Employer of Record (EOR) in India | Global PEO in India | Employer of Record (EOR)

An Employer of Record (EOR) in India is a company that takes on the responsibility of being the legal employer for a worker. This includes managing payroll, benefits, and other employment-related tasks on behalf of the worker's actual employer.

Employer of Record (EOR) Pricing in India

Employer of Record in India charges a flat fee or a percentage of the gross salary of the employee. The pricing for an Employer of Record in India can range anywhere between $200 and $600 per month. Additionally, an EOR may require a security deposit equivalent to one month's salary or notice period of the employee. This security deposit will be refunded upon the employee's exit.

Agent of Record (AOR) Pricing in India

An Agent of Record in India serves as the Employer of Record for independent contractors, assuming legal and administrative responsibilities related to employment. This includes payroll management, tax compliance, and employment contract management. The pricing for Agent of Record services in India is typically around $50 to $100 per month. This cost covers the essential tasks involved in employing workers or engaging independent contractors, ensuring compliance with labor laws and providing administrative support. By availing these services, businesses can focus on their core operations while relying on the expertise of an Agent of Record to handle the intricacies of workforce management in a compliant and efficient manner.

Roles and Responsibilities of an Employer of Record in India

Hiring and Recruitment in India:

Depending on the current stage of your hiring process, if you have already found a remote employee in India, an Employer of Record can assist you with the onboarding process. Additionally, an EOR can help you find the best talent in India. Hiring and Recruitment is an add-on service provided by some EOR service providers in India.

Issuing the Offer Letter:

An Employer of Record is responsible for extending the offer letter to the employee, including details such as compensation, benefits, start date, and any other relevant terms and conditions of employment.

Pre-Employment Checks or Background Verification with Employer of Record in India:

Employees are required to submit documents for background verification. Employee background verification is an add-on service and there will be additional charges for background verification. EOR companies in India are usually partnered with external background verification agencies.

Here are some commonly requested documents for pre-employment checks:

Identity Proof: This can include a copy of the candidate's passport, Aadhaar card, PAN card, or any other government-issued identification document.
Address Proof: Documents such as a utility bill, bank statement, or rental agreement can be submitted as proof of the candidate's address.
Educational Certificates: Copies of educational certificates, diplomas, degrees, or transcripts may be required to verify the candidate's educational qualifications.
Employment History: A resume or curriculum vitae (CV) listing the candidate's previous work experience, along with employment letters, experience certificates, or reference letters from previous employers, can be requested to validate their employment history.
Reference Checks: The contact information of references, such as previous supervisors or colleagues, may be requested for conducting reference checks.
Criminal Record Check: Candidates may be asked to provide a police clearance certificate or undergo a background check to verify their criminal record.
Drug Test Reports: In certain industries, candidates may be required to undergo a drug test, and the test reports may be needed as part of the pre-employment checks.
Medical Examination Reports: Depending on the nature of the job, candidates may be required to undergo a medical examination and provide medical reports to ensure they are fit for the role.

It's important to note that the specific documents required may vary depending on the company's policies, legal requirements, and industry-specific regulations. The employer or the background verification agency will typically inform the candidate about the specific documents needed for the pre-employment checks.

Employee Onboarding with Employer of Record in India:

Employee onboarding in India involves the process of integrating newly hired employees into the organization and setting them up for success in their roles. Here are some key steps typically involved in the employee onboarding process in India:

Paperwork and Documentation: Assist the employee in completing the necessary paperwork and documentation required for employment. This may include filling out employment contracts, tax forms, bank account details, and other relevant documents.

EOR service providers will have a standard employment contract template as per the Indian labor laws and it can be customized as per the requirement with any additional clauses. An employment agreement is between the EOR service provider and the employee.

IT Setup and Access: Set up the employee's computer, email, and other IT systems necessary for their role. Provide them with the required login credentials, access to company databases, and any specific software or tools they will be using.

EOR companies are usually partnered with local vendors for renting laptops. This will be helpful for employers hiring foreign employees. This is an add-on service and there will be additional charges.

Benefits and Employee Assistance Programs: Explain the employee benefits package, including health insurance, retirement plans, and any other applicable benefits. Provide information about employee assistance programs, wellness initiatives, and other support services available to them.

An Employer of Record ensures compliance with India's local labor laws and takes care of all employee benefits accordingly.

Below are some factors to consider when employing a remote team in India. An Employer of Record in India can provide additional information and assistance.

