# Hire in India

Source: https://overseashire.com/hire/india · verified 2026-10-05 · confidence medium

The largest English-speaking engineering, data and IT services pool in the world, with deep experience across SaaS and support operations. Time zone overlaps with Europe and, partially, the US West Coast.

## Employer cost
Employer on-costs 5–10% of gross salary. Recomputed 5 Oct 2026, as % of gross monthly pay (CTC excluding employer statutory items). Employer items: EPF 12% + EPS 8.33% (together the 12% employer PF) + EDLI 0.5% + EPF admin 0.5% on PF wages, plus gratuity accrual of 15/26 x basic = 4.81% of basic (Ministry of Labour notification of 1 Jul 2026 via SCC Online for 12% / 8.33% / 0.5%; admin 0.5% and gratuity formula from secondary sources). Typical structure with basic = 50% of pay (the Code on Wages minimum): PF 12% x 50% = 6.0% + EDLI/admin 1% x 50% = 0.5% + gratuity 4.81% x 50% = 2.4% = about 8.9%, rounded to 10 at the top of the range. Low end: PF wages capped at the mandatory-coverage ceiling (INR 15,000, raised to INR 25,000 on 17 Sep 2026 per Cabinet): at INR 100,000/month, 12% x 25,000 = 3,000 + 125 + 125 = 3,250 (3.3%) + gratuity 2.4% = about 5.7%; at INR 150,000 about 4.6%, so low = 5. Roles where basic is close to 100% of pay (or lower-paid staff with ESIC 3.25% on top) can reach 15-20%. Previous 8-20% range mixed 'percent of basic' with 'percent of pay'. Modelled estimate, not a published figure.

| Contribution | Rate | Notes |
|---|---|---|
| Employees' Provident Fund (EPF) and Pension (EPS) | 12% of PF wages | Ministry of Labour notifications of 1 Jul 2026: EPF 12% (effective 21 Nov 2025), EPS 8.33% (effective 29 Jun 2026). EPS 8.33% has been calculated on wages up to INR 15,000 (PwC). On 16-17 Sep 2026 the Cabinet raised the mandatory-coverage wage ceiling from INR 15,000 to INR 25,000 (effective 17 Sep 2026); whether the EPS cap moves with it is unconfirmed. PF wages must be at least 50% of total remuneration under the Code on Wages definition. |
| Employees' State Insurance (ESIC) | 3.25% of gross wages | Applies to employees earning up to INR 21,000/month in covered establishments (10+ workers in most states); employee pays 0.75%. 3.25% / 0.75% and the INR 21,000 threshold from secondary sources; a rise of the threshold to INR 30,000 was reported as under consideration. |
| Gratuity | 15 days' wages per year of service (about 4.81% of basic) | Under the Code on Social Security, fixed-term employees become eligible pro rata after 1 year; permanent employees after 5 years. |
| EDLI insurance and EPF administration charge | 0.5% (EDLI) + 0.5% (EPF admin) | EDLI 0.5% of wages confirmed in the 1 Jul 2026 Ministry notification (effective 29 Jun 2026). The 0.5% EPF administration charge is from secondary payroll guides (not an official page); wage base for EDLI/admin follows the PF wage ceiling. |

Mandatory benefits: Provident fund; Gratuity; ESIC medical cover for lower-paid employees; Statutory bonus for eligible low-paid staff (8.33%-20%); Maternity benefit 26 weeks; Paid leave and holidays under state Shops & Establishments Acts

