Employer of Record (EOR) Services in India

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2% of gross salary / month

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EOR in India

Horizons provides compliance solutions to ensure your business in India operates in line with Indian labor laws and tax regulations. Businesses benefit from hiring in, investing in, or job outsourcing to, India in a range of industries, from customer service, to accounting services, to software development.

We also process monthly payroll, and, as an India Employer of Record, absorb all local employer liabilities. Partnering with our India EOR is the quickest and most cost-effective way to enter the Indian market.

Note, an India Employer of Record is also known as an India Professional Employer Organization (PEO).

Facts & Stats

stay compliant with India labor laws

Employment Laws

Regional presence in India

From our regional base in Uttar Pradesh — India’s most populous state — we directly co-ordinate and manage all recruitment and hiring in India. We ensure that your team in India is managed in full compliance with national and state laws

Employment contracts in India

While not a strict legal requirement, it is highly recommended that employees be hired under written employment contracts in India. This clearly establishes the legal rights and responsibilities of employer and employee, as well as reducing the probability of an employment dispute.

If there is no written employment contract in place, there is also a risk that a court would read implied terms into the contract which favor the employee over the employer.

Employment contracts should state the employee’s base salary, as well as any allowances, additional compensation and severance payments. The contract should also state all employee responsibilities, and how contract termination and renewal are to proceed. All references to monetary value should be made in Indian rupees (INR).

While not compulsory, it is common for employees in India to expect a salary increase of 10%-15% per year. Stepwise pay increases should be clearly established in the terms of the written employment contract.

Probationary periods are also common in India. Three months is a typical length, which is also the maximum initial probationary period. However, employers can choose to extend this period for up to three more months. During a probationary period, 15 days written notice is required for employees or employers to end employment.

When you engage Horizons’ India EOR solution, we ensure that all employment contracts are Indian labor law compliant.

Fixed-term

Indefinite

Work hours in India

The standard Indian work week is 40 hours, and the average work day is eight hours.

Maximum daily and weekly working hours under Indian labor law, depend on the industry in question. For example, for those employed in factories, the Factories Act 1948 specifies that hours in excess of 9 hours in a day or 48 hours in a week need to be paid twice their ordinary rate.

For those employed in mines, the Mines Act 1952 specifies that workers should work more than 10 hours in a day or 50 hours in a week, including overtime.

Holidays in India

Employees in India are entitled to a number of public holidays (also known as ‘statutory holidays’, depending on the state in question. There are three national public holidays that apply across the country: This covers Republic Day, Independence Day and Mahatma Gandhi Jayanti. Other paid holidays vary by state, local custom, industry/sector and religion, and overall, amount to 10-20 days per year. For example, central government employees are entitled to 17 public holidays in 2023 (14 specific mandated days, and three that can be chosen from a list).

Holiday Schedule in India [2024]

India has a range of national public holidays that are celebrated annually. In 2023 these holidays are:

Date	Holiday name
1 Jan Monday	New Year’s Day
14-15 Jan Sunday-Monday	Makar Sankranti
15 Jan Sunday	Pongal
26 Jan Thursday	Republic Day
5 Feb Sunday	Guru Ravidas Jayanti, Hazarat Ali’s Birthday
14 Feb Wednesday	Vasant Panchami
19 Feb Monday	Shivaji Jayanti
8 Mar Wednesday	Maha Shivaratri
24 Mar Sunday	Holika Dahana
25 Mar Monday	Dolyatra
29 Mar Friday	Good Friday
31 Mar Sunday	Easter Day
4 Apr Tuesday	Mahavir Jayanti
4-5 Apr Tuesday-Wednesday	Jamat Ul-Vida
9 Apr Tuesday	Chaitra Sukhladi, Ugadi, Gudi Padwa
11 Apr Thursday	Ramzan Id/Eid-ul-Fitar
13 Apr Saturday	Vaisakhi
14 Apr Sunday	Mesadi / Vaisakhadi
17 Apr Wednesday	Rama Navami
8 May Wednesday	Birthday of Rabindranath
22 May Wednesday	Buddha Purnima/Vesak
17 Jun Monday	Bakrid/Eid ul-Adha (Tentative Date)
7 Jul Sunday	Rath Yatra
17 Jul Wednesday	Muharram/Ashura (Tentative Date)
15 Aug Thursday	Independence Day
15 Aug Thursday	Parsi New Year
19 Aug Monday	Raksha Bandhan (Rakhi)
20 Aug Sunday	Vinayaka Chathurthi
26 Aug Monday	Janmashtami (Smarta)
7 Sep Saturday	Ganesh Chaturthi/Vinayaka Chaturthi
14 Sep Saturday	Onam
16 Sep Monday	Milad un-Nabi/Id-e-Milad (Tentative Date)
2 Oct Wednesday	Mahatma Gandhi Jayanti
10 Oct Thursday	Maha Saptami
11 Oct Friday	Maha Ashtami
11-12 Oct Friday-Saturday	Maha Navami
12 Oct Saturday	Dussehra
17 Oct Thursday	Maharishi Valmiki Jayanti
20 Oct Sunday	Karaka Chaturthi (Karva Chauth)
31 Oct Thursday	Naraka Chaturdasi
1 Nov Friday	Diwali/Deepavali
2 Nov Saturday	Govardhan Puja
3 Nov Sunday	Bhai Duj
7 Nov Thursday	Chhat Puja (Pratihar Sashthi/Surya Sashthi)
15 Nov Friday	Guru Nanak Jayanti
24 Nov Sunday	Guru Tegh Bahadur’s Martyrdom Day
24 Dec Tuesday	Christmas Eve
25 Dec Wednesday	Christmas