Employment in India

India's employment landscape is characterized by a talented workforce proficient in English, abundant tech talent, and a pool of highly skilled professionals. The country offers a diverse range of employment types, including full-time employees, part-time or freelance workers, independent contractors, and self-employed individuals.

Startups and multinational corporations (MNCs) in India have a high demand for top talent. The startup ecosystem seeks innovative individuals across sectors such as technology, e-commerce, fintech, and healthcare. MNCs operating in India provide attractive employment packages and global exposure for skilled professionals.

India's proficiency in English has positioned it as a preferred destination for outsourcing and offshoring services. The country's tech talent is globally recognized, with a large number of skilled IT professionals and developers. This talent pool drives the growth of the IT and software industry.

In summary, India offers a competitive job market with a talented workforce, a focus on technology and innovation, and various employment opportunities. The presence of startups and MNCs further enhances the demand for highly skilled professionals in the country.

Some of the top cities in India known for their talent pool include:

Bangalore (Bengaluru): Known as the "Silicon Valley of India," it is a hub for IT, technology, and startup talent.
Mumbai: A major financial center with a diverse range of industries and opportunities.
Delhi/NCR: The National Capital Region is a thriving hub for professionals in sectors like IT, finance, consulting, and government.
Hyderabad: Known for its IT and technology industry, it attracts talent in software development and engineering.
Pune: A growing IT and manufacturing hub with a strong presence of automotive and engineering industries.

If you are hiring in India from a foreign country, it is important to understand the competition and offer the best compensation and benefits to attract top talent. Your employer of record can help you with salary benchmarks and facilitate the process of hiring a remote employee while ensuring compliance and providing necessary support.

Employment Contracts in India

When hiring an employee through an employer of record (EOR) in India, it is crucial to have a comprehensive employment contract in place. This contract outlines the rights, responsibilities, and expectations of both the employer and the employee. Here's what you can expect to find in an employment contract for an EOR arrangement:

Job Title: The contract clearly states the job title or position that the employee will hold within the organization, ensuring clarity and alignment.
Job Location: It specifies the primary work location or base of operations where the employee will be required to perform their duties.
Roles and Responsibilities: The contract outlines the specific roles, duties, and responsibilities associated with the job, setting clear expectations for the employee's performance.
Compensation and Benefits: Details regarding the employee's compensation package are included, covering aspects such as salary, bonuses, incentives, and other benefits offered by the employer, such as health insurance, retirement plans, or allowances.
Non-Compete: If applicable, the contract may include a non-compete clause that restricts the employee from engaging in similar activities or working for competing organizations during or after the employment period.
Non-Disclosure: A non-disclosure clause ensures that the employee agrees to maintain the confidentiality of any sensitive or proprietary information belonging to the employer, protecting the company's trade secrets and confidential data.
Intellectual Property: The contract addresses ownership and rights related to intellectual property, specifying that any intellectual property created or developed by the employee during their employment belongs to the employer.
Termination: The contract outlines the conditions and procedures for termination, including grounds for termination, notice period requirements from both the employer and the employee, and any severance or compensation arrangements.
Governing Law and Dispute Resolution: The contract typically states the governing law applicable to the contract and provides mechanisms for resolving any disputes or conflicts that may arise, such as arbitration or mediation.
Working Hours: The contract specifies the expected working hours per day or per week, ensuring clarity regarding the regular working schedule and any provisions for overtime work.
Notice Period: It defines the notice period required by either party to terminate the employment contract, providing a clear understanding of the time required for notice before the employment ends.
Probation Period: If applicable, the contract may include a probationary period during which the employee's performance and suitability for the position are evaluated. The duration and terms of the probation period are typically outlined in the contract.
Leave Entitlement: The contract specifies the employee's entitlement to various types of leave, such as annual leave, sick leave, maternity/paternity leave, and any other applicable leaves as per local labor laws or company policies.

Employees vs Independent Contractors in India

Determining employment status in India involves factors like the control and integration tests. The control test examines the extent of control the employer has over the worker, while the integration test assesses the worker's integration into the employer's concern. Other factors considered include appointing authority, payment source, dismissal authority, duration of service, control and supervision, nature of work, and ownership of equipment.

In terms of tax treatment, employers withhold taxes from employees' salaries, while independent contractors are paid professional fees subject to tax withholding. Both employees and contractors must file income tax returns. Statutory benefits like provident fund, insurance, and leave entitlement generally apply to employees but not independent contractors.

