Employer of Record (EOR) in India

An EOR in India allows businesses to enter the market quickly and help maintain compliance with local laws, all while reducing the overhead costs of establishing a local entity. Atlas HXM offers a seamless EOR service that handles all aspects of employment for workers who already have valid authorization to work in India from payroll processing to compliant administration.

Partner with Atlas HXM for a cost-effective, compliant solution to hire and manage your workforce in India.

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Quick Overview of EOR in India

Expanding into India doesn't have to mean drowning in paperwork or hefty setup costs. With an Employer of Record (EOR), you can bypass the complexities of local regulations and quickly hire employees, all while maintaining compliance with India's labor laws. From payroll processing and tax compliance to benefits management, an EOR takes care of the legal nitty-gritty like EPF and ESI contributions, so you can focus on growing your business without the need to set up a costly local entity.

The EOR model offers a low-risk, cost-effective alternative to setting up a subsidiary. Establishing a local entity in India can cost anywhere from USD 38,500 to USD 77,000 plus the cost of maintaining human resources (HR), legal assistance, accountants and more. It can also become highly administrative. By partnering with an EOR, you can avoid these setup costs and enter the market faster, avoiding the overhead of a physical office. This is especially beneficial for startups, SMEs, and businesses testing new markets, who need to act quickly and comply with complex local regulations.

Disclaimer: The contents of this article is not legal advice and should be used for reference only. If in doubt, please seek independent legal advice from a lawyer in the relevant jurisdiction.

What You'll Learn Ahead:

  • Looking to hire in India without the hassle and administrative burden of setting up a local entity? An EOR helps you onboard employees while maintaining compliance with payroll and local labor laws.

  • With a Direct EOR, you gain control, faster onboarding, and stronger compliance. It is ideal for businesses aiming to scale quickly.

  • On the other hand, an Indirect EOR may be more cost-effective but comes with slower processes and added complexity.

  • EOR service fees typically range from USD 300 to USD 800 per employee per month.

  • Atlas HXM offers a robust Direct EOR solution, providing smooth market entry, compliance, and seamless employee management: all in one platform.

How an EOR Works

At Atlas HXM, we provide EOR services that ensure your business remains compliant with India's labor laws while you focus on growing your operations, free from administrative and legal burdens.

Candidate Selection

Atlas HXM does not recruit candidates, but will check the employment setup for compliance around new hires like validating right-to-work, reviewing contract terms against Indian rules, and configuring payroll and statutory obligations correctly. EOR providers in India, including Atlas HXM, can assist with work permit applications for foreign nationals. Anyone hired via EOR must either already hold valid work authorization or qualify for employment visa sponsorship through the client's requirements.

Employment Contracts

Atlas HXM drafts and administers employment contracts in compliance with Indian labor codes. Clearly outlines Key Employment Terms to reduce risk of future disputes, such as:

  • Job title and responsibilities

  • Salary, benefits, and working hours

  • Leave entitlements and notice periods

Payroll & Benefits Management

Payroll is processed in Indian Rupees (INR), including:

  • Accurate tax withholdings and EPF/ESI contributions

  • Statutory benefits such as medical insurance

The EOR also helps maintain compliance with mandatory benefits, so employees are protected under India's laws.

Work Permit Compliance

In India, EOR providers can assist with employment visa applications for qualified foreign nationals earning above INR 1,625,000 annually. Atlas HXM manages compliant employment, payroll, EPF, ESI, and statutory obligations in alignment with Ministry of Labour regulations.

Ongoing HR Support

Provides HR support, including: Leave management and performance tracking and employee relations and regulatory updates throughout the employee's tenure. This allows businesses to focus on core operations, while Atlas HXM handles ongoing compliance.

Costs & Pricing

EOR services in India are typically billed as a platform/service fee in the range of USD 300–800 per employee per month. This fee covers administration such as compliant contracts, payroll processing, statutory filings, and HR administration for workers who already hold valid work authorization. This service fee is separate from the employee's salary, benefits, taxes, and visa-related costs, which vary by role and jurisdiction. By using an EOR, companies avoid the cost and overhead of setting up an Indian entity, which can require USD 38,500–77,000 upfront before any operational spend.

