cases for Availing of Services Under Employer of Record India?
1. Business Expansion Without a Legal Entity
For foreign businesses, entering the Indian market can be daunting due to the complexity of legal and regulatory requirements. An Employer of Record (EOR) allows companies to start operations in India without setting up a formal legal entity. The EOR becomes the local employer for hired employees, managing payroll, taxes, and compliance while the company focuses on core business activities.
This is especially beneficial for:
- Startups testing new markets.
- Enterprises running short-term projects in India.
- Organizations seeking cost-effective market entry strategies.
2. Offering Full-time Employment to Contractors or Freelancers
Many businesses initially hire Indian talent as independent contractors or freelancers to reduce operational complexities. However, as work relationships solidify, transitioning these individuals into full-time roles can be complex. An EOR simplifies this process by providing structured employment contracts, employee benefits in India, and ensuring compliance with labor laws.
3. Recruiting Talent Globally
India is renowned for its highly skilled workforce, particularly in IT, engineering, and business services. For companies hiring from abroad, an EOR acts as a vital partner, managing recruitment and ensuring compliance with regional hiring norms. Businesses can build globally distributed teams without the administrative burden of establishing offices in multiple locations.
Laws and Compliance Best Practices to Hire Employees in India
India has a complex legal landscape with strict labor and employment regulations. Non-compliance can result in penalties and legal challenges. Below are the essential laws and best practices businesses should follow:
- Understanding Indian Labor Laws: Familiarize yourself with laws like the Employees’ Provident Funds Act, Payment of Bonus Act, and Shops and Establishments Act. These laws govern employee rights and benefits.
- Taxation in India: Employers must ensure proper deductions for TDS (Tax Deducted at Source) and comply with corporate tax obligations. An EOR simplifies this by managing filings and payments.
- Employee Benefits in India: Employees enjoy statutory benefits, including Provident Fund (PF), Employee State Insurance (ESI), gratuity, and leave entitlements.
- Contract Structuring: Employment agreements should be clear, compliant, and aligned with labor regulations to avoid disputes.
Best practices for compliance include conducting regular audits, staying updated on legal changes, and engaging a professional EOR partner for ongoing support.
Best EOR Companies in India
Choosing the right EOR provider can make or break your business’s success in India. Trusted EOR providers handle everything from compliance to payroll management efficiently. Explore the Top EOR Companies in India to find partners that align with your goals and budget.
What are EOR Services in India
Payroll Management
Payroll Management is a fundamental aspect of EOR services. Employers in India must navigate complex payroll regulations, managing salaries, bonuses, statutory deductions, and taxes. EOR providers handle salary calculations, ensure accurate deductions for Provident Fund (PF) and Employee State Insurance (ESI), and file necessary payroll-related tax returns. This ensures accurate and timely employee payments while maintaining compliance with Indian laws, protecting businesses from costly errors or penalties.
Employee onboarding
Employee Onboarding is another critical service provided by EORs in India. The onboarding process involves issuing legally compliant employment contracts, collecting and verifying necessary documents, and integrating new hires into the organization. EORs simplify the process for foreign businesses unfamiliar with Indian employment norms by ensuring compliance with all regulatory requirements. This helps businesses start operations quickly while creating a positive experience for new employees.
HR Administration
HR Administration offered by EORs ensures that routine HR tasks are managed efficiently. This includes maintaining employee records, monitoring attendance, and addressing workforce-related queries. By taking over these administrative tasks, EOR providers free up businesses to focus on strategic initiatives. Moreover, many EORs offer Self-Serve Employee Portals that allow employees to access payslips, update personal information, and apply for leave, making HR processes more transparent and user-friendly.
Equipment procurement and management
Equipment Procurement and Management is particularly important for companies employing remote teams or specialized roles. EORs assist in sourcing, delivering, and managing necessary work tools and equipment, ensuring employees have the resources needed to perform their roles effectively.
Compliance and Legal Support
Compliance and Legal Support is a vital component of EOR services, especially in a country like India with stringent labor laws. EOR providers ensure businesses adhere to regulations like the Shops and Establishments Act, Minimum Wages Act, and the Payment of Bonus Act. They also handle statutory filings, reducing the risk of non-compliance and associated penalties. This support is particularly valuable for international companies that may lack in-depth knowledge of local laws.
Taxation and Statutory Compliance
Taxation and Statutory Compliance is another area where EORs provide significant value. They manage mandatory deductions like TDS, PF, and ESI contributions, ensuring accurate calculations and timely submissions. This service ensures businesses comply with Indian tax regulations while maintaining transparency with employees regarding their contributions and benefits.
Employee Insurance and Benefits Administration
Employee Insurance and Benefits Administration is a critical service for companies aiming to attract and retain top talent. EORs manage statutory benefits like gratuity, as well as voluntary perks such as health and life insurance. They also ensure that benefits align with Indian labor laws and cultural expectations, enhancing employee satisfaction and loyalty.
Risk Management and Insurance
Risk Management and Insurance services provided by EORs help businesses mitigate employment-related risks. This includes covering liabilities such as wrongful termination claims, workplace accidents, or compliance audits. EORs act as a buffer, ensuring that companies operate within the legal framework and are protected from potential disputes.
Self-serve employee portal
A Self-Serve Employee Portal is an advanced feature offered by many EOR providers to enhance employee engagement and streamline HR processes. This digital platform allows employees to independently access critical information such as their payslips, tax details, benefits, and leave balances. Employees can update personal information, track attendance, and apply for leaves without needing constant HR intervention, making the system more efficient for both employees and employers.
Employee Tax Optimization
Employee Tax Optimization is another specialized service offered by EOR providers. They assist employees in structuring their salaries to maximize tax savings while ensuring compliance with Indian tax laws. This not only benefits employees but also enhances overall satisfaction and retention.