While independent contractor use is unrestricted, there are limitations on employing contract labor. The government may prohibit contract labor in certain cases based on work nature, regularity, and scale.

Deputed employees remain employees of the deputing company and must comply with their terms and conditions. Employer-employee relationships are governed by agreements, while principal employers have obligations toward contractors under the Industrial Disputes Act.

Employee and Independent Contractor Misclassification in India

One important aspect to consider in the context of employer of record services in India is the issue of independent contractor misclassification. This occurs when a worker is inaccurately classified as an independent contractor instead of an employee. Such misclassification can have significant implications for both the worker and the employer.

In India, misclassifying a worker as an independent contractor can result in the denial of important employment benefits and legal protections that are specifically afforded to employees under labor laws. These benefits may include statutory benefits like provident fund, insurance coverage, leave entitlements, and other social security benefits. By misclassifying workers, employers may also face legal consequences, including non-compliance penalties and potential legal actions from affected workers.

To ensure compliance and mitigate the risk of misclassification, it is crucial for employers utilizing employer of record services to accurately assess and classify workers based on the criteria outlined in Indian labor laws. Regular audits, consultations with legal professionals, and staying updated on relevant regulations can help employers avoid misclassification issues.

Workers who suspect they have been misclassified as independent contractors can seek guidance from labor authorities or legal professionals to understand their rights and explore appropriate avenues for resolution.

Addressing the issue of independent contractor misclassification is essential in the context of employer of record services in India. Employers must be diligent in correctly classifying workers to adhere to labor laws and maintain a fair and compliant working environment.

Expat Hiring - Employing foreign employees in India

Foreign employees in India are subject to the same labor laws as their Indian counterparts. This includes the Maternity Benefit Act, Payment of Bonus Act, Employees Provident Fund Act, Industrial Disputes Act, State Insurance Acts, and others. These laws regulate the employment relationship and apply to both Indian and foreign workers, ensuring fair treatment and benefits.

Work Visa / Work Permit in India

India offers various types of visas to cater to different purposes of travel. Three common types of visas are the employment visa, business visa, and X entry visa.

Employment Visa: This visa is granted to foreign nationals who intend to work in India. It is typically issued to skilled professionals, managers, or executives employed by an Indian company or organization. The employment visa is subject to certain conditions, such as a minimum salary threshold, contract duration, and sponsorship by an Indian employer.
Business Visa: The business visa is designed for individuals who wish to engage in business activities in India but are not seeking employment. It allows for activities such as attending business meetings, negotiations, or exploring business opportunities. The business visa is typically granted to entrepreneurs, investors, and individuals involved in trade or commercial activities.
X Entry Visa: The X entry visa is a special category visa issued to individuals of Indian origin or foreign nationals who have a close family member (spouse, parents, children, or grandparents) of Indian origin. This visa is applicable for visits with a family or social purpose, such as family reunions, attending weddings, or visiting relatives in India.

Each visa type has specific eligibility criteria, documentation requirements, and validity periods. It is crucial to review the official guidelines provided by the Indian embassy or consulate in your country to ensure accurate and up-to-date information on the visa application process.

Employment Visa in India

The Indian employment visa is designed for highly skilled individuals who plan to work in India. This visa category is specifically for professionals with advanced qualifications and expertise who intend to take up employment in the country.

Visa Application Requirements:

Skilled or qualified professionals, with a possible undertaking from the host Indian company.
Salary exceeding US$ 25,000 per year, with some exceptions for specific roles.
Employment contract from the host Indian company.

Key Purposes:

Project execution or contract work.
Consultants on fixed remuneration.
Provision of technical support or transfer of know-how with fees or royalties involved.
Foreign engineers or technicians for installation and commissioning of equipment or machines.
Foreign artists, coaches, sportsmen, or specialist chefs employed with national or state-level teams.

Visa Processing Documents:

Invitation letter from the host Indian company.
Covering letter from the foreign company.
Employment contract and income statement.
Certificate of Incorporation of the host company.
Certificate of educational qualification and professional expertise of the applicant.
Valid passport with 2 blank pages and at least 6 months validity.

Maximum Duration and Extensions:

Employment visa can be granted for a maximum of 5 years with multiple entries.
Extensions are subject to conditions like the applicant's conduct, documentation supporting continued employment, filing income tax returns, and no adverse security inputs.