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What to Choose: EOR vs PEO

EOR

Employer of Record

An EOR becomes the legal employer for your hires in a country where you do not have an entity. The EOR carries employer liability and handles compliant contracts, payroll, statutory benefits, tax filings, and labour-law adherence. You still direct the employee's work. This model suits companies expanding into India without wanting to form a local entity or take on compliance risk.

PEO

Professional Employer Organization

A PEO provides outsourced HR services like payroll, benefits, HR admin, but only when you already have a local entity. You remain the legal employer, and the PEO shares administrative tasks without taking on employer liability. Suitable when you are already established in the country and are only looking to offload HR administration.

What’s Best for You?

  • Choose an EOR when you want to hire in India without setting up an entity and want a partner who absorbs employer risk.

  • Choose a PEO when you already operate locally and just want HR support.

Work Life in India

India's employment framework is designed to balance operational needs with employee protections. Here's what you need to know:

Employment Types:

  • Permanent: Ongoing employment with full statutory benefits.

  • Fixed-Term: Hired for a specific project or defined duration (maximum 7 years).

  • Temporary: Short-term assignments; entitled to statutory benefits like leave and overtime.

Probation Periods: India allows probation periods of up to 6 months for permanent employees, extendable by 3 months. These periods allow employers to assess employee suitability before offering permanent employment. Employment can be terminated without notice during probation, and the EOR ensures that all terms are compliant with Indian labor codes.

Working Hours & Overtime: In India, the standard workweek is 48 hours, with a maximum of 8 hours per day and 6 days per week. Employees must receive a break after working continuously. For eligible employees covered by labor codes, overtime is paid at 2x the basic hourly rate, and the EOR ensures that all overtime is calculated correctly and that employee work hours comply with local regulations.

Leave Entitlements

Leave Type

Eligibility / Duration

Payment / Notes

Annual Leave

1 day per 20 days worked (minimum 180 days service)

Paid by employer; up to 30 days carry-over

Maternity Leave

26 weeks

100% wages paid by employer

Paternity Leave

15 days (government employees)

Varies by company policy for private sector

Sick Leave

15-40 days (varies by industry)

As per company policy and state laws

Public Holidays

All statutory holidays

Paid; handled by Atlas HXM

Vacation Leave

As per company policy / statutory minimum

Paid; unused leave typically paid out upon termination

Payroll & Benefits: Wages are calculated based on skills and local regulations, with minimum wage varying by state. Atlas HXM manages payroll in INR, EPF/ESI contributions (employer and employee), statutory benefits, bonuses, and group health insurance. Supplemental benefits can include life insurance, flexible benefits, and professional development options.

Atlas HXM can help you manage these aspects and can help ensure that employees are supported and compliant with India's labor laws while businesses can focus on operations without administrative burdens.

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What to Choose: Indirect vs Direct EOR

Direct EOR

The EOR owns the legal entities in the target country, coordinating all employment-related tasks directly. It offers faster onboarding, better compliance, and more control.

Best for: Businesses looking to scale quickly, expand long-term, or enter India with compliance.

Indirect EOR

The EOR provider acts as an intermediary between the business and a third-party local entity. While it can be cheaper, it may result in delays and compliance complexity.

Best for: Small teams or short-term hires with less urgent compliance needs.

What’s Best for You?

  • For Small Teams or Contractors: Indirect EOR could work, especially for temporary hires or testing a market.

  • For Scaling and Compliance: Direct EOR is the best choice. With Atlas HXM, you’ll have control, faster entry, and streamlined compliance.

Taxes & Compliance

India operates on a financial year from April 1 to March 31. Employers must submit monthly EPF contributions by the 15th of the following month, ESI returns by the 15th, and provide Form 16 (tax certificate) by May 31. Income tax returns are due by July 31 for individuals and September 30 for companies, with quarterly advance tax payments due on June 15, September 15, December 15, and March 15.

