🇮🇳 Hiring in India

Employer payroll taxes and contributions

• Provident Fund (EPF + EPS)

  Statutory

  Employer 12% of PF wages; 8.33% of that goes to EPS. The mandatory wage ceiling is ₹25,000 a month (up from ₹15,000).

  Contributions above the ceiling are optional.

  Source: PIB 23-09-2026: EPFO wage ceiling enhanced to ₹25,000 · as of 2026-11-10 · effective 2026-09-17

• EDLI insurance + EPF admin charges

  Statutoryverify

  About 0.5% EDLI plus 0.5% admin charges on PF wages.

  Check whether the EDLI wage cap moved with the new ceiling.

  Source: EPFO (Employees' Provident Fund Organisation) · as of 2026-11-10

• ESIC

  Statutory if conditions apply

  Employer 3.25% (employee 0.75%) where the employee's wages are ₹21,000 a month or less.

  Under the Codes, ESIC is mandatory for establishments with more than 10 employees.

  Source: ESIC: Contribution · as of 2026-11-10

• Professional tax / Labour Welfare Fund

  Statutory if conditions applyverify

  State-level; small fixed amounts in some states.

  Source: Ministry of Labour & Employment: Labour Codes · as of 2026-11-10

Bonuses: statutory vs customary

Statutory and customary items are kept separate. Customary items are never added to the statutory cost.

• Statutory bonus

  Statutory if conditions applyverify

  8.33%–20% of wages for employees under the bonus wage threshold (historically ₹21,000 a month).

  Most professional salaries are above the threshold. Confirm the threshold notified under the Code on Wages.

  Source: PIB 21-11-2025: Four Labour Codes made effective · as of 2026-11-10

• Performance / festival bonus

  Customary (not required by law)

  Common, but set by the employer.

  Source: Ministry of Labour & Employment: Labour Codes · as of 2026-11-10

Mandatory benefits

• Gratuity

  Statutoryverify

  15 days' wages per completed year of service, payable after 5 years (1 year for fixed-term staff). Employers usually accrue about 4.81% of basic pay.

  Tax-free ceiling and cap on gratuity: verify against the Code on Social Security rules.

  Source: PIB 21-11-2025: Four Labour Codes made effective · as of 2026-11-10

• Annual health check-up

  Statutory if conditions applyverify

  The Codes add an annual health check-up for workers (age and sector conditions apply).

  Source: PIB: Provisions of the four Labour Codes · as of 2026-11-10

• Group medical insurance

  Customary (not required by law)

  Very common for salaried staff, but not required where ESIC does not apply.

  Source: ESIC: Contribution · as of 2026-11-10

Leave

• Annual leave

  Statutoryverify

  Under the OSH Code, 1 day per 20 days worked once 180 days are worked in a year. Offices are usually also governed by the state Shops & Establishments Act.

  Source: Ministry of Labour & Employment: Labour Codes · as of 2026-11-10

• Maternity

  Statutoryverify

  26 weeks paid maternity leave (for the first two children).

  Source: Ministry of Labour & Employment: Labour Codes · as of 2026-11-10

Termination, notice and severance

• Notice and retrenchment (workers)

  Statutoryverify

  For 'workers' under the Industrial Relations Code: 1 month's notice (or pay) and 15 days' average pay per completed year as retrenchment compensation.

  Managerial and supervisory staff above the wage threshold are generally governed by their contract.

  Source: Ministry of Labour & Employment: Labour Codes · as of 2026-11-10

• Government permission

  Statutory if conditions applyverify

  Establishments with 300+ workers need prior government permission for layoffs, retrenchment or closure.

  Source: PIB 21-11-2025: Four Labour Codes made effective · as of 2026-11-10 · effective 2025-11-21

• Re-skilling fund

  Statutory if conditions applyverify

  Employers pay 15 days' wages per retrenched worker into a Worker Re-Skilling Fund.

  Source: PIB: Provisions of the four Labour Codes · as of 2026-11-10

Contracts and working time

• Appointment letters

  Statutory

  The Labour Codes require appointment letters for all employees.

  Source: PIB: Provisions of the four Labour Codes · as of 2026-11-10 · effective 2025-11-21

• Definition of wages (50% rule)

  Statutoryverify

  Under the Code on Wages, excluded allowances above 50% of total pay are added back into 'wages'. This raises the base for PF and gratuity when basic pay is set low.

  Source: PIB 21-11-2025: Four Labour Codes made effective · as of 2026-11-10 · effective 2025-11-21

• Fixed-term employment

  Statutory

  Recognised under the Codes, with the same benefits as permanent staff and gratuity after 1 year.

  Source: PIB 21-11-2025: Four Labour Codes made effective · as of 2026-11-10 · effective 2025-11-21

• Minimum wage

  Statutoryverify

  Statutory right for all workers; set by central and state governments and varies by state, skill and zone.

  Source: PIB: Provisions of the four Labour Codes · as of 2026-11-10

Hiring options: EOR, contractor or your own entity

• Own entity

  Statutoryverify

  Usually a private limited company or a branch/liaison office, with EPF, ESIC (if applicable), professional tax and Shops & Establishments registrations.

  Source: Ministry of Labour & Employment: Labour Codes · as of 2026-11-10

• EOR

  Vendor / optional

  Widely used for first hires. Check that the EOR registers you under EPF/ESIC and issues appointment letters.

  Source: PIB: Provisions of the four Labour Codes · as of 2026-11-10

• Contractor risk

  Statutoryverify

  Long-term exclusive contractors can be treated as employees, with back EPF/ESIC and tax exposure.

  Source: Ministry of Labour & Employment: Labour Codes · as of 2026-11-10