Business Visa in India

If you are planning to visit India for business purposes, you will need to apply for a business visa. The business visa allows you to engage in various activities related to industrial, commercial, and business ventures in India. The visa is initially granted for a maximum duration of 5 years, with multiple entries permitted during this period. However, please note that for US citizens, the maximum duration can be extended up to 10 years.

To apply for a business visa in India, there are certain preconditions and norms that need to be met. Here is a summary of the requirements:

Person of assured financial standing: The applicant should demonstrate a strong financial background. This can be proven through bank statements, financial statements, and other relevant documents that establish the individual's financial stability.
Expertise in the field of intended business: The applicant should possess the necessary expertise and knowledge in the field of the intended business venture. This can be demonstrated through educational qualifications, work experience, and any other relevant certifications or achievements.

Key purposes for the business visa include:

Establishing an industrial/business venture or exploring possibilities for such ventures in India.
Buying/selling industrial products, commercial products, or consumer durables.
Attending technical meetings/discussions, board meetings, or general meetings to provide business services support.
Recruiting manpower for the business.
Functioning as partners/directors of the Indian company.
Short-duration visits for monitoring ongoing projects or conducting meetings related to projects.
Engaging in pre-sales or post-sales activities that do not involve executing contracts or projects.

Visa processing requires the following documents:

Valid passport: The passport should have a minimum of 2 blank pages and at least 6 months of validity remaining from the date of application.
Introduction/support letter from the foreign entity: This letter should be issued by the foreign company or organization that the applicant is associated with. It should introduce the applicant, state the purpose of the visit to India, and provide support for the visa application.
Invitation/support letter from the Indian entity: This letter should be issued by the Indian company or organization that the applicant intends to visit or conduct business with. It should invite the applicant to India, mention the purpose of the visit, and provide support for the visa application.
Certificate of Incorporation of the Indian entity: This document proves the legal existence of the Indian company or organization that is involved in the business activities with the applicant.
The maximum duration of a business visa is generally 5 years for multiple entries. However, for US citizens, the maximum duration is 10 years for multiple entries. The initial term of the business visa can be extended up to 5 years, inclusive of the initial term.

India Overview

India Overview
Continent	Asia
Country	India
Capital	New Delhi
Time zone	UTC+05:30 (IST)
Total Time zones	1
Working hours per week	48-60
Working week	Monday - Friday
Date Format	dd/mm/yyyy
Typical hours worked	8–12
Personal Tax filing deadline	31 July of the tax year.
Financial Year	1 April – 31 March
Probationary period	3 to 6 months
Notice Period	1 to 3 months

Payroll in India

Employer Payroll Contributions in India

Employers	% of Gross Salary
EPF and EPS	12%
ESI	4.75%
Total Employment Cost	16.75%

EPF and EPS is applicable for companies with more 20 employees and for employees with a monthly salary of 15,000 INR. ESI is applicable for companies with at least 10 employees.

Employee Payroll Contributions in India

Employees	% of Gross Salary
EPF and EPS	12%
Employee’s State Insurance (ESI)	1.75%
Health and Education Cess	4% of the income tax + surcharge
Total Employee Cost	17.75%

An Employer of Record in India deducts social security contributions from employees' salaries and ensures that they are paid to the government in accordance with local labor laws.

Employee Benefits in India

Social Security in India - ESI, PF, LWF and Gratuity

Employee State Insurance (ESI): ESI is a social security and health insurance scheme for Indian workers managed by employees' state insurance corporations. This is a standard deduction for all employees working for any company with more than 10 employees and earning less than 21K INR per month. Social security benefits for all insured employees under this scheme include Medical, Sickness, Maternity, Disablement, and Dependants Benefits.

Provident Fund (PF): PF is a retirement scheme managed by employees' provident fund organization. This is a standard deduction for all employees working for any company with more than 20 employees and earning less than 15K INR per month. Both employer and employee need to contribute 12% of the basic pay to this scheme. Members of this scheme can take nonrefundable advances during emergencies or some special situations as per EPFO policy. Amount deducted under the PF component contributes to three pension schemes namely provident fund, pension scheme, and disability and life insurance.

Labor Welfare Fund (LWF): The Labor Welfare Fund (LWF) in India is a statutory fund established to promote the welfare of workers. It operates under the labor welfare acts of individual states. LWF aims to improve workers' living and working conditions by providing assistance in areas such as healthcare, education, housing, social security, and recreation. The contribution to LWF is mandatory for employers in certain states and is determined based on factors like the number of workers and the type of establishment. The funds collected are utilized for various welfare activities to benefit workers and their families, as specified by the respective state labor welfare acts.