Category

Details

Employer Payroll Tax

EPF contributions: 3.67%–12% (salary-dependent)

ESI contributions: 3.25% on salaries up to INR 21,000

Professional Tax: varies by state (INR 150-2,500 annually)

Labour Welfare Fund: state-specific nominal amounts

Employee Payroll Tax

Residents: progressive income tax 0%–30%

Non-residents: as per applicable rates

Employee EPF contributions: 12% of basic salary

Employee ESI contributions: 0.75% on salaries up to INR 21,000

Pension System (EPF/NPS)

Mandatory EPF for organizations with 20+ employees

Voluntary NPS with two tiers

Gratuity: 15 days' wages per year of service (minimum 5 years)

Atal Pension Yojana: government matches 50% contribution up to INR 1,000 annually

GST & EOR Costs: India applies an 18% Goods and Services Tax on EOR services. This GST is typically added to the EOR service charges and can be claimed as input tax credit by eligible businesses.

Atlas HXM handles tax compliance, including progressive income tax calculations, EPF/ESI contributions, year-end filings, and expatriate tax planning, ensuring businesses remain compliant with local laws while minimizing administrative burden.

Termination

Employees must give written notice for termination, with statutory minimum notice periods ranging from no notice (probation) to 3 months (establishments with 300+ employees) depending on establishment size and employee category. Severance pay includes retrenchment compensation (15 days' wages per year of service), gratuity (15 days' wages per year for 5+ years service, capped at INR 2,000,000), and leave encashment. The EOR helps ensure proper handling of terminations, including notice periods, final wages, and required documentation.

Visas & Work Permits

In India, foreign nationals must hold valid work authorization such as an Employment Visa, Business Visa, or other appropriate visa categories depending on their role and purpose.

EOR providers, including Atlas HXM, can assist with employment visa applications for qualified foreign nationals. To be employed through an EOR, foreign employees must earn at least INR 1,625,000 annually (except for specific categories like ethnic cooks, language teachers, and embassy staff). Once authorization is in place, Atlas HXM can employ the individual under the EOR model and then manage payroll, EPF, ESI, benefits, and compliant employment administration.

5 Things to Look for in an EOR Provider

  1. Local expertise and knowledge of labor codes, EPF/ESI contributions, and Ministry of Labour requirements.

  2. Advanced technology for payroll, reporting, and HR system integration.

  3. Experience in your industry and handling employment visa management.

  4. Strong compliance track record and relationships with government agencies and legal advisors.

  5. Global presence to support multi-country expansion, with verified security and compliance standards (ISO 27001/27017/27018, GDPR).

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Atlas HXM provides direct EOR services, managing payroll, compliance and benefits efficiently. Our unified platform automates HR, payroll, and compliance tasks, while offering premium employee support, global benefits, and access to 9,000+ learning courses. Recognized by Everest Group PEAK Matrix 2025 and NelsonHall NEAT Assessment 2025, Atlas HXM combines compliance, technology, and global expertise.

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FAQs

Can an EOR in India manage employees who already have valid work authorization?

Yes. Once authorization is already in place, Atlas HXM can employ and manage the worker under the EOR model, including payroll, EPF, ESI, benefits and compliant administration.

What is the minimum salary requirement for foreign employees in India?

Foreign nationals on Employment visas must earn at least INR 1,625,000 annually, except for specific categories like ethnic cooks, language teachers, and embassy staff.

What is the typical probation period in India?

Usually up to 6 months (extendable by 3 months) and must be specified in the employment contract.

How much notice is required for termination in India?

Notice depends on establishment size: 1 month (50+ employees) to 3 months (300+ employees), unless otherwise stated in contract.

What are the EPF contribution rates for employers in India?

Rates vary by salary: 3.67% (basic salary ≤ INR 15,000), 12% (basic salary > INR 15,000).

Can employees work overtime without limits in India?

Overtime is regulated with specific payment requirements at 2x the basic rate for eligible employees, and requires employee consent.

         

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