Employer of record in India: costs and rules for 2026

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Employing someone in India adds 3.4% to an INR 3,800,000 salary (USD 40,000), made up of gratuity accrual and the employer's 12% provident fund and pension contribution on the Rs 25,000 monthly wage ceiling, under EPFO and labor ministry rules (checked October 2026), and published EOR list prices run from $199 a month (Payoneer WFM, formerly Skuad) to $699 (Oyster) in October 2026. The point US companies miss most is the ceiling itself: it rose from Rs 15,000 to Rs 25,000 on September 17, 2026, so pages and quotes written before then understate PF, and Remote's India page still shows employer provident fund at 0.00%.

An employer of record in India is an Indian company registered with EPFO and ESIC that issues your hire's appointment letter, runs monthly payroll with PF, professional tax and TDS, and owes the gratuity and exit dues, while you direct the person's work.

Employer cost on a sample salary
3.4%on top of gross pay
Currency
INR
On this page

What makes hiring in India different

India's four labor codes took effect on November 21, 2025, and most of the rules that move cost changed with them.

  • The 50% wages rule. If allowances excluded from "wages" add up to more than half of total pay, the excess is added back. A salary built on a small basic pay no longer shrinks the base for PF, gratuity and bonus.
  • Provident fund at the new ceiling. The employer pays 12% of wages up to Rs 25,000 a month: 8.33% to the pension fund (now up to Rs 2,083 a month, from Rs 1,250) and 3.67% to the worker's EPF account, plus 0.5% EDLI insurance. Employers may choose to contribute on full wages, which costs far more.
  • Gratuity is a real liability. 15 days of wages per completed year, payable after 5 years, or after 1 year for fixed-term employees, within 30 days of leaving, capped at Rs 20 lakh.
  • Low-wage extras. ESIC (3.25% employer) and the statutory bonus of 8.33% to 20% apply only up to Rs 21,000 a month, so most professional hires are out of scope.
  • Pay timing is strict. Monthly wages are due by the end of the 7th day of the next month, and all dues within 2 working days of resignation or dismissal.
  • Retrenchment costs 15 days' average pay per completed year, plus 15 days' wages paid into the Worker Re-Skilling Fund. Establishments with 50 to 299 workers give one month's notice; 300 or more need three months and government permission.
  • Hours: 48 a week, overtime at twice the normal wage. Paid annual leave starts once a worker has 180 days in the year. States add Professional Tax of up to Rs 2,500 a year, withheld from the employee.

We have not yet confirmed India's minimum wage rates, public holiday count or probation rules from an official source. Check the state government where your hire works, or ask the EOR to cite them.

