Why hire in India through an EOR

A low mandatory floor — and a brand-new reform changing it

For most professional salaries, India's mandatory statutory floor is genuinely modest: Provident Fund is capped at a small fixed amount that hasn't moved since 2014, and the health insurance scheme (ESI) simply doesn't apply above a low wage threshold. But a new Labour Code reform, effective November 2025, requires Basic + Dearness Allowance to make up at least 50% of total compensation — mechanically raising the contribution base for many salary structures. Current information matters here more than most countries.

No entity required

Employ staff in India without registering a company or filing your own PF and ESI contributions.

Current on the 2025 Labour Code reform

The new 50% Basic+DA rule genuinely changes PF and gratuity calculations — we apply it correctly, not the old structure.

ESI eligibility checked

Most professional salaries sit above the ESI wage ceiling — we confirm what actually applies to your specific hire.

Independent advice

We confirm whether the new Basic+DA rule actually changes your specific salary structure before it changes your PF liability.

Employer costs at a glance

India's headline numbers

12%
Employer PF (Provident Fund) contribution on Basic+DA, capped at a ₹15,000/month wage ceiling — max ₹1,800/month mandatory
3.25%
Employer ESI contribution — but only applies if gross monthly wages are ₹21,000 or below
50%
Minimum share of CTC that Basic+DA must now represent, under the Labour Codes effective November 2025

Employer costs explained

Why the mandatory floor is lower than you'd expect — for now

PF — 12%, but capped at a figure unchanged since 2014

Employer Provident Fund contributions run at 12% of Basic+DA, matched by the employee, but the statutory wage ceiling for mandatory PF has stayed at ₹15,000 a month since 2014 — meaning the strict legal minimum caps out at just ₹1,800 a month from each side, regardless of how much higher an employee's actual basic salary is. Many employers voluntarily contribute 12% on the full basic salary instead, as a genuine retention benefit — but that's a policy choice, not a legal requirement.

ESI — irrelevant for most professional hires

ESI provides medical, sickness, and maternity benefits, funded at 3.25% employer and 0.75% employee — but it only applies where gross monthly wages are ₹21,000 or below (₹25,000 for employees with disabilities). For the great majority of professional and white-collar salaries our clients hire at, ESI simply doesn't apply at all.

The 2025 Labour Code reform — a genuine, current shift

India's four new Labour Codes came into force on 21 November 2025, introducing a requirement that Basic + Dearness Allowance must equal at least 50% of total CTC (cost to company). Many Indian salary structures previously kept basic pay deliberately low, with the remainder made up of allowances, specifically to minimise PF and gratuity liability. This reform mechanically raises the contribution base for those structures — a real, current change worth checking your specific salary structure against, not an older assumption.

Employment basics

What's standard for an Indian employment contract

PF (Provident Fund)

12%, capped at ₹15,000/month wage

Mandatory minimum caps at ₹1,800/month — many employers voluntarily pay more.

ESI

3.25% employer, ≤₹21,000/month only

Doesn't apply above this wage threshold — irrelevant for most professional roles.

Basic+DA rule (2025)

Minimum 50% of CTC

New Labour Code requirement, effective November 2025 — raises the PF/gratuity base for many structures.

Applicability threshold

PF: 20+ employees / ESI: 10+

Both schemes apply at the establishment level once headcount crosses these thresholds.

Before you budget an Indian hire

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Common questions

Hiring in India, answered

Is the mandatory PF cost really capped that low?

For the strict legal minimum, yes — the wage ceiling for mandatory PF has stayed at ₹15,000 a month since 2014, capping the compulsory contribution at ₹1,800 a month each side. Many employers choose to contribute more voluntarily as a retention benefit, but that's a policy decision, not a legal obligation.

Does the new Labour Code change anything for us?

If a salary structure keeps basic pay low and makes up the rest with allowances, yes — the new rule requiring Basic+DA to be at least 50% of CTC will mechanically raise the PF and gratuity contribution base. We check this against every current structure.

Do I need an Indian entity to hire someone there?

No — through an Employer of Record arrangement, we become the legal employer, handling PF, ESI where applicable, and the new Labour Code requirements, while you keep full control of the person's day-to-day work.

Ready to talk about an Indian hire?

Tell us the role and salary structure and we'll give you the real, current cost and the fastest compliant route — including if that's not us.

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