Employee Requirement
EOR services in India also extend to managing employee retirement benefits, ensuring compliance with statutory requirements and providing support for long-term employee welfare. This involves managing contributions to retirement schemes like the Employee Provident Fund (EPF) and gratuity payments, mandated by Indian labor laws. EOR providers handle accurate and timely deductions and deposits, ensuring employee rights are protected and employers remain compliant.
Offboarding & Recovery
Offboarding and Recovery services ensure that employee exits are handled professionally and compliantly. EORs manage final settlements, conduct exit interviews, and recover company assets. This ensures a smooth transition and helps maintain a positive relationship with departing employees while protecting the company’s interests.
How to Hire Employees Through an EOR India Partner
Hiring employees through an EOR India Partner offers businesses a streamlined, compliant way to establish a presence in India without the need for a legal entity. By partnering with an EOR provider, companies can bypass the complexities of labor laws, tax regulations, and administrative tasks.
EOR India Partner
An EOR India Partner is a third-party service provider that acts as the official employer of record for your employees in India. The EOR partner handles all employment-related obligations, including compliance with local labor laws, payroll, tax filings, benefits administration, and more. By working with an EOR, you can focus on business operations, recruitment, and talent management while ensuring that your employees in India are fully compliant with statutory regulations. The EOR partner also mitigates risks associated with non-compliance, such as penalties or legal disputes, ensuring that all HR and employment practices meet India’s stringent requirements.
Select the Best EOR Service Provider in India for Your Business
Choosing the right EOR service provider is a crucial step in ensuring the success of your operations in India. The best EOR partner should have in-depth knowledge of Indian labor laws, strong local market experience, and a proven track record of providing comprehensive employee management solutions. When evaluating EOR companies, look for factors such as their level of expertise in payroll management, HR support, compliance handling, and employee benefits administration. Additionally, ensure that the EOR provider offers flexible service packages that align with your company’s specific needs.
Hire & Onboard Your New Employees
Once you have selected an EOR India partner, the next step is to begin the hiring process. Your EOR partner will help you recruit the best talent for your business needs by advertising job openings, interviewing candidates, and handling employment documentation. The EOR will also manage the employee onboarding process, ensuring that new hires receive a compliant employment contract, go through the necessary training, and understand their roles and responsibilities. This process is designed to make the transition smooth for both the employee and the employer while ensuring full legal compliance in India.
Remote EOR Employee Onboarding Checklist for India
| Onboarding Step | Responsibility | Details |
| Before Offer Letter | ||
| Collect Employee Details | Company | Gather necessary details like name, DOB, contact info, address, previous employment docs, etc. |
| After Offer Letter | ||
| Draft Employment Contract | EOR | Create localized employment agreements compliant with Indian labor laws. |
| Background Verification | EOR | Conduct background checks with informed consent from the new hire. |
| Welcome Email | Company & EOR | Company sends welcome email; EOR conducts local onboarding process. |
| On Joining Day | ||
| Employment Documentation | EOR | Ensure all paperwork like contracts, NDAs, tax forms, etc., are completed and filed. |
| Payroll Setup | EOR | Collect required docs, set up payroll systems and tax calculations. |
| Policy Briefing | Company | Explain leave policies, code of conduct, company procedures to the new hire. |
| Account Setup | EOR | Assist with bank account setup for salary deposits. |
| Introduction to Systems | EOR | Provide a walkthrough of payroll and HRIS systems. |
| IT Setup | Company/EOR | Provide necessary equipment, software, IT training, and communication channels. |
| Mentor Assignment | Company | Assign a buddy/mentor to help the new hire acclimate to company culture. |
| Post-Onboarding | ||
| Payroll Explanation (First Paycheck) | EOR | Explain payslip components like deductions, contributions, and net pay. |
| Ongoing Support | Company | Schedule regular check-ins and 1:1 meetings to provide ongoing support and feedback. |
| HR Operations | EOR | Manage payroll processing, compliance, benefits administration, and other HR operations. |
Processing Payroll
Processing payroll in India can be complex due to the various deductions and contributions required by Indian tax and labor laws. An EOR partner takes care of the entire payroll process, ensuring that employees are paid accurately and on time while adhering to Indian payroll regulations.
Key components of payroll management in India include:
- Salary and Wages: The basic salary, allowances (such as house rent allowance, special allowances, etc.), and bonuses are processed according to the agreed-upon compensation package.
- Statutory Deductions: Deductions for Employee Provident Fund (PF), Employee State Insurance (ESI), and Professional Tax (PT) are mandatory. These are calculated based on the salary slab and statutory limits set by the Indian government.
- Tax Deductions at Source (TDS): Employers are responsible for deducting the correct amount of tax from employees’ salaries before disbursing payments. TDS must be submitted to the Indian tax authorities.
- Other Benefits: If applicable, benefits like insurance, gratuity, and bonuses are also managed during payroll processing.
The payroll process in India typically involves three stages:
- Payroll Calculation: The first stage involves calculating the total earnings, allowances, and deductions for each employee. This includes statutory deductions like PF and ESI, as well as any performance-based bonuses.
- Tax Compliance: In this stage, the correct TDS amount is calculated and deducted from employees’ salaries. The EOR ensures the timely filing of tax returns and submits payments to the appropriate tax authorities.
- Salary Disbursement: After tax calculations and other deductions, the final salary is disbursed to the employee. EORs ensure that employees are paid on time, and that all payments are compliant with Indian financial regulations.
Suggested Read: Hire Employees in India Through EOR
Taxes in India
Taxes are a critical aspect of the Indian financial system, and employees in India are subject to various types of taxes. The primary taxes that employees need to be aware of are income tax, Tax Deducted at Source (TDS), and professional tax. Understanding these taxes and their respective brackets is essential for financial planning and compliance.
