What do you need to know to hire in India?
India payroll runs monthly, EPF employer contributions are 12% of basic salary, and the four Labour Codes that came into force in November 2025 changed how you calculate retrenchment pay and final settlement. Each guide below takes one layer.
· India guide
How does Teamed handle India hiring for you?
Teamed becomes your legal employer of record in India for from $599 per employee per month, with zero FX mark-up in any currency.
Payroll, contracts, and the full India employment law stack run on one platform.
Real HR and legal experts manage every India hire, from the first offer letter to the full and final settlement. An actual person, not a chatbot or a pooled queue, handles your India team alongside EOR, contractor onboarding, and entity payroll on one platform. There is no setup fee and no exit fee. Employer cost passes through at cost, itemised on every invoice.
An India contractor who converts to PAYE keeps their record, and that same employee can graduate from EOR to your own Indian entity without re-onboarding. Run the Crossover Calculator to see the month the model flips. EOR is the right model for a first India hire, until it isn't.
- India has no statutory paternity leave in the private sector. There is no central law mandating paid paternity leave for private employers. Most companies set their own policy. New hires from US companies often arrive expecting a benefit that does not exist under Indian law. The hiring guide covers what you need to set in your offer letter.
- The four Labour Codes came into force on 21 November 2025. The Industrial Relations Code, Code on Wages, Code on Social Security, and Occupational Safety Code replaced 29 legacy central acts. Final settlement must now be paid within 2 days of an employee leaving. Most competitor pages still reference the old Acts only.
- Establishments with 300 or more workers need government approval before retrenchment. This is not a consultation right. It is a hard procedural gate that can block layoffs entirely. Most US buyers assume India is a hire-and-fire market. For large-establishment workers it is not.
Hiring in India adds EPF contributions of 12% of basic salary for both employer and employee. Add ESI for employees earning below the wage ceiling, professional tax, and any contractual gratuity provision on top.
India pays salaries monthly. TDS on salary must be deposited with the government within 7 days of each month end. The Code on Wages 2019 requires final settlement within 2 days of an employee leaving.
Teamed runs Indian payroll, contracts, and compliance through an EOR entity holding the required Indian registrations.
This page is the map. Each guide below is the detail.
Zero FX. No setup fees. 48-hour onboarding. The price your finance team can forecast against without an asterisk.
How much does it cost to hire an employee in India in 2026?
An India hire typically costs 112 to 115 percent of gross salary once EPF and statutory contributions are added.
EPF employer contributions are 12% of basic salary. ESI adds another 3.25 percent for employees below the wage ceiling.
EPF employer contributions run at 12% of basic salary plus dearness allowance. Employees below the ESI wage ceiling also attract a 3.25 percent employer ESI contribution. Professional tax applies in most states. Gratuity accrues once an employee passes 5 years of service. Teamed's India fee sits inside the total cost envelope, not outside it.
Teamed's India price is a starting rate, with zero FX in any currency pairing. No setup fees. No exit fees. Salaries, taxes, and benefits passed through at cost on every invoice.
The full breakdown, with worked examples at current statutory rates, is in the cost guide.
Do you need an Indian entity to hire employees in India?
No. An Employer of Record runs Indian payroll and contracts from day one.
Your own Indian private limited company becomes cheaper than EOR somewhere around 5 to 8 employees, depending on salary.
Incorporating a private limited company in India requires registration with the Ministry of Corporate Affairs, a registered office, and director and shareholder filings. Setup takes six to ten weeks. An Employer of Record is faster and cheaper at low headcount. Teamed runs Indian payroll, contracts, and EPF compliance from day one.
The crossover point depends on Indian salary levels and your local accounting costs. For most tech roles it lands around 5 to 8 employees. At that headcount your own entity's total cost crosses below the EOR fee plus 12% EPF plus ESI on the same gross salary.
Most EOR providers will not tell you when you have crossed it. We do, and we help you move. You progress from contractor to EOR to your own Indian entity on one platform under Teamed's Graduation Model, with tenure preserved.
What changed in India employment law in November 2025?
India's four Labour Codes came into force on 21 November 2025, replacing 29 legacy central Acts.
The Code on Wages 2019 now requires final settlement within 2 days of an employee leaving, down from 30 days under the old Payment of Wages Act.
The Industrial Relations Code 2020, Code on Wages 2019, Code on Social Security 2020, and Occupational Safety Health and Working Conditions Code 2020 all came into force on 21 November 2025. Working time is now capped at 48 hours per week. Final settlement must reach the departing employee within 2 days. Retrenchment compensation for workers with at least 1 year of service is 15 days of average pay per completed year of service.
Workmen in establishments with 300 or more workers now need government approval before retrenchment can proceed. The new Re-skilling Fund requires employers to deposit 15 days of wages for each retrenched worker. The hiring guide covers the day-one obligations in full.
What benefits must you provide Indian employees in 2026?
The statutory floor is 18 days of earned leave, 26 weeks of paid maternity leave, and ESIC sickness benefit at 70% of average daily wages.
India has no central statutory paternity leave for the private sector. Most companies set a policy of 5 to 15 days.
Earned leave is 18 days per year under the Factories Act basis. India counts annual leave and public holidays separately. There are 17 central gazetted public holidays, and individual states add more. ESIC sickness benefit pays 70% of average daily wages for up to 91 days in a year, for employees below the ESI wage ceiling.