India's tax and contribution system

Employers in India are required to contribute to the Employee Provident Fund (EPF) which is a state pension fund, funding the Employee Pension Scheme. Employers are also required to contribute to the Employees’ Deposit Linked Insurance Scheme (a life insurance scheme). Employers contribute 3.67% of an employee’s salary to this EPF. Employees contribute 12% of their salary to this fund. Additionally, employers contribute 9.94% to other social insurances. This rate is calculated through the employee’s base salary, excluding all allowances. Income tax is applied to an employee’s salary, according to the following structure:

Income up to INR 2,50,000 – No tax
Income greater than INR 2,50,000 to INR 5,00,000 – 5%
Income greater than INR 5,00,000 to INR 7,50,000 – 10%
Income greater than INR 7,50,000 to INR 10,00,000 – 15%
Income greater than INR 10,00,000 to INR 12,500,000 – 20%
Income greater than INR 12,50,000 to INR 15,00,000 – 25%
Income greater than INR 15,00,000 – 30%

In addition to employee income tax, other taxes that any business expanding into India needs to take into account includes:

Corporate income tax. This usually comes out at an effective rate of around 25 percent. It is payable by resident companies on their global earnings, and by non-resident companies on their earnings in India.
Goods & Services Tax (GST). This is a consumption tax on the supply of goods and services. Depending on the good/service, it is taxed at 0%, 5%, 12%, 18% and 28% respectively.

Health insurance

In India, health insurance is a hybrid of public and private insurance. Some employees may request a health insurance allowance as part of their compensation.

Vacation leave

Statutory minimum paid vacation leave in India is 18 days per year, with an additional 7 days of unpaid ‘casual leave’, making a total of 25 days.

Sick leave

Paid sick leave depends on the state in question, but is usually around 10 days paid leave per year. It is quite common for employers to offer unpaid leave for long-term medical issues, but this is not required by law.

There is an additional ten days leave available every year as ‘casual’ leave. This is unpaid leave which the employee can take at their discretion.

Maternity and paternity leave

Female employees are entitled to 26 week’s maternity leave in India. Leave can be taken up to eight weeks before an expected delivery date, while the remaining leave can be taken after childbirth. Female employees are also entitled to a medical bonus of 3,500 Indian rupees.

Note, paid maternity leave is only owed to women who work for organizations of 10 or more employees. Note also, that for the second or subsequent employee, the mother is eligible for only 12 weeks of maternity leave.

If a woman is is classified as a factory-level employee, maternity leave is paid for by the government’s social funds. Otherwise, the employer is responsible for payment of all maternity leave.

Although India does not mandate paternity leave, some employers may offer it as a benefit.

An India Employer of Record ensures that employees receive all the paid and unpaid leave that they are entitled to under the law.

Negotiation of employment contracts in India

It is common in India for many elements of the employment relationship to be negotiated in advance between the potential employer and employee.

As with all business negotiation, this means taking into certain features of Indian business culture. First, Indian companies are often hierarchical in nature. This may mean that negotiations take longer than they would in other countries due to the need to get sign-off at multiple levels of the organization. This is especially true if a business relationship is not already in place.

Second, Indians themselves may be more likely to communicate indirectly than individuals from other countries. For example, they may be disinclined to say “no”. Instead, they may be more likely to use terms such as “possibly” or “perhaps.”

Job titles are also important to people in India. Culturally, higher titles command higher respect: The premium placed on job titles in India should be considered when negotiating any employment contracts within the country.

Benefits and allowances in India are crucial for potential employees seeking to maximize their take-home pay. These allowances and benefits are pre-tax and may contribute up to 60% of the total compensation package. One way of thinking about it is that what might be thought of as “gross pay” in other countries is tantamount to “base pay” in India.

The total amount paid by a business for employee compensation, allowances and benefits, is often referred to as the ‘cost to company’ or ‘CTC’, in India.
In addition to these allowances, some Indian workers may receive incentives and bonuses that are based on performance. These allowances are taxable.

Many foreign companies prefer to offer a gross amount of compensation and elect for their EOR to structure a compensation package in the most tax-efficient manner. This is due to the components of a compensation package being affected by whether they are taxed or tax-free.