Gratuity is paid to the employees who finished 5 years of employment. Gratuity is half of the latest salary drawn multiplied by the total number of years.

Healthcare and Insurances in India

Employers in India must compensate for medical care in case of workplace injury. Many private companies provide medical benefits to employees and immediate family members for up to 5 lacs. In some companies, medical insurance benefits only apply to spouse and kids and not to parents in the family.

Holiday and Annual Leave Policy in India

Holidays: Many companies will have a leave calendar specific to the respective state that includes public holidays like Independence Day, Republic Day, Labour Day, Christmas, etc.

Annual Leave Casual and Paid Leaves: All employees are eligible for casual and paid leaves as per the monthly leave quota. Many companies have a standard leave policy and the employees are entitled to take 12 casual leaves and 6 paid leaves per year.

Leave Carry Forward Policy: Some companies allow employees to carry forward a portion of unused leaves to the following year.

Leave Encashment: Some companies pay for the unused leaves during full and final settlement after the resignation.

Maternity and Paternity Leave: Maternity leave is 26 weeks and paternity leave is 1 to 2 weeks.

Hiring in India - Popular Job Portals

Naukri, Monster, LinkedIn, Angel.co and Shine

Employment Laws in India

India Labour Codes

The Code on Social Security, 2020 (SS Code)
The Industrial Relations Code, 2020 (IR Code)
The Occupational Health, Safety and Working Conditions Code, 2020 (OSH Code)
The Code on Wages, 2019 (Wage Code)

Individual Tax Slabs and Income Tax Rates - New Tax Regime 2022

Taxable Income	Tax Rate
less than INR 250,000	0%
INR 250,000 to INR 500,000,	5% of income exceeding INR 250,000
INR 500,000 to INR 750,000,	10% of income exceeding INR 500,000
INR 750,000 to INR 10,00,000,	15% of income exceeding INR 750,000
INR 10,00,000 to INR 12,50,000,	20% of income exceeding INR 10,00,000
INR 12,50,000 to INR 15,00,000,	25% of income exceeding INR 12,50,000
more than INR 15,00,000,	30% of income exceeding INR15,00,000

Individual Tax Slabs and Income Tax Rates - Old Tax Regime

Taxable Income	Tax Rate
less than INR 250,000	0%
INR 250,000 to INR 500,000,	5% of income exceeding INR 250,000
INR 500,000 to INR 750,000,	20% of income exceeding INR 500,000
INR 750,000 to INR 10,00,000,	20% of income exceeding INR 750,000
INR 10,00,000 to INR 12,50,000,	30% of income exceeding INR 10,00,000
INR 12,50,000 to INR 15,00,000,	30% of income exceeding INR 12,50,000
more than INR 15,00,000	30% of income exceeding INR 15,00,000

An Employer of Record deducts income tax from employees' salaries and remits it to the government in accordance with local labor laws in India.

Public Holidays in India - 2023

Day	Date	Holiday
Thursday	Jan 26th	Republic Day
Wednesday	Mar 8th	Holi
Friday	Apr 7th	Good Friday
Friday	Apr 21st	Eid al-Fitr
Tuesday	Aug 15th	Independence Day
Wednesday	Aug 30th	Raksha Bandhan (Rakhi)
Thursday	Sep 7th	Janmashtami
Monday	Oct 2nd	Mahatma Gandhi Jayanti
Tuesday	Oct 24th	Dussehra/Vijaya Dashami
Sunday	Nov 12th	Diwali
Monday	Nov 13th	Diwali Holiday
Monday	Nov 27th	Guru Nanak Jayanti
Monday	Dec 25th	Christmas Day

Conclusion

In conclusion, leveraging an Employer of Record (EOR) in India provides foreign companies with a streamlined solution to hire employees without the need for establishing a legal entity in the country. By assuming the role of the legal employer, the EOR simplifies the hiring process while ensuring compliance with local regulations. This arrangement allows foreign companies to focus on their core operations while benefiting from the expertise and support of the EOR in managing payroll, legal obligations, and employee supervision. Consider the advantages of an EOR in India to expand your business seamlessly and tap into the talent pool without the complexities of company setup. Get in touch for employer of record services in India.