Employment costs and rules in India

Employing someone in India: the rules and costs
ItemIndia
Employer social contributionsAbout 1.0% of gross for a mid-level salary when PF is paid only on the Rs 25,000 monthly wage ceiling (EPF and EPS 12%, EDLI 0.5%, plus an EPF admin charge of 0.5% that is unconfirmed); about 3.4% with gratuity accrual. ESIC (3.25%) and statutory bonus apply only to lower wages
What the employer paysEPF employer 12% of wages up to Rs 25,000 a month (8.33% to the Pension Fund EPS, max Rs 2,083 a month; 3.67% to the EPF account); EDLI 0.5% of wages up to the ceiling; EPF admin charge 0.5% of EPF wages (min Rs 500 a month) unconfirmed; ESIC 3.25% for employees with wages up to Rs 21,000 a month (Rs 25,000 for persons with disability); Gratuity 15 days' wages per completed year of service (after 5 years, 1 year for fixed-term), max Rs 20 lakh; Statutory bonus 8.33% to 20% of wages for employees under the eligibility limit
Caps and ceilingsEPF, EPS and EDLI wage ceiling raised from Rs 15,000 to Rs 25,000 a month effective Sept 17 2026 (S.O. 5109(E)); max employer EPS now Rs 2,083 a month (was Rs 1,250). Employers may contribute on full wages. ESIC coverage limit Rs 21,000 a month (labor.gov.in FAQ Mar 16 2026). Gratuity cap Rs 20 lakh. Under the Labor Codes in force Nov 21 2025, excluded allowances above 50% of total pay are added back into 'wages', which raises the PF, gratuity and bonus base. Professional Tax (state tax on the employee, withheld by the employer) is capped at Rs 2,500 a year
Employee contributionsEPF employee share 12% of wages (commonly on the Rs 25,000 ceiling; employee rate not restated on the official pages read, unconfirmed); ESIC 0.75% only for wages up to Rs 21,000 a month (nil if daily average wage is Rs 176 or less); state Professional Tax up to Rs 2,500 a year; plus income tax withheld at source
Mandatory bonusesStatutory bonus of at least 8.33% and at most 20% of wages for employees within the government-set wage limit who worked at least 30 days in the accounting year starting Apr 1 (Code on Wages s.26). Limits from the 2015 Payment of Bonus amendment: eligibility Rs 21,000 a month, calculation ceiling Rs 7,000 or the minimum wage, whichever is higher (a new limit under the Code: unconfirmed). No 13th month salary
Annual leavePaid annual leave for workers who work 180 days or more in a calendar year (OSH Code 2020, down from 240 days). Accrual rate not confirmed on an official page today; offices and shops follow state Shops and Establishments Acts
Notice periodRetrenchment: one month's prior notice in establishments under IR Code Chapter IX (handbook: 50 to 299 workers); three months' prior notice plus prior government permission for 300 or more workers (Chapter X). Otherwise notice follows the contract and state law
SeveranceRetrenchment compensation of 15 days' average pay per completed year of continuous service, plus 15 days' wages per retrenched worker paid into the Worker Re-Skilling Fund (IR Code 2020). Gratuity of 15 days' wages per completed year after 5 years of service (1 year for fixed-term employees), paid within 30 days, max Rs 20 lakh (Code on Social Security)
Payroll frequencyMonthly is the norm. Wage period may be daily, weekly, fortnightly or monthly, never over one month; monthly wages due before the end of the 7th day of the next month; all dues within 2 working days of resignation, dismissal or termination (Code on Wages s.17)
Standard work week48 (max 8 hours a day and 48 hours a week under the OSH Code; with consent, a 4-day week of 12-hour days without overtime). Overtime at twice the normal wage
Sample salary usedINR 3,800,000 per year (INR 316,667 per month; USD 40,000 at 94.96 INR per USD, ECB cross rate Oct 16 2026: INR 106.8640 and USD 1.1253 per EUR)
Employer cost on that salary3.4%

Checked October 17, 2026. Source type: official (EPFO subdomain, ESIC, labor.gov.in, PIB, ECB); minimum wage, public holidays and probation not confirmed. Sources are listed at the end of this page.

What an EOR charges to employ someone in India

What EOR providers charge (published list prices)
ProviderEOR fee per employee per monthDepositEntity model (provider claim)
Payoneer Workforce Managementfrom $199None listedClaims owned entities across APAC, MEA, Europe and the Americas
Pebl$399Not listedAbout 90% of employees on Pebl-owned entities
Playrollfrom $399One month's salary per employee, refundableNo clear owned-entity claim
Rivermate$319 to $639Not statedClaims 38 owned entities
Multiplier$459 (annual) or $499 (monthly)Sized from costs, fees and notice period (method published, no fixed amount)Claims owned entities in 160+ countries
Rippling EORQuote only (third-party reference: $499)Not listedClaims Rippling entities; no partner mention
Deel$599Not stated by DeelClaims owned entities in 130+ countries
Remotefrom $599Waived for startups; otherwise not statedClaims 100% owned entities in 90+ countries
Atlasfrom $599Not publishedClaims owned entities in 160+ countries
Papaya Globalfrom $650Refundable deposit, amount not statedUses in-country partners
Oyster$699At least one month of total service cost, refundable (per its terms)Owned entities and partners
Globalization Partners (G-P)Quote onlyNot statedInformation page claims 100+ wholly owned entities

Source: each provider’s pricing page, checked October 16, 2026. Fees are the provider’s charge on top of salary and the employer contributions above. Some providers adjust prices by country.

Cost of one employee in India, in rupees and dollars

The sample is a senior engineer or manager on INR 316,667 a month. The cash remitted each month is small because PF stops at the ceiling; gratuity is the bigger number, and it is owed at exit rather than paid monthly.

