What does a $60,000 hire cost in India?
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Total annual employer cost
Full cost breakdown
Statutory contributions and typical benefits for an employee in India at $60,000 base salary.
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Key Takeaways for Hiring in India
- Employment rules in New Delhi blend national law with Delhi-specific requirements for wages, contracts, and benefits.
- Employers contribute 12% to the Employees’ Provident Fund (EPF), India’s social security system, with an additional 3.25% to health insurance for lower earners.
- Employees qualify for gratuity (severance) after five years of service, calculated at 15 days’ wages per year worked.
- Final wages must be paid within two working days of termination.
Continent
Asia
Capital
New Delhi
Currency
Indian Rupee (INR)
Language
Hindi (national), English (widely used in business)
Payroll Cycle
Monthly
VAT
18%
Quick Facts For Hiring In New Delhi, India
India Employment Contract Overview
Because India’s labour rules vary by state, it’s important for employers to document core terms in a formal contract. Laying out pay, hours, benefits, and notice clearly helps ensure smooth working relationships.
What Do You Need To Include In an Indian Employment Contract?
Hiring in India works best when your employment contract removes any guesswork. A clear agreement helps you define how the role functions, what the employee can expect, and what your responsibilities are as an employer.
Employee Information
- Full name
- ID number
- Role / Job title
- Start date
- Contract duration
- Working hours
- Probation and notice conditions
- Termination provisions
- Compensation details
Payroll
Average employer cost
16.75%
| Category | Details |
|---|---|
| Time-Based Employees | Monthly, paid by the 7th of the following month |
| 13th Salary | Not mandatory, but gratuity is legally required after 5 years of service |
| Avg employer tax | 16.75% |
Tax Breakdown
Employer Contributions (statutory benefits): ~16–17%
| Category | Rate / Details |
|---|---|
| Provident Fund (EPF) | 12% |
| Employee State Insurance (ESI) | 3.25% (for employees earning less than ₹21,000/month) |
| Professional Tax | Small fixed amount (state-specific) |
| Labor Welfare Fund | Nominal, in applicable states |
Employee Contributions: ~12%
| Category | Rate / Details |
|---|---|
| EPF | 12% of basic salary |
| ESI | 0.75% (if applicable) |
| Professional Tax | Deducted monthly in certain states |
Personal Income Tax (2025), Under the new regime (optional)
| Category | Rate / Details |
|---|---|
| Up to ₹3,00,000 | 0% |
| ₹3,00,001–6,00,000 | 5% |
| ₹6,00,001–9,00,000 | 10% |
| ₹9,00,001–12,00,000 | 15% |
| ₹12,00,001–15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
GST (VAT equivalent)
| Category | Rate / Details |
|---|---|
| Standard rate | 18% (for services) Varies by industry |
VAT
| Category | Rate / Details |
|---|---|
| VAT | 12-18% (reduced rate is 5%) |
Mandatory Employee Benefits In New Delhi
India allows employers to hire expats, and the process is generally straightforward as long as immigration rules are followed.
Work authorization depends on the employee’s role, salary level and nationality, while visa fees can vary widely because they’re based on reciprocal arrangements between India and the applicant’s home country.
| Benefits | Provider | Funded Through | Notes |
|---|---|---|---|
| Pension / Social Security | Government | Payroll contributions | Old-Age Pension Scheme Operates under Delhi government’s Department of Social Welfare. Although not statutory law, it is a formally notified welfare scheme. |
Governed by eligibility norms officially published on socialwelfare.delhi.gov.in.
Leave And Holiday Entitlement in New Delhi
Annual Leave
Employees in New Delhi receive a minimum of 15 days of paid annual leave each year under Delhi laws. Employers may offer more generous leave through company policy.
Public Holidays
New Delhi observes 17 gazetted public holidays in 2025, though the exact list may vary slightly each year based on government notification.
Employees may also take two to three optional holidays chosen from an official list of 33–34 restricted holidays. These typically cover cultural or religious observances such as Makar Sankranti, Guru Ravidas Jayanti, and Shivaji Jayanti.
Sick Leave
Employees receive 12 days of sick leave each year, and employers may choose to offer more through internal policy.
Maternity Leave
Employees qualify for maternity leave after working at least 80 days in the 12 months before the expected delivery date. Entitlement depends on the number of children:
First and second child: 26 weeks total (up to eight weeks before delivery and 18 weeks after)
Third child onward: 12 weeks total (up to six weeks before delivery and six weeks after)
Paternity Leave
There is no statutory paternity leave in the private sector. However, many employers offer five to 30 days of paid paternity leave as a matter of practice.
Other Types of Leave
-
Marriage Leave: Customary; companies often grant 3 to 5 days, though not legally required.