New Tax Regime (without most deductions)
| Income Slab | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 to ₹7,00,000 | 5% |
| ₹7,00,001 to ₹10,00,000 | 10% |
| ₹10,00,001 to ₹12,00,000 | 15% |
| ₹12,00,001 to ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
Old Tax Regime (with deductions)
| Income Slab | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 to ₹5,00,000 | 5% |
| ₹5,00,001 to ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Tax Due Dates in India
Tax due dates in India are important to ensure timely payments and avoid penalties. The Income Tax due dates for individuals and businesses typically include quarterly advance tax payments, with deadlines in June, September, December, and March. Companies must file annual tax returns, typically by July 31st of the assessment year. Additionally, employers must ensure timely submission of tax deductions, such as Tax Deducted at Source (TDS), to the government by the 7th of each month. Adherence to these deadlines is crucial to avoid late fees and fines.
Tax Thresholds in India
India has progressive tax rates based on the income level of individuals. For individual income tax, there are different tax slabs based on income thresholds, which change periodically through the annual budget. For instance, individuals earning up to INR 2.5 lakh annually are exempt from income tax, while those earning above this threshold are taxed at rates ranging from 5% to 30%, based on their income bracket. Additionally, businesses must comply with corporate tax rates, which generally range from 25% to 30%, depending on the company’s turnover and other factors. It’s important to understand these thresholds to determine the amount of tax to be paid.
Tax Deducted at Source (TDS)
Tax Deducted at Source (TDS) is a system where the employer deducts a certain percentage of tax from an employee’s salary and remits it to the government on their behalf. This is applicable to various income types, including salaries, interest payments, and professional fees. Employers are responsible for calculating the appropriate TDS and ensuring timely submission of the deducted amounts. The rates of TDS vary based on income type and thresholds, and employers must ensure they comply with the necessary rules to avoid penalties.
Professional Tax
Professional Tax (PT) is a state-level tax imposed on employees and professionals. The tax amount varies depending on the state in which the employee is based. It is typically deducted from an employee’s salary and is applicable to individuals earning above a certain income threshold. PT is a modest amount, typically ranging from INR 200 to INR 2,500 per month, depending on the income and the state of residence. Employers are responsible for deducting this tax and submitting it to the respective state government on time.
Deductions and Exemptions
India’s income tax system provides a range of deductions and exemptions that can help reduce an individual’s taxable income. Some common deductions include:
- Section 80C: Deductions for investments in specified savings schemes, such as Public Provident Fund (PPF), National Savings Certificates (NSC), and life insurance premiums.
- Section 80D: Deductions for premiums paid on health insurance policies for self and dependents.
- Section 10(13A): Exemption for house rent allowance (HRA) paid to employees, provided they meet specific criteria.
Employers can help employees optimize their tax liability by advising on eligible deductions and exemptions. Ensuring employees are aware of these can lead to significant savings in their annual tax liabilities.
Provident Fund (PF):
The Provident Fund (PF) is a mandatory retirement savings scheme under Indian labor law. Both the employer and employee contribute a percentage of the employee’s salary towards the PF, with the employer contributing an equal amount to that of the employee’s contribution. The contribution is typically 12% of the employee’s basic salary and dearness allowance. The accumulated amount earns interest and can be accessed by employees upon retirement or when leaving the job. It is a key aspect of India’s social security system and provides long-term financial security to employees. Employers are responsible for ensuring that these contributions are made on time and in the correct amounts.
Employee State Insurance (ESI):
The Employee State Insurance (ESI) scheme is a health and social security insurance scheme for Indian workers. It provides medical benefits, sickness benefits, maternity benefits, and disability benefits to employees and their families. Employees earning below a specified salary threshold are covered under the ESI Act. Employers are required to contribute 4.75% of the employee’s gross salary to the ESI fund, while employees contribute 1.75%. ESI offers workers access to healthcare services and financial support during periods of illness or injury. Employers must ensure that these contributions are made regularly to maintain employee coverage.
Asanify’s Support For Employee Tax Optimization
Asanify is India’s leading EOR service provider that offers comprehensive employee tax optimization. Asanify helps businesses and their employees navigate the complexities of India’s tax system by providing guidance on available tax exemptions, deductions, and exemptions, ensuring that employees optimize their tax liability. By leveraging Asanify’s platform, businesses can ensure that all employee tax-related processes are handled efficiently, with accurate TDS calculations, timely submissions, and advice on tax-saving instruments.
CTC Calculator for Hiring Employees in India
When hiring employees in India, understanding the Cost to Company (CTC) is crucial for both employers and employees. CTC refers to the total amount a company would spend on an employee in a year, including salary, bonuses, and any additional benefits. To make the process clearer, businesses can use a CTC Calculator to break down all the components involved in an employee’s total compensation package. This helps both the employer and the employee understand how much the employee will take home after deductions like taxes and provident fund contributions. For more details on salary structures and how to calculate CTC, check out our blog!
Key Considerations While Hiring Employee through EOR in India
Employee Agreements in India
Employee agreements are a critical component of hiring employees in India. An EOR partner ensures that all employee agreements comply with Indian labor laws and contain essential elements, including job responsibilities, compensation structure, confidentiality clauses, non-compete clauses, and termination terms. These agreements serve as legal contracts that protect both the employer and the employee, ensuring that both parties understand their rights and obligations. It’s vital for businesses to ensure that these agreements are drafted in accordance with local labor laws, as failure to do so could lead to legal complications.
Work Hours and Probation
Work hours and probation periods are key aspects of an employee’s contract. The standard workweek in India is typically 48 hours, with a maximum of 9 hours per day. However, companies may offer flexible working hours depending on the industry and role. Many EOR providers also ensure that the contract clearly outlines the probation period, which is often 3 to 6 months. During this period, either party can terminate the contract with minimal notice. Defining the probation period helps ensure that both the employer and employee have clear expectations regarding performance evaluation and future employment terms.
Leave Policies
India has specific leave policies that must be adhered to by employers. The leave policies must be clearly outlined in employee contracts and must comply with Indian labor laws. EORs can help businesses structure these policies to ensure compliance and provide a balanced work environment.