One employee in India on INR 3,800,000 a year (INR 316,667 a month), after Sept 17, 2026
ItemWorkingINR a yearUSD a year
Gross salarySample salary; statutory "wages" taken as 50% of pay, INR 158,333 a month3,800,00040,016.85
EPS (pension), employer8.33% x Rs 25,000 ceiling = 2,082.50 a month24,990263.16
EPF account, employer3.67% x Rs 25,000 = 917.50 a month11,010115.94
EDLI insurance0.5% x Rs 25,000 = 125 a month1,50015.80
ESICNot due: wages above Rs 21,000 a month00.00
Statutory bonusNot due: wages above the Rs 21,000 eligibility limit00.00
Gratuity accrual15 days of wages a year: 15/26 x 158,333 (26-day convention, see note)91,346961.94
Employer contributions3.39% of salary128,8461,356.84
EOR fee$599 x 12, converted at 94.96 INR per USD682,572.487,188.00
Total cost to youSalary + contributions + fee4,611,418.4848,561.69
Per monthTotal / 12384,284.874,046.81

Rates: EPFO, ESIC and labor ministry notices; EPF ceiling per S.O. 5109(E), effective Sept 17, 2026. Dollar column: 94.96 rupees per dollar, the ECB cross rate on October 16, 2026. The fee row uses the $599 list price of Deel and Remote (October 2026). The 26-day divisor for gratuity is the usual convention, not confirmed on an official page.

Two choices move this a lot. If PF is paid on full wages instead of the ceiling, PF alone becomes 12% x 158,333 = Rs 19,000 a month (INR 228,000 a year) and employer cost rises to INR 320,846, or 8.44%. An EPF admin charge of 0.5% is widely quoted, but we have not confirmed it from EPFO; at the ceiling it would add Rs 1,500 a year.

Try a different salary in the international hiring cost calculator, or see how India ranks in the EOR cost index by country.

An Indian subsidiary or an EOR

The statutory costs above are the same either way. What you avoid with your own entity is the EOR fee, INR 682,572.48 ($7,188) a year per person at $599 a month, which is 17.96% of this sample salary. What you take on is EPFO and ESIC registration, state Professional Tax, the labor code registers and appointment letters. The EOR or own entity comparison covers break-even headcount, and permanent establishment risk matters if your Indian staff close sales.

Contractor or employee in India?

Indian candidates increasingly say either works: October 2026 Hacker News job posts from India read "Contractor or EOR both work". The trade-off is cost against risk. A contractor saves the 3.39% and the EOR fee, but a full-time, exclusive role run like a job is hard to defend as contracting, and gratuity after one year applies to fixed-term staff now, so short contracts no longer dodge it. Pay real freelancers through contractor management software, or use a contractor of record if you want the classification risk carried for you.

Choosing an EOR for India

Our scores put Multiplier first (79/100) and Oyster second (64/100) among EORs; the EOR ranking has the rest.

  • Multiplier ($459 a month annual, $499 monthly) had the freshest India page we read: updated October 15, 2026, with the Rs 25,000 ceiling and the labor codes.
  • Oyster ($699) charges no setup or termination fee; its deposit is at least one month of total service cost under its terms (its pricing page, in the fee table, gives no amount).
  • Remote ($599 on its pricing page) shows employer PF at 0.00% on its India explorer page, with income tax tables at 0% as placeholders, and leaves out ESIC, gratuity and bonus. Read our Remote review before relying on its cost tables. Deel's guide could not be checked; our Deel review covers its terms, and the Oyster review covers late-pay complaints.
  • Playroll asks one month's salary as deposit: INR 316,667 here.

Ask each provider in writing whether it pays PF on the ceiling or on full wages, how it accrues gratuity, and whether the fee is billed in USD or INR.

