Employer of Record in India

How hiring through an employer of record works in India

The local employer signs the Indian contract, enrolls the employee in provident fund (new joiners earning above INR 25,000 a month are excluded employees) and, where it applies, ESI, and runs payroll, while your managers direct the work. The labour ministry says every employee must receive an appointment letter, and the central safety rules set its format.

Provident fund rules apply from 20 employees, and ESI is mandatory from 10 and voluntary below that.

What is national and what varies by state in India

The labour codes, provident fund, pension, insurance and ESI rates, income tax and the central bank's crypto stance are national. Under the Code on Wages the Central Government is the appropriate government only for listed sectors such as railways, mines, banking and telecom, and the State Government for any other establishment. Most private employers therefore meet state minimum wages, state rules under each code and state laws such as shops and establishments acts, and a more favourable state benefit still applies. Toku confirms the work state before pricing a hire.

Employer costs and contributions in India

The employer pays 12% of wages to provident fund (rate notified on 1 July 2026, effective from 21 November 2025). Contributions stop at the wage ceiling, raised from INR 15,000 to INR 25,000 a month on 17 September 2026, so the maximum is INR 3,000 a month. Of the 12%, 8.33% funds the pension scheme. The employer also pays 0.5% of wages into deposit-linked insurance, plus an administrative charge whose percentage the Centre fixes.

ESI costs the employer 3.25% of wages and the employee 0.75%, up to earnings of INR 21,000 a month. For a lower-paid hire these employer lines add to 15.75% before the administrative charge.

Pay structure matters: wages now mean basic pay, dearness allowance and retaining allowance, and allowances above half of remuneration are added back, which can raise gratuity accruals.

Working time, leave and pay rules in India

• Hours: the OSH Code sets 8 a day and 48 a week, and extra work earns twice the normal rate.
• Pay timing: final wages are due within two working days of dismissal, resignation or retrenchment.
• Bonus: employees under a notified wage limit get at least 8.33% of wages or INR 100, whichever is higher, up to 20%.
• Leave: the code covers workers at any pay and supervisors earning up to INR 18,000 a month. Other roles depend on state law and the contract.
• Maternity: up to 26 weeks of paid leave, now under the Code on Social Security.

Retrenchment, notice and gratuity in India

For industrial establishments such as factories, mines and plantations the Ministry's handbook gives retrenchment terms of one month's notice and 15 days' average pay per completed year at 50 to 299 workers, and prior permission with three months' notice from 300. Other roles depend on the appointment letter and state law, so plan exits with the local employer.

Gratuity is 15 days of last drawn wages per completed year after five years of continuous service, or after one year for directly engaged fixed-term employees.

Getting paid in stablecoins, USDC, USDT, tokens and crypto in India

Short answer: Not settled. Section 15 of the Code on Wages requires all wages to be paid in coin or currency notes, by cheque, by bank credit or by the electronic mode, so a USDC payout of the rupee wage does not fit the listed ways. The Explanation to section 2(y) counts in-kind remuneration given in lieu of wages, up to 15%, but no official source says crypto can be that.

What the law says about the form of pay

Section 15 of the Code on Wages, 2019 requires wages to be paid in current coin or currency notes, by cheque, by credit to the employee's bank account or by the electronic mode. Neither the Code nor the 2026 central rules names crypto-assets as a way to pay wages.

What it means for employee salary

Section 15 lists only coin, currency notes, cheque, bank credit and the electronic mode and names no crypto-asset, so a USDC or USDT payout of the rupee wage does not fit the listed ways. The Explanation to section 2(y) counts in-kind remuneration given in lieu of wages, up to 15%, but no official source says crypto can be that. The Ministry of Finance says crypto products can be highly risky, and the RBI's December 2025 Financial Stability Report calls its stance on crypto assets, including stablecoins, cautious. What applies to a specific hire is confirmed when Toku checks the arrangement.

Contractors

No official source reviewed here addresses paying contractors in India in crypto or stablecoins. Virtual digital asset service providers operating in India must register with the Financial Intelligence Unit, which issued notices to 15 on 9 September 2026.

Tax on crypto and tokens

Under the Income-tax Act, 2025, income from transferring a virtual digital asset is taxed at 30% (section 194), with only the cost of acquisition deductible, and payments for such a transfer carry 1% TDS (section 393(1)). Employers deduct salary TDS under section 392. The department's pages do not name stablecoins or say how crypto received as pay is valued.

How Toku handles it

Separately from what the law in India allows, Toku offers stablecoin payroll, including USDC, in supported arrangements and pays contractors in USDC or USDT through contractor management. Token grants are a separate arrangement from salary, administered through token grant administration. This page does not say any of these is available for a hire in India: that is confirmed before an offer.

Reviewed November 7, 2026 against the official sources listed below. General information, not legal or tax advice. Tax on crypto or tokens received depends on local rules and where the person is resident, so confirm it with a local adviser.

How hiring through Toku works in India

1. Share the role, location, salary and start date.
2. Toku confirms coverage, the contract type and the right to work.
3. The local employer issues the contract and onboards the person.
4. Payroll, contributions and filings run each cycle.

Toku checks the role, work state and contract terms before a start date is set. Gather what the appointment letter asks for, such as date of birth, Aadhaar number given with consent, any Universal Account Number and bank details. Your quote confirms the onboarding timeline for India.

What an employer of record costs in India

Where Toku supports the hire, its employer of record service starts at $599 per employee per month, with salary, employer contributions and benefit premiums itemized in your quote. Coverage in India is confirmed before an offer. See the published pricing.

More on hiring in India

• Payroll and hiring in India
• India full-time hiring compliance guide
• Employer of record in India: full guide
• Employer of record coverage in 100+ countries