An India Employer of Record can ensure that all staff receive benefits which are compliant and market competitive.

Termination and severance

In India, employers must provide written notice before terminating an employment contract. 30 days is the typical period of notice. However, employers can elect to pay employees in lieu of a notice period.

Employees are entitled to 15 days’ wages for each year’s company service. This is unless they were terminated due to:

Disciplinary action
Continued ill health
Expiration or non-renewal of a fixed-term employment contract
Retirement or superannuation

If an employee has served for five or more continuous years, they may be entitled to a gratuity payment. This payment is equal to an employee’s last drawn salary x 15/26 x No. of year’s service.

By partnering with our India EOR, Horizons’ team of local experts can provide assistance for drafting strong employment contracts that are compliant with local regulations.

hassle-free India compensation & benefits

Compensation & Benefits

India compensation laws

In India, the minimum wage varies by state and sector. For example, Delhi’s minimum wage for unskilled workers is INR 16,506 per month.

Employers are required to provide employees with payslips (sometimes called ‘pay stubs), and in most circumstances, payment is deposited into an employee’s bank account.

Employees in India are typically paid on the 1st of each month. The Wages Act stipulates that businesses with less than 1,000 employees should administer wages before the 7th of every month. For businesses with more than 1,000 employees, wages should be administered before the 10th of every month.

Due to salary inflation, many employees in India expect wage growth of between 10% – 15% per year. While India’s compensation laws do not mandate this wage growth, employees are unlikely to stay with a business if they do not receive this pay rise.

Minimum Wage Country Comparison Chart	(Per month in USD)
Switzerland (Geneva)	$4,000
Italy	$2,255
Australia	$1996
Algeria	$156
Uzbekistan	$22

Guaranteed benefits in India

To maintain a successful benefit management strategy, employers in India should be mindful of guaranteed benefits. As an example, health insurance in India is typically a combination of public and private insurance. While employees are entitled to public health benefits, they may also request a private supplementary plan as part of their benefits.

Employees receive paid time off that includes 10 paid public holidays. Three of these days are set nationally, while the rest will vary between states, local customs, and religions. The statutory minimum for paid vacation is 15 days.

Female employees in India are eligible for 26 week’s maternity leave.

An India EOR ensures that all employees in India receive the benefits they are entitled to under the law.

India benefit management

Businesses seeking to expand into India need to budget for supplemental benefits. These benefits can influence an employee to accept a position and to remain with an employer. Supplementary benefits in India can include :

Special allowance
Medical allowance
Telephone/mobile phone allowance
Leave travel allowance of concession (LTA/LTC)
House rent allowance (HRA)
Conveyance allowance
Vehicle allowance

It is increasingly common for employees in some industries in India (such as IT) to be part of an employer-provided Employee Stock Options Plan. Management of such a plan can also be facilitated by an India EOR.

Horizons’ India EOR solutions include a benefits management service which will source the most competitive benefits for your employees.

Benefits and compensation restrictions

For businesses expanding into India, the emphasis on variable allowances and benefits in negotiating an overall compensation package can be daunting. Employers are generally prohibited from hiring and paying employees without first establishing a subsidiary in India. To establish such a subsidiary, and to ensure that hiring is compliant with local rules for allowances and benefits, could take months, causing significant business delays.

With Horizons’ India Employer or Record solution, businesses can begin operating in India in as little as 48 hours. Horizons acts as the legal employer of your workforce in India, meaning there is no need to establish a subsidiary there for the purposes of employing staff. And as the only global EOR with an in-house recruitment team, we can help you source, hire, and onboard top local and international talent.

India Employer Of Record Peo

Navigation

EOR in India

Employment Laws

Work hours in India

Holidays in India

Compensation & Benefits

Frequently asked questions

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Frequently asked questions

What is the difference between an India PEO and an India EOR?

Generally speaking, the terms “India PEO” and India EOR” are used interchangeably.

Can an EOR in India hire both local and foreign nationals to work in India?

An EOR in India can feasibly hire both local and foreign nationals to work in India. However, the ability of Horizons to sponsor your foreign national employee in India may be limited due to visa quotas practiced in many countries. Contact us with your requirements and our Global Mobility team with review the case and get back to you within 2 business days.

How long does Horizons' India EOR service take to hire an employee?

In most cases, Horizons’ India EOR can hire & onboard your employee within 24 hours. The actual start date of the employee will depend on their notice period obligation to their previous employer as well as any relevant hiring rules in India.

Is it possible to get a work visa in India?

It is possible to get a work visa in India. Horizons’ Global Mobility team is a dedicated team of work visa experts. They assess the details of each case to determine feasibility and costs before Horizons applies for the work visa on behalf of your employee. If the Global Mobility team determines that your case is feasible, the process is smooth and transparent. Visa spots in India are limited, however—get started today to secure your employees’ visa spot.

Employer of Record (EOR) Services in India