Maternity leave is 26 weeks of fully paid leave for the first two children. The employee must have worked at least 80 days in the 12 months before the expected delivery date. There is no central law mandating private sector paternity leave. The benefits guide covers leave, EPF, and ESI in full.
What are payroll taxes in India in 2026?
EPF employer contributions are 12% of basic salary. Employees contribute a matching 12%.
Income tax under the new default regime starts at 5% above the ₹400,000/year basic exemption limit and tops out at 30% on income above INR 24 lakh.
EPF (Employees Provident Fund) employer contributions are 12% of basic salary plus dearness allowance. Employee contributions are the same 12%. Employers also deduct TDS (Tax Deducted at Source) from salary and must deposit it with the government within 7 days of each month end. ESI employer contributions are 3.25 percent for employees below the wage ceiling. Professional tax is levied by state governments.
Under the new default income tax regime for FY 2026-27, the first ₹400,000/year is tax-free. The rate rises to 5% on income between INR 4 and 8 lakh, and reaches 30% on income above INR 24 lakh. The Section 87A rebate provides additional relief for lower earners. The tax and payroll guide sets out every band and threshold.
How do you terminate an employee in India?
For workmen in smaller establishments, the minimum notice is 30 days. Establishments with 300 or more workers need prior government approval.
Retrenchment compensation for workers with at least 1 year of service is 15 days of average pay per completed year of service, with no cap on years.
Termination rules in India depend on the employee category (workman or non-workman) and the establishment size. For workmen under the Industrial Relations Code 2020, the employer must give 30 days notice or pay in lieu for establishments under 300 workers. For larger establishments, government approval is required before retrenchment. Employers must also deposit 15 days of wages per retrenched worker into the Re-skilling Fund.
Gratuity becomes payable after 5 years of continuous service. The formula is 15 days of last drawn salary per year of service. Gratuity is tax-free up to ₹2,000,000. Wrongful retrenchment protection applies once a workman has completed 12 months of continuous service. Final wages must be settled within 2 days of the employee leaving. The termination guide runs the full process.
What should you know before hiring in India?
Two things catch US buyers out. The first is the workman/non-workman split in Indian labour law.
The second is the government approval gate that applies before you can retrench workers in establishments with 300 or more employees.
India's labour law applies differently to workmen and non-workmen. Workmen, broadly those in manual, clerical, or technical roles below supervisory level, get full Industrial Relations Code protection. Senior managers and supervisors have weaker statutory protection. Most US tech hires fall into a grey area. Getting the classification wrong exposes you to retrenchment compensation claims you did not budget for. The hiring guide covers how to classify correctly.
The government approval gate changes your layoff math. Once your establishment crosses 300 workers, you need prior government approval to retrench. Approval is not automatic. It can take weeks or be refused. Most US buyers model India as a low-cost, flexible market and do not price this in at scale. The EOR vs entity guide covers how Teamed navigates this.
Frequently asked questions
How much does it cost to hire an employee in India?
Plan on roughly 112 to 115 percent of gross salary once EPF employer contributions at 12% of basic salary and ESI contributions are added. Professional tax and gratuity accrual sit on top. Teamed's India fee is one flat number per employee per month, with zero FX mark-up in any currency pairing. The cost breakdown guide has worked examples.
Can a US company hire in India without an entity?
Yes. An Employer of Record like Teamed runs Indian payroll, EPF, ESI, and TDS compliance through its own registered entity. You direct the work. Teamed becomes the legal employer of record. Setup takes 48 hours once terms are confirmed. Incorporating your own Indian private limited company takes six to ten weeks.
What are the Labour Codes that came into force in India in November 2025?
Four codes came into force on 21 November 2025: the Industrial Relations Code 2020, the Code on Wages 2019, the Code on Social Security 2020, and the Occupational Safety Health and Working Conditions Code 2020. Together they replaced 29 legacy central Acts. Key changes include a 2 days-day final settlement deadline and a 48 hours-hour weekly working time cap.
What is the EPF contribution rate in India in 2026?
EPF employer contributions are 12% of basic salary plus dearness allowance. Employee contributions are a matching 12%. The wage ceiling for EPF is under Supreme Court review. Contributions apply to employees earning below the statutory ceiling. The tax and payroll guide sets out every rate and threshold.
What are Indian statutory notice periods?
For workmen in establishments with under 300 workers, the minimum notice for retrenchment is 30 days or wages in lieu. In establishments with 300 or more workers, prior government approval is required and the notice window is 90 days. Senior managers and non-workmen notice periods are typically set by contract.
What is the minimum annual leave for an Indian employee?
Earned leave under the Factories Act basis is 18 days per year. India counts annual leave and public holidays separately. There are 17 central gazetted public holidays per year, with state governments adding more. State-specific Shops and Establishments Acts may give different minimums for office and service workers.
India reads as a large, flexible talent market. The complexity is in the layers: state-by-state variations in Shops and Establishments Acts, the workman classification that most US buyers miss, and the government approval gate that applies at scale. The four Labour Codes that came into force in November 2025 simplified the rules on paper. The practical complexity is still there. These guides exist so the first India hire does not become the first retrenchment dispute.
India's talent pool is deep. The Labour Codes that took effect in November 2025 changed how final settlement, retrenchment pay, and working time are calculated.
The workman classification and the government approval gate at 300 employees are the two things most US buyers do not find until after the first hire.
Read the right India guide before that hire, not after the first dispute.