Standard Leave Policy in India
| Leave Type | Description | Duration |
|---|---|---|
| Earned Leave | Paid leave for vacation, personal time off, etc. | 15 working days per year |
| Sick Leave | Paid leave for illness or medical reasons | 12 calendar days per year |
| Casual Leave | Paid leave for general purposes | 12 calendar days per year |
| Maternity Leave | Paid leave for childbirth and recovery | 14-26 weeks (depending on service) |
| Bereavement Leave | Paid leave for grieving a family member | 2 days |
The standard leave policy in India includes various types of leave, and it is important to ensure that employees are aware of their entitlements. Indian labor laws mandate the provision of paid leave, sick leave, and other statutory leaves for employees, and these must be incorporated into employee agreements. Many businesses also offer additional leave benefits to attract and retain talent.
Suggested Read: Types of Leaves in India
Types of Leaves in Indian employment laws:
Earned Leave (EL) or Privilege Leave
Employers grant Earned Leave (EL), also known as Privilege Leave (PL), to employees for personal time off. Employees typically accrue this leave over time based on the number of days they work, using it mainly for vacations or personal reasons. Employees earn one day of leave for every 20 days of work, or as per their company policy.
Casual Leave (CL)
Casual Leave (CL) is provided to employees for short-term absences due to unforeseen events, personal matters, or emergencies. This leave accommodates immediate or short-notice situations, such as family emergencies or minor illnesses. It is typically non-cumulative and cannot be carried forward to the next year.
Sick Leave (SL)
Sick Leave (SL) is provided to employees who are unable to perform their duties due to illness, injury, or medical conditions. This leave ensures that employees are not financially impacted when they are unwell, allowing them to take time off to recover without losing their income.
Maternity Leave
Maternity Leave is a statutory benefit for female employees, granted for childbirth. The Maternity Benefit Act of 1961 ensures that female employees receive paid leave to care for their newborn and recover from childbirth. Employers in India must provide female employees with 26 weeks of paid maternity leave for the first two children and 12 weeks for subsequent children.
Paternity Leave
Paternity Leave is a type of leave granted to male employees following the birth of their child. This leave allows new fathers to support their partners during childbirth and spend time with their newborn. While paternity leave is not as widely mandated as maternity leave, many companies offer it to male employees as part of their employee benefits package.
Bereavement Leave
Bereavement Leave is provided to employees who experience the death of a close family member, offering them time off to mourn and attend to funeral arrangements. This leave is crucial for ensuring that employees can take the necessary time to grieve without worrying about their professional obligations.
Marriage Leave
Employers provide Marriage Leave to employees who are getting married. This leave allows employees time to focus on wedding arrangements, ceremonies, and celebrations. It is typically offered as a special leave benefit, separate from regular annual or casual leave.
Sabbatical Leave
Sabbatical Leave is a longer-term leave option provided to employees for personal reasons, study, travel, or rest. It is typically an unpaid leave, though some organizations may offer partial compensation during the sabbatical period. Organizations commonly offer sabbaticals in academic, research, or nonprofit sectors. However, some companies across various industries also provide this option to foster long-term employee engagement and creativity.
List of General Public Holidays in India 2025
| Date | Occasion | Category |
|---|---|---|
| 26 January 2025 | Republic Day | General Public Holiday |
| 14 March 2025 | Holi | General Public Holiday |
| 18 April 2025 | Good Friday | General Public Holiday |
| 30 March 2025 | Id-ul-Fitr | General Public Holiday |
| 15 August 2025 | Independence Day | General Public Holiday |
| 16 August 2025 | Janmashtami | General Public Holiday |
| 2 October 2025 | Gandhi Jayanti | General Public Holiday |
| 2 October 2025 | Dussehra | General Public Holiday |
| 20 October 2025 | Diwali | General Public Holiday |
| 25 December 2025 | Christmas Day | General Public Holiday |
| 12 May 2025 | Buddha Purnima | Optional Holiday |
| 7 June 2025 | Bakrid | Optional Holiday |
| 27 July 2025 | Muharram | Optional Holiday |
| 5 September 2025 | Id-e-Milad | Optional Holiday |
| 5 November 2025 | Guru Nanak Jayanti | Optional Holiday |
| 24 December 2025 | Christmas Eve | Optional Holiday |
Gratuity Payments
Gratuity payments, mandated by the Payment of Gratuity Act, 1972, require employers to provide a lump sum to employees with at least five years of continuous service. This benefit rewards long-term service and aids employees during transitions like resignation, retirement, or termination.
The amount of gratuity is typically calculated as 15 days’ wages for every completed year of service, based on the last drawn salary (basic pay + dearness allowance). Gratuity payments are tax-free up to a limit of ₹20 lakh. For employees who work through an Employer of Record (EOR) India Partner, the EOR takes on the responsibility of managing and disbursing gratuity payments in compliance with Indian labor laws.
Termination Policies
Termination Policies are essential for outlining the procedures and conditions under which an employee’s contract may be terminated. These policies must comply with Indian labor laws, ensuring fairness and transparency in the process. In India, employees can be terminated under various grounds, such as misconduct, inefficiency, or organizational downsizing, but the termination process must adhere to specific legal guidelines, especially if the employee has been with the organization for more than one year.
Termination policies should clearly define the notice period (typically one to three months), severance pay (if applicable), and conditions for wrongful termination. For employees hired through an EOR India Partner, the EOR manages the termination process in line with Indian labor laws, ensuring that the employer remains compliant and that the employee is treated fairly in the case of termination.
Bonus Payments in India
In India, Bonus Payments are regulated by the Payment of Bonus Act, 1965, which applies to establishments with 20 or more employees. The Act requires that employers pay an annual bonus to eligible employees based on their salary and the company’s profits.
The bonus is calculated at a minimum of 8.33% of an employee’s annual salary, with the maximum bonus capped at 20%. This payment is mandatory for employees earning up to ₹21,000 per month (as of the latest threshold) and is meant to reward employees for their contribution to the organization’s success. For businesses operating through an EOR India Partner, the EOR ensures that bonus payments are made in compliance with Indian labor laws, alleviating the administrative burden from the employer.