Frequently asked questions

What does an employer of record in India cost per month?
Published monthly EOR list prices run from $199 (Payoneer WFM, formerly Skuad) to $699 (Oyster); Pebl and Playroll list $399 and Deel and Remote $599 (checked October 2026). Paying an INR 3,800,000 salary with PF on the Rs 25,000 ceiling, gratuity accrual and a $599 fee costs INR 4,611,418.48 a year, or USD 48,561.69, which is INR 384,284.87 a month.
What is the EPF wage ceiling in 2026?
Rs 25,000 a month from September 17, 2026, raised from Rs 15,000 by notification S.O. 5109(E), per India's labor ministry and PIB. The employer pays 12% up to the ceiling, with 8.33% (now up to Rs 2,083 a month) going to the EPS pension fund and 0.5% to EDLI.
When is gratuity payable in India?
Under the Code on Social Security, gratuity is 15 days of wages per completed year of service, due after 5 years, or after 1 year for fixed-term employees, paid within 30 days of exit and capped at Rs 20 lakh. On a salary with statutory wages of INR 158,333 a month, it accrues at about INR 91,346 a year using the usual 26-day divisor.
Does an employer pay ESIC for every employee?
No. ESIC's employer rate of 3.25% (employee 0.75%) applies only to employees earning up to Rs 21,000 a month, or Rs 25,000 for persons with disability, according to ESIC. Most salaried professionals hired through an EOR earn above that limit.
How quickly must final pay be made in India?
The Code on Wages requires all dues to be paid within 2 working days of resignation, dismissal or termination. Monthly wages are due by the end of the 7th day of the following month, and the wage period can never be longer than one month.
Sources (25)
  1. Pebl: Pebl EOR pricing (checked Oct 16, 2026)
  2. Playroll: Playroll pricing (checked Oct 16, 2026)
  3. Multiplier: Multiplier pricing (checked Oct 16, 2026)
  4. Deel: Deel pricing (checked Oct 16, 2026)
  5. Remote: Remote pricing (checked Oct 16, 2026)
  6. Oyster: Oyster pricing (checked Oct 16, 2026)
  7. Remote: Remote country explorer: India (checked Oct 16, 2026)
  8. Multiplier: Employer of Record in India (checked Oct 16, 2026)
  9. Hacker News: Who wants to be hired, October 2026 (India candidate posts) (checked Oct 16, 2026)
  10. Oyster: Oyster terms of service (deposit and termination terms) (checked Oct 16, 2026)
  11. pib.gov.in/PressReleasePage.aspx?PRID=2313829®=48&lang=2 (checked October 17, 2026)
  12. labour.gov.in/static/uploads/2026/09/4f607a88c5342aeb980c6b999997ca... (checked October 17, 2026)
  13. pib.gov.in/PressReleasePage.aspx?PRID=2314111®=48&lang=2 (checked October 17, 2026)
  14. pmvbry.epfindia.gov.in/faq-epfo (checked October 17, 2026)
  15. pmvbry.epfindia.gov.in/insurance-scheme-edli (checked October 17, 2026)
  16. esic.gov.in/contribution (checked October 17, 2026)
  17. esic.gov.in/coverage (checked October 17, 2026)
  18. labour.gov.in/static/uploads/2026/03/a4ccf4c6d97c4f1f36a6d83f8c6421... (checked October 17, 2026)
  19. labour.gov.in/static/uploads/2026/02/83978455025732b99b0165def80ab1... (checked October 17, 2026)
  20. labour.gov.in/static/uploads/2026/01/de4758d5bfeffc456d7de97a801891... (checked October 17, 2026)
  21. pib.gov.in/newsite/printrelease.aspx?relid=134313 (checked October 17, 2026)
  22. pib.gov.in/PressReleseDetailm.aspx?PRID=2192463®=3&lang=2 (checked October 17, 2026)
  23. static.pib.gov.in/WriteReadData/specificdocs/documents/2025/nov/doc... (checked October 17, 2026)
  24. cdnbbsr.s3waas.gov.in/s380537a945c7aaa788ccfcdf1b99b5d8f/uploads/20... (checked October 17, 2026)
  25. ecb.europa.eu/stats/policy_and_exchange_rates/euro_reference_exchan... (checked October 17, 2026)

This page is general information, not tax, legal or accounting advice. Rules and rates change, so check the official source linked above before you file or sign a contract. Read our disclaimer.

Checked Oct 17See Multiplier pricing on Multiplier’s site