🇮🇳 Hiring in India

💡 Everything you need to know to hire and manage employees in India through Toku. Toku handles payroll processing, tax withholding, social contributions, and statutory compliance. This guide covers what you need to plan costs and manage your team.

At a Glance

Item	Detail
Currency	Indian Rupee (INR)
Payroll cycle	Monthly. Toku runs one payroll per month in India.
Estimated employer costs on top of salary	Approximately 5-13%, depending on salary structure
Onboarding lead time	7-10 business days
Standard working week	48 hours (8 hours per day, 6 days, with one mandatory rest day)
Probation period	6 months (per Toku's employment agreement)
Annual leave	About 15 days per year (1 day per 20 days worked; varies by state)
13th month salary	Not required
Minimum notice on termination	30 days (typically 30-90 days by contract)
Fiscal year	1 April to 31 March

Onboarding a New Hire

Plan for 7-10 business days between submitting a new hire and their start date. Toku completes Provident Fund and ESI registration before the start date; your new hire just needs to provide their PAN (tax ID) and Aadhaar (national ID).

Submit your new hire through the Toku platform and we take it from there: local employment agreement, statutory registrations, and payroll setup. See Onboard Contributors as a Client Admin in Toku for the step-by-step process, and the Country Readiness Live Tracker for lead times across all countries.

Employer Costs

Employer contributions in India are calculated mostly on basic pay (basic salary plus dearness allowance), which by law must be at least 50% of total remuneration:

Cost	Rate	Notes
Provident Fund (EPF)	3.67% of basic pay	Statutory base capped at INR 15,000/month; often applied to full basic pay by agreement
Pension Scheme (EPS)	8.33% of basic pay	Capped at INR 15,000/month basic pay
Deposit Linked Insurance (EDLI)	0.50% of basic pay	Capped at INR 15,000/month basic pay
EPF administration charges	0.50% of basic pay	Minimum INR 500/month
Employees' State Insurance (ESI)	3.25% of gross wages	Only for employees earning up to INR 21,000/month gross

As a rule of thumb, total cost of employment is roughly 105-113% of gross salary, with the exact figure driven by how the salary is structured and whether ESI applies (it usually does not for professional salaries). Also budget for gratuity: a statutory end-of-service payment of 15 days' wages per year of service, payable after 5 years of continuous service (capped at INR 20,00,000). There is no 13th month salary requirement.

Employees contribute 12% of basic pay to the Provident Fund (plus 0.75% ESI where applicable) and pay progressive income tax deducted at source. These come out of gross salary, not on top of your costs. Toku calculates and remits all of the above.

Compensation & Payroll

Toku runs one payroll per month in India, and employees receive an itemized payslip each cycle. India has no single national minimum wage: states set minimum wages by region, sector, and skill level (as a reference point, the central rate for unskilled workers in the Delhi region is about INR 17,494 per month). By law, basic pay must make up at least 50% of total remuneration, which Toku's salary structuring handles for you.

Employment Contracts & Probation

Toku issues a compliant local appointment letter and employment agreement for every hire, covering all terms the Labour Codes require.
Contracts can be indefinite or fixed-term; fixed-term employees must receive the same pay and benefits as comparable permanent employees, including pro-rata gratuity after 1 year.
Probation is 6 months under Toku's employment agreement, in line with standard market practice.

Working Hours

The statutory framework caps standard hours at 48 per week, typically 8 hours per day with one mandatory weekly rest day, and a hard ceiling of 12 hours in a day including overtime. Overtime beyond daily or weekly limits is paid at 200% of the ordinary wage rate. State-level rules can add further limits, which Toku's employment agreement reflects for your employee's state.

Leave Entitlements

Leave	Entitlement	Who pays
Earned (annual) leave	1 day per 20 days worked, about 15 days per year; varies by state	Employer
Sick/casual leave	Typically 7-12 days per year, varies by state	Employer (ESIC for ESI-covered employees)
Maternity leave	26 weeks at full pay for the first two children; 12 weeks from the third	Employer (ESIC for ESI-covered employees)
Paternity leave	No statutory entitlement in the private sector, though increasingly offered by policy	Employer, where offered
National and festival holidays	3 national holidays plus state-specific festival holidays	Employer

Leave rules vary meaningfully by state, and unused earned leave can generally be carried forward subject to state caps (typically 30-45 days). Maternity leave for most professional employees is employer-funded at full pay.

Public Holidays (2026)

India has 3 compulsory national holidays (Republic Day, Independence Day, and Gandhi Jayanti) within a list of 17 central gazetted holidays for 2026. States add their own regional and festival holidays, so your employee's actual calendar follows their state. Islamic holiday dates are approximate as they depend on moon sighting.

Date	Holiday
January 26	Republic Day
March 4	Holi
March 21	Id-ul-Fitr (date subject to moon sighting)
March 26	Ram Navami
March 31	Mahavir Jayanti
April 3	Good Friday
May 1	Buddha Purnima
May 27	Id-ul-Zuha (Bakrid) (date subject to moon sighting)
June 26	Muharram (date subject to moon sighting)
August 15	Independence Day
August 26	Milad-un-Nabi (date subject to moon sighting)
September 4	Janmashtami
October 2	Mahatma Gandhi Jayanti
October 20	Dussehra (Vijaya Dashami)
November 8	Diwali (Deepavali)
November 24	Guru Nanak's Birthday
December 25	Christmas Day

Benefits: Required vs. Common Extras

Statutory (included in employer costs above): Provident Fund retirement savings, the Employees' Pension Scheme, ESI health and maternity coverage for lower-wage employees, gratuity after qualifying service, and maternity benefits.

Through Toku, Indian employees receive 100% employer-sponsored ICICI Lombard health and accident insurance covering the employee and their family. See India Supplemental Benefits for details.

Common extras in the Indian market include group term life insurance, flexible benefit plans, meal vouchers, transportation allowances, professional development budgets, and employee stock or token plans. Toku can advise on the cost impact of any extras you want to offer.

Ending Employment

India does not recognize at-will employment: every termination needs a valid legal reason and proper procedure, courts are strongly employee-friendly, and disputes can end in reinstatement with back pay, so involve Toku early, before any termination conversation happens. For the process, see How to Terminate an Employee or Contractor.

Service	Notice
During probation	As per contract (commonly 15-30 days)
Non-managerial workers (establishments under 300 workers)	30 days or 1 month's wages in lieu
Non-managerial workers (establishments with 300+ workers)	90 days or 3 months' wages in lieu
Managerial employees	As per contract (typically 30-90 days)

Redundancy (retrenchment) of workers carries compensation of 15 days' average wages per completed year of service, and gratuity is payable on top after 5 years of service (15 days' wages per year, capped at INR 20,00,000). Written settlements and clean documentation matter a great deal here.

Hiring Someone from Overseas?

Foreign nationals need an Employment Visa, which requires an annual salary of at least USD 25,000 and is tied to the sponsoring employer; processing takes roughly 2 to 8 weeks. Overseas Citizen of India (OCI) cardholders can work in India without a separate permit. Talk to Toku before extending an offer to a candidate who needs sponsorship.

Last verified July 2026. This guide is for general information and doesn't constitute legal or tax advice. Your Toku account manager can confirm specifics for your situation.