Health Insurance in India
Health Insurance is an essential benefit for employees in India, helping them access medical care and financial protection in case of illness or injury. While health insurance is not mandatory under Indian law, many companies choose to offer it as a part of their employee benefits package to attract and retain talent. The Employees’ State Insurance Act (ESI) mandates that companies with 10 or more employees (in specified industries) provide health insurance and medical benefits through the ESI scheme. This scheme covers hospitalization, medical care, and various other health-related services.
Suggested Read: PEO vs EOR Differences- All That You Need to Know
Employee Benefits in India
Employee benefits are a crucial aspect of the compensation package offered by companies in India. These benefits not only help attract and retain top talent but also contribute to employee well-being and job satisfaction. In India, employee benefits can be broadly categorized into statutory and supplementary benefits.
Statutory Benefits in India
Statutory Benefits are benefits that are mandated by Indian labor laws and regulations. These benefits ensure that employees are given their legal entitlements, and employers are compliant with national employment standards. Some of the key statutory benefits in India include:
- Provident Fund (PF): Employees contribute a portion of their salary to a retirement fund, and the employer matches the contribution. PF is mandatory for establishments with 20 or more employees.
- Employees’ State Insurance (ESI): ESI provides medical benefits, disability compensation, and maternity benefits to employees earning below a certain threshold (currently ₹21,000 per month).
- Gratuity: As mentioned, gratuity is a statutory benefit payable to employees who have worked for five or more continuous years with the company.
Supplementary Benefits in India
Employers offer supplementary benefits to enhance the overall compensation package and boost employee satisfaction. These benefits go beyond statutory requirements and aim to improve employees’ quality of life. Some of the common supplementary benefits in India include:
- Health Insurance: Employer-provided health insurance covers medical expenses, hospital stays, and treatments. This benefit is increasingly common among Indian employers.
- Performance Bonuses: In addition to statutory bonuses, employers often provide performance-based bonuses to reward employees for meeting or exceeding targets.
- Company Stock Options: Some companies offer stock options or equity as part of their long-term incentive plans.
Asanify’s Flexible Benefits Plan for EOR Employees
Asanify provides a robust Flexible Benefits Plan (FBP) designed to empower employees to customize their salary structure for maximum tax efficiency. The plan offers benefits such as meal cards, fuel allowances, gift wallets, and reimbursements for telecom, attire, and books, enabling employees to save up to ₹40,000 annually in taxes. With Asanify’s user-friendly payroll system, managing these benefits is seamless, ensuring compliance and satisfaction for both employees and employers.
For employers, Asanify’s FBP is a strategic tool to boost employee satisfaction and retention without increasing the cost-to-company (CTC). By offering flexibility and simplicity, Asanify ensures a win-win for all.
| Flexible Benefits Components | IT Section | Old Tax Regime | New Tax Regime | Annual Maximum Amount (₹) |
|---|---|---|---|---|
| Meal or Food Allowance | Section 10 | Applicable | Not Applicable | 39,600 |
| Fuel Allowance | Section 17 | Applicable | Not Applicable | 28,800 |
| Mobile and Internet | Section 17 | Applicable | Not Applicable | 24,000 |
| Gift Wallet | Section 17 | Applicable | Not Applicable | 5,000 |
| Attire/Apparel | Section 10 | Applicable | Not Applicable | 36,000 |
| Books and Periodicals | Section 10 | Applicable | Not Applicable | 36,000 |
| **Total** | 1,69,400 | |||
Terminations in India
Terminating employment in India involves different processes for contractors and full-time employees. While contractors typically have more flexible termination terms, employees are protected by various labor laws that govern notice periods and severance pay. This is to protect employee rights while allowing employers to manage their workforce effectively.
Notice Periods in India
In India, the notice period refers to the time an employee or employer must give before ending the employment contract. Under the Industrial Employment (Standing Orders) Act, notice periods are mandatory for both parties and depend on the employment contract. Typically, the notice period for an employee ranges from one to three months, based on the agreement.
Severance Pay in India
In India, employers typically provide severance pay when terminating an employee’s employment, whether voluntarily or involuntarily. Under the Industrial Disputes Act of 1947, employers are required to pay severance to employees with at least one year of continuous service. Specifically, severance pay is calculated as 15 days of salary for each completed year, based on the employee’s last drawn wages, including basic salary and dearness allowance. Severance pay is a statutory benefit that ensures employees receive financial support as they transition to new employment.
Key points:
- Legal Compliance: Termination policies in India must adhere to statutory requirements such as notice periods, severance pay, and procedural fairness.
- Documentation: Employers must maintain thorough documentation of the reasons for termination, communications, and any supporting evidence.
- Employment Contracts: Clear employment contracts are crucial for outlining termination procedures, including the notice period and severance entitlement.
- Employee Rights: Employers must honor employee rights, such as severance pay and compensation for unused leave, during the termination process.
Types of Termination
Termination for Cause
Termination for Cause refers to the dismissal of an employee due to a serious violation of company policies or misconduct. This may include actions such as theft, dishonesty, insubordination, or other unethical behavior that impacts the company’s operations. In such cases, the employer typically does not need to provide a notice period, as the termination results from the employee’s actions. However, the employer must present evidence of the misconduct and, at the same time, allow the employee an opportunity to explain their actions.
Termination Without Cause
Termination Without Cause occurs when an employer dismisses an employee for reasons unrelated to misconduct, such as downsizing, restructuring, or operational changes. In these cases, the employer must provide the employee with the required notice period or severance pay in lieu of notice. Indian labor law requires that employers follow due process, such as notifying employees of the termination, offering them compensation, and providing an opportunity for the employee to respond to the proposed action.
Collective Termination
Collective Termination occurs when an employer terminates the employment of a group of employees at the same time. This often happens in cases of mass layoffs or downsizing due to economic reasons, company mergers, or business closures. In India, the Industrial Disputes Act governs collective termination, requiring organizations with over 100 employees to obtain prior government approval for mass layoffs or terminations. Affected employees are entitled to severance pay, compensation for unused leave, and other statutory benefits.