## Rules
- Payroll: monthly (wages must be paid by the 7th of the following month under the Code on Wages for most establishments)
- Probation: Not set by statute; commonly 3-6 months by contract.
- Notice and severance: Notice is contractual (commonly 30-90 days). Retrenchment under the Industrial Relations Code is reported to require one month's notice and compensation of 15 days' average pay per completed year of service (not checked against the Code text); gratuity is separate. Fixed-term employees are entitled to gratuity pro rata after one year.
- Termination: IR Code requires government permission for layoffs/retrenchment/closure in establishments with 300+ workers (raised from 100). Termination of 'workmen' needs process; tech and office roles are mostly under state Shops & Establishments Acts and contract. Final settlement to be paid within two working days of termination under the Code on Wages. Rules vary by state; the Code on Wages (Central) Rules, 2026 were notified on 8 May 2026 (SCC Online); Industrial Relations and Social Security central rules and state rules should be rechecked.
- Working time: Typically 8-9 hours per day and 48 hours per week; overtime at twice the normal wage under the labour codes. Shops & Establishments Acts of each state govern office hours.
- Paid leave: Set by state Shops and Establishments Acts and company policy, so it varies; typically 12-24 days of earned/casual/sick leave plus 8-15 public holidays (exact figures state-specific and not confirmed). The labour codes provide earned leave at 1 day per 20 days worked.
- Minimum wage: not verified

## Contractors
Contractors and freelancers are very common (consultancy agreements, invoicing under GST). Misclassification risk is moderate: Indian courts look at control and integration, and the labour codes tighten contract labour rules. Cross-border contractors can create permanent establishment or tax risks for the foreign company if directed from abroad.

## EOR
A foreign firm needs an Indian entity (private limited, LLP, or branch/liaison office with RBI/FEMA compliance) to employ staff directly; EOR avoids this. Providers typically advertise days to a few weeks.
Onboarding: EOR Days to ~2 weeks (provider claims; specific figure unverified); own entity Roughly 1-3 months for a private limited company (estimate, not verified).

## FAQ
**What does the employer pay into provident fund?** 12% of PF wages (the 12% includes 8.33% to the Pension Scheme), plus 0.5% EDLI and a 0.5% administration charge, per the Ministry of Labour's 2026 scheme notifications. The mandatory-coverage wage ceiling was raised from INR 15,000 to INR 25,000 on 17 Sep 2026.

**Is gratuity mandatory?** Yes. 15 days' wages per year of service, typically after 5 years; under the Code on Social Security, fixed-term employees qualify pro rata after 1 year.

**What changed with the labour codes?** Four labour codes took effect on 21 November 2025; the 50% wage rule requires basic wages to be at least half of total pay, increasing PF and gratuity costs.

**Do I need an entity to hire in India?** To employ people directly, yes. EOR providers allow hiring without one.

Unverified: No single national minimum wage; Code on Wages floor wage not newly notified in sources found (a legacy national floor of INR 178/day from 2019 is reported by secondary sources) and state rates not confirmed (minimumWage = null); Whether the 17 Sep 2026 wage-ceiling rise to INR 25,000 also lifts the EPS 8.33% cap and the EDLI/admin wage base (only the Cabinet decision was read); EPF admin charge 0.5% and ESIC 3.25% / INR 21,000 threshold come from secondary sources, not the EPFO/ESIC sites; Leave days, public holidays and salary payment deadlines are state/code-specific; wage-payment deadline of the 7th not re-checked against the Central Rules; Retrenchment threshold 300 (KPMG) is reported but the 15-day compensation rule and one-month notice not checked against final rules; Employer cost range is a modelled estimate (arithmetic in note), not a published figure; EOR and entity timing

Sources:
- https://kpmg.com/in/en/blogs/2025/12/implementation-of-labour-codes-what-changes-and-road-ahead.html
- https://www.setindiabiz.com/blog/how-labour-codes-2025-affect-pf-gratuity-and-salary
- https://www.hubinternational.com/en-us/hub-resources/global-benefits-bulletins/2026/01/india-labor-code-reforms/
- https://labourlawreporter.com/gratuity.asp
- https://topsourceworldwide.com/?p=17982
- https://www.scconline.com/blog/post/2026/07/06/epf-eps-edli-contribution-rates-notified/
- https://newsonair.gov.in/cabinet-raises-epfo-mandatory-coverage-wage-ceiling-from-%E2%82%B915000-to-%E2%82%B925000/
- https://www.scconline.com/blog/post/2026/05/19/code-on-wages-central-rules-2026-key-highlights-india/
- https://taxsummaries.pwc.com/india/individual/other-taxes
- https://group.teamlease.com/esic-raises-wage-threshold-to-rs-21000-aims-to-add-50-lakh-workers/

Not legal or tax advice.