Voluntary Termination (Resignation)
Voluntary Termination, commonly known as resignation, occurs when an employee chooses to leave the company. This could be for various reasons, including personal growth, career changes, or dissatisfaction with the current role. In India, employees are required to submit a resignation letter and serve the notice period as outlined in their employment contract.
Upon resignation, employees may be entitled to severance pay if applicable, along with any unused leave encashment. Employers may also conduct an exit interview to understand the reasons behind the resignation and address any potential issues.
What are the key steps involved in terminating employees in India?
1. Serve Notice Period
The notice period is a mandatory time that both the employee and employer must provide before the termination of the employment contract. As per the Industrial Employment (Standing Orders) Act, employees must give a notice period, which can vary between one to three months, depending on the employment agreement. Employers must also honor this notice period unless the termination is for a cause.
2. Termination for Cause
Employers terminate an employee for cause when the employee breaches company policies or engages in misconduct. In these cases, employers generally do not need to provide the standard notice period but must allow the employee to present their defense. Typical grounds for termination for cause include theft, insubordination, dishonesty, or violation of company rules.
3. Full and Final Settlement
After the notice period is served or the termination is completed, a full and final settlement is carried out. This settlement includes:
- Outstanding salary
- Leave encashment for unused leaves
- Gratuity (if applicable)
- Bonus payments (if due)
- Any other pending financial obligations
Employers must promptly pay employees and make proper statutory deductions, such as taxes and provident fund contributions.
4. Documentation
Proper documentation is essential when terminating an employee to ensure legal compliance and avoid future disputes. This includes:
- A formal termination letter outlining the reason for termination, notice period, and other details.
- Exit interview reports (if applicable).
- Acknowledgment of receipt of all due payments and benefits by the employee.
- Legal documentation, such as severance pay records, which confirm that the employee’s rights have been honored.
Recommended Read: How to Hire in India Easily- 10 Key Considerations
How to Choose the Right EOR India Services?
Expertise and Local Knowledge
When selecting an EOR India Partner, it’s vital to choose a provider with deep expertise in the Indian market. The provider should understand the complexities of Indian labor laws, taxation, employee benefits, and other regulatory requirements. This expertise ensures that your business is fully compliant and can avoid potential legal pitfalls.
Comprehensive Service Offerings
The ideal EOR service provider should offer a broad range of services, such as payroll management, taxation services, employee onboarding, compliance management, and benefits administration. A full-service provider can handle all aspects of hiring, managing, and terminating employees in India, allowing you to focus on your core business operations.
Scalability and Flexibility
Your business needs may change over time, and your EOR partner should be able to scale services as your company grows. Whether hiring one employee or managing a large team, the EOR should accommodate your needs and provide flexible solutions to meet your evolving requirements.
Technology and Data Security
In today’s digital age, data security is paramount. Choose an EOR India provider that uses secure technology platforms to manage payroll, HR administration, and employee data. The provider should have strong data security protocols in place, ensuring compliance with data privacy regulations
Compliance and Risk Management
A key benefit of working with an EOR India partner is minimizing the risk of non-compliance with Indian labor laws. Ensure that the EOR has a strong track record in managing compliance and can assist with audits, statutory filings, and updates on changing regulations. This reduces the legal risks your business faces when hiring employees in India.
Reputation and Client References
Check the reputation of the EOR provider by looking at client references and online reviews. A reputable EOR partner will have proven experience in delivering quality services to global companies and will be able to provide testimonials or case studies that demonstrate their ability to meet client expectations.
Expertise in Indian Employment Regulations
An EOR provider must have in-depth knowledge of Indian employment regulations, including labor laws, statutory benefits, tax regulations, and employee insurance requirements. This ensures that employers hire, manage, and terminate employees in a legally compliant manner while meeting all legal obligations.
Service Offerings and Scalability
Make sure the EOR India service provider offers all the services your business requires, from payroll management to employee benefits. Additionally, they should be able to scale these services as your business expands, offering a long-term solution for managing your employees in India.
Reputation and Client References
Review the EOR provider’s reputation by seeking client feedback, reading case studies, or looking for reviews from other businesses that have worked with them. A strong reputation indicates reliability, effective communication, and the ability to handle your workforce needs efficiently.
Data Security and Privacy Compliance
Given the sensitive nature of employee data, the EOR India partner must ensure that employee information is securely stored and compliant with data protection regulations. This includes safeguarding personal, financial, and health-related data in line with Indian Data Protection Laws.
Transparent Pricing and Contractual Agreements
Before finalizing your EOR partner, ensure that their pricing structure is transparent and competitive. Clear contractual agreements should define the scope of services, terms of engagement, and payment structures. This helps avoid any hidden costs or misunderstandings later on.
Local Network and Support
A good EOR India partner should have a strong local network and support system, including relationships with legal and tax professionals who can assist with compliance, dispute resolution, and other requirements. This ensures that all your business needs are met locally without relying on external consultants.
Benefits of Working With an Employer of Records Service Provider in India
Compliance and Legal Expertise
One of the most significant advantages of partnering with an EOR is gaining access to their deep expertise in Indian labor laws and compliance requirements. India’s labor laws are complex and frequently change, making it challenging for foreign businesses to remain compliant. An EOR provider ensures that your business adheres to the regulations, such as payroll taxes, employee benefits, contracts, and labor protection laws, which helps avoid potential legal risks and fines.
Time and Cost Efficiency
Hiring employees in India through an EOR can save businesses considerable time and money. The EOR takes on the administrative tasks, such as payroll processing, tax filing, and benefits administration, allowing you to focus on core operations. Without the need to establish a legal entity, companies can save on incorporation, office setup, and maintenance costs.
Swift Market Entry
An EOR allows businesses to quickly enter the Indian market without the need to navigate the complexities of setting up a local entity. With an EOR India Partner, you can start hiring employees and conducting business operations almost immediately, without waiting for months to establish a legal presence. This swift market entry is especially beneficial for businesses testing new markets or entering India on a trial basis.
Local HR Support
An EOR offers local HR support, which is invaluable when managing employees in a foreign country. The EOR partner understands Indian labor practices, language nuances, and cultural expectations. They assist in handling the day-to-day HR functions such as employee onboarding, managing grievances, and addressing employee concerns. This local expertise ensures that employee relations are smoothly managed.
Flexibility and Scalability
Working with an EOR provides flexibility and scalability for businesses looking to expand or reduce their workforce in India. As your business grows, the EOR can scale your workforce, managing hiring, payroll, and compliance. During downsizing or restructuring, the EOR can scale back, handling employee terminations and severance without the complexities.
Risk Mitigation
An EOR helps mitigate employment-related risks, including disputes over compensation, working conditions, or wrongful termination. By acting as the official employer, the EOR assumes responsibility for ensuring compliance with Indian labor laws, protecting your company from potential legal liabilities. This reduces the risks associated with managing employees directly in India.
Cost Efficiency
By outsourcing HR and administrative functions to an EOR service provider, businesses can significantly reduce costs associated with compliance, payroll, tax filings, and HR management. The EOR handles all these tasks, eliminating the need to hire local HR staff or legal consultants, which makes it a highly cost-effective solution for foreign companies expanding into India.
Mitigating cultural and language barriers
Navigating cultural and language barriers can be challenging when working in India. An EOR partner helps bridge these gaps by offering local insights and handling communication effectively with Indian employees. The EOR also ensures that employees’ expectations align with local business practices, making it easier for companies to build strong relationships with their workforce and improve employee retention.
Focus on core business activities
Outsourcing HR and legal functions to an EOR India Partner allows businesses to concentrate on their core activities, such as sales, marketing, product development, and customer service. With administrative tasks and compliance responsibilities managed by the EOR, businesses can focus their resources on strategic objectives and growth, ultimately leading to better productivity and efficiency.
Visa Types in India
Asanify simplifies this process by providing comprehensive support for obtaining the necessary visas and work permits for your employees. Our experienced team guides you through the entire process, ensuring compliance with Indian immigration laws and regulations. We handle the paperwork, document verification, and liaising with relevant authorities, allowing you to focus on your core business objectives.
If you prefer to handle the visa and work permit process independently, here’s a step-by-step guide:
Visa Application Process:
The visa application process for foreign nationals wishing to work in India involves several key steps. It begins with securing a job offer from an Indian company or a business partner. After this, the applicant must apply for a work visa (Employment Visa) through the Indian Embassy or Consulate in their home country. The application typically requires submitting the job offer letter, proof of educational qualifications, passport, and other supporting documents. Once the visa application is approved, the foreign employee can travel to India and begin their employment.
Work Permit (Employment Visa) Requirements:
An Employment Visa is required for foreign nationals who wish to work in India for more than 180 days. The key requirements for obtaining an employment visa include:
- A valid passport with at least six months of validity.
- Proof of a confirmed job offer from a registered company in India.
- Details of the job position, salary, and job contract.
- The employee’s qualifications should match the requirements for the job role.
- The Indian company must submit the application for the employment visa with supporting documents, including the Letter of Recommendation and a Certificate of Incorporation of the company.
Authorities typically issue an Employment Visa for one year but may extend it based on the employee’s contract duration, the company’s policy, and the employee’s position.
Foreigner Registration:
Foreign nationals on a long-term visa (over 180 days) must register with the Foreigners Regional Registration Office (FRRO) within 14 days of arriving in India. The registration process includes submitting documents such as a passport, visa details, and proof of residence. Failure to comply with the foreigner registration requirements could lead to penalties, visa cancellation, or deportation.
Useful Websites:
- Indian Visa Online: https://indianvisaonline.gov.in/visa/
- e-FRRO Portal: https://indianfrro.gov.in/eservices/home.jsp
- Ministry of Home Affairs (Visa Division): https://www.mha.gov.in/division_of_mha/visa-division
Risks or Drawbacks of EOR India
1. Limited Control
One of the main drawbacks of using an EOR in India is the limited control over the employees’ day-to-day activities. Since the EOR is the official employer, they handle payroll, compliance, HR functions, and other administrative tasks. This means that your company has less direct oversight of the employee’s operations, which could lead to challenges in maintaining organizational culture and alignment with the company’s values.
2. Potential Cultural Differences
Indian business culture may differ significantly from the home country’s culture, potentially leading to cultural misalignment. Although EOR service providers help bridge this gap, businesses unfamiliar with India’s corporate culture may still face challenges in understanding and adapting to local nuances in workplace behavior, communication styles, and expectations. These differences might affect team dynamics and the smooth integration of employees into the company.
3. Cost
While partnering with an EOR India Partner can save on the costs of setting up a legal entity, EOR services still incur certain costs. The service fees charged by EOR providers can be higher than simply hiring employees directly, especially if you are managing a small workforce. Businesses need to carefully weigh the cost-benefit ratio to ensure that the value offered by the EOR provider justifies the investment.
4. Data Security and Confidentiality
Using an EOR means that a third party will handle sensitive employee and company data. This raises concerns about data security and confidentiality, particularly when dealing with personal and financial information. Although reputable EORs in India follow strict data protection measures, businesses must ensure that the provider adheres to local privacy laws and global data protection standards like GDPR.
5. Scalability Challenges
While EOR services can scale to meet the demands of businesses as they grow, there might be limitations when scaling very rapidly. In some cases, EOR providers may struggle to manage a large volume of employees quickly, which could affect the quality of services like payroll processing, compliance management, or HR support. As a business grows, you should ensure that the EOR is capable of supporting your scaling requirements effectively.
6. Communication Challenges
Communication can be challenging when working with an EOR, especially if it is located in a different country. Despite the EOR’s expertise in managing Indian employment, language barriers and time zone differences can sometimes lead to misunderstandings or delays in response times. Clear and effective communication with the EOR is crucial to ensure that there is alignment on key HR and operational decisions.
How Does Employer of Record India (EOR) Services Differ From Usual HR Software?
1. Employer of Record (EOR)
An Employer of Record (EOR) provides a comprehensive solution for businesses looking to hire and manage employees in India without setting up a legal entity. The EOR acts as the legal employer of the employees, handling tasks such as payroll management, tax filings, employee benefits administration, compliance with Indian labor laws, and risk management. EOR services primarily help companies establish a legal framework for hiring employees, ensure compliance with local regulations, and manage administrative tasks related to employment.
Key responsibilities of an EOR include:
- Payroll management and tax filing
- Employment contracts and employee benefits
- Ensuring compliance with local labor laws and regulations
- Risk management and liability mitigation
An EOR India service provides a full-service solution for businesses wishing to enter the Indian market without setting up a local entity, offering a legal and operational framework for hiring and managing employees.
2. HR Software
On the other hand, HR software is a tool that automates and manages various human resources functions, including employee record management, time tracking, recruitment, performance management, and training. By streamlining internal HR processes, HR software helps businesses manage day-to-day HR tasks more efficiently. Unlike an EOR, HR software does not act as the legal employer of record for employees and does not manage payroll or compliance with labor laws.
Key features of HR software include:
- Employee record management and payroll automation
- Performance tracking and employee training
- Recruitment and talent management
- Time and attendance tracking
While HR software can optimize HR workflows, it lacks the legal and compliance functions that an EOR India Partner provides. Consequently, it is inadequate for businesses operating in countries like India, where compliance with local labor laws is essential.
How much does it cost to avail Services Under EOR India?
Scope of Services
The cost of EOR services can vary depending on the range of services required. Some businesses may need basic payroll and compliance support, while others require a comprehensive package with benefits, recruitment, HR, and legal services.
Employee Strength
The size of the workforce is another key factor that affects pricing. Typically, EOR providers charge on a per-employee basis. Therefore, the more employees you have, the higher the costs will be. Discounts may be available for larger groups of employees, depending on the provider.
Complexity of Employment Regulations
Employment regulations can become more complex, particularly when the business operates in a highly regulated industry. As a result, managing and ensuring full compliance with Indian labor laws often demands additional effort and resources. Consequently, this can lead to a significant increase in overall costs.
Customization and Additional Services
EOR service providers may offer customized solutions, including flexible benefits plans, advanced tax strategies, and support for expatriate employees. These additional services can increase the overall cost of EOR services.
Technology Infrastructure
Some EOR providers offer advanced technology platforms for managing employee data, payroll, and compliance. Providers with robust technological infrastructures may charge higher fees due to the added value of using secure, automated systems for HR management.
Pricing Models and Contract Terms
EOR India providers typically offer various pricing models, including per-employee-per-month fees, flat-rate packages, or performance-based pricing. Contract terms can also affect costs, as longer contracts often offer lower pricing compared to short-term agreements. Furthermore, some providers may charge one-time setup fees or additional costs for specialized services.
Conclusion: EOR India
The Employer of Record (EOR) India model is an invaluable tool for businesses seeking to hire and manage employees in India without the complexities of setting up a local entity. By partnering with an EOR India provider, businesses can ensure compliance with India’s complex labor laws, streamline HR functions, and mitigate risks associated with payroll, taxation, and employee benefits administration. With benefits such as swift market entry, risk management, and scalability, the EOR model offers businesses a cost-effective, flexible, and efficient solution for workforce management in India.
For companies looking to enter the Indian market or expand their global workforce, partnering with an EOR India provides both strategic and operational support. The EOR service handles the legal and administrative complexities of hiring in India, from legal and regulatory compliance to employee benefits and payroll, allowing businesses to focus on their core activities and growth.
FAQs
An Employer of Record (EOR) ensures compliance with local labor laws in India by managing payroll, tax deductions, benefits, contracts, and registrations.
An EOR helps navigate key Indian labor laws like the Industrial Disputes Act, Payment of Gratuity Act, Maternity Benefit Act, Provident Fund regulations, and tax compliance laws.
An EOR becomes the legal employer by handling all employment-related responsibilities, including payroll, benefits, compliance, and taxation, while the company manages the employee’s day-to-day tasks.
Using an EOR in India simplifies legal compliance, reduces administrative burden, ensures adherence to labor laws, and allows companies to quickly hire employees without setting up a legal entity.
An EOR ensures companies comply with Indian employment laws by handling payroll, taxes, benefits, contracts, and other legal requirements for international employees.
Yes, EOR services are legal in India as they operate within the framework of Indian labor laws, providing compliance with all necessary regulations.
Yes, an EOR can manage employment contracts for remote workers in India, ensuring compliance with local labor laws and regulations.
Benefits include access to a large talent pool, cost-effectiveness, and a growing economy. Challenges involve navigating complex labor laws, tax regulations, and employee benefits requirements.
An EOR ensures employees receive legally mandated benefits, such as provident fund contributions, gratuity, medical insurance, and other statutory benefits while managing the complexities of compliance.
Yes, EOR platforms typically include features like payroll management, benefits administration, employee record management, compliance tracking, and tax filings.
The cost of an EOR in India varies based on the services offered, the number of employees, and the complexity of the arrangement. It typically includes setup fees, monthly service fees, and administrative costs.
The best EOR service depends on the company’s specific needs, including the scale of operations, industry, and level of support required. Popular options include global EOR providers like Asanify, and Papaya Global.
An EOR acts as the legal employer for a workforce, handling all compliance and employment responsibilities. A PEO enters a co-employment relationship, sharing responsibilities with the client company.
Partnering with an EOR ensures compliance with local laws, reduces the risk of legal issues, simplifies employee management, and speeds up the hiring process across different countries.
Asanify does not have a strict minimum or maximum limit, but the service is designed to scale with your business needs, whether you have a few or a large number of employees.
Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant or Labour Law expert for specific guidance.