-
Bereavement Leave: Customary; typically 3 to 7 days for the loss of a close family member.
-
Adoption Leave: 12 weeks of paid leave is mandatory for eligible adoptive parents.
-
Miscarriage Leave: 6 weeks of paid leave is mandatory.
Termination And Offboarding in New Delhi, India
Employees in New Delhi receive several types of leave, from annual and sick leave to maternity, paternity, and customary leave. The entitlements can vary by state, so here’s what applies in the capital.
| Type | Possible? |
|---|---|
| Termination for Cause (poor performance, misconduct, etc.) | Yes |
| Termination without Cause | Yes |
| Mutual Termination Agreement (MTA) | Yes |
| Redundancy | Not possible under the EOR setup |
New Delhi Employee Resignation
Notice
Form
Employees must submit a written resignation. Section 30(2) requires written notice to end employment.
Notice period
- Applies after three months of continuous service
- Requires at least one month of written notice
Payment in lieu of notice or notice waiver
If an employee does not serve the full notice period, the employer may accept a payment equal to one month’s wages instead.
End-of-Service Benefits
Severance/Gratuity
Under the Payment of Gratuity Act, 1972, which applies nationwide including Delhi, employees with more than 5 years of continuous service qualify for gratuity.
It is calculated as 15 days’ wages for each completed year (based on a 26-day month) and capped at ₹3,50,000.
Other Benefits
- Leave encashment: Under Delhi Act §22, employees must be paid for any unavailed privilege leave at resignation.
- Full & Final Settlement: Should include unpaid salary, leave encashment, gratuity (if applicable), and any contractual dues.
Employer Termination With Cause in New Delhi
Acceptable grounds
Under Section 30 of the Delhi Shops & Establishment Act, 1954, employers may terminate an employee with three or more months of continuous service without notice or pay in lieu when the dismissal is for misconduct and the employee has been given a fair opportunity to respond to the charges in writing.
Rule 13 of the Delhi Shops & Establishments Rules, 1954 defines misconduct to include (non-exhaustive list):
- Willful insubordination or disobedience
- Illegal strikes or incitement
- Willful slowdown of work
- Theft, fraud, or dishonesty
- Habitual absence without leave or chronic lateness
- Drunkenness, disorderly behavior, or gambling
- Habitual neglect of duties or negligence
- Willful damage to property
- Disclosure of proprietary information
Notice
Form
Employers must issue a written notice of dismissal, except in cases of misconduct where procedural safeguards (inquiry + written explanation) allow termination without notice.
Notice period:
Standard requirement is 1 month’s written notice, unless dismissal is for misconduct (where no notice is required).
Payment in lieu of notice or notice waiver:
Employers must provide either 1 month’s notice or 1 month’s wages in lieu, unless the dismissal is for misconduct, where notice may be waived.
End-of-Service Benefits
Severance
- The Delhi Shops & Establishments Act does not require severance or gratuity when termination is for cause.
- If the employee has completed 5+ years of service, gratuity under the Payment of Gratuity Act, 1972 may still apply (subject to statutory conditions).
Other Benefits
- Wages for unavailed leave: If the employee is terminated before availing privilege leave, they are entitled to wages for accumulated leave.
Employer Termination Without Cause in New Delhi
Acceptance Grounds
- Termination without cause is permitted under the Delhi Shops & Establishments Act as long as the employer provides the required one month’s written notice or wages in lieu of notice for employees with 3+ months of continuous service.
- There is no requirement to justify termination (i.e., no misconduct or fault needed), as long as proper notice or wages are provided.
Notice
Form
The notice must be in writing.
Notice period:
Minimum 1 month of written notice after 3 months of continuous service
Payment in lieu of notice or notice waiver:
Employers can substitute the notice period with one month’s wages.
End-of-Service Benefits
Severance/Gratuity
- The Delhi Shops & Establishments Act does not mandate severance pay beyond notice or payment in lieu.
- However, employees who qualify under the Payment of Gratuity Act, 1972 (i.e., 5+ years of service) remain entitled to gratuity under central law.
Other Benefits
- Employees must be paid wages for any accumulated privilege leave (leave encashment) upon termination.
Mutual Termination Agreements in New Delhi
A mutual termination is a voluntary, contractual resolution rather than a mandated statutory route. It means both parties agree to end the employment relationship under specified terms.
Notice
Form
The mutual termination should be formalized in writing, typically via a mutual termination agreement or settlement letter.
Notice period:
Statutory minimum of 1 month’s notice, or payment in lieu, is required for employees with 3+ months of continuous service. The agreement may specify a shorter or modified timeline only if both parties expressly agree, but cannot go below statutory minimum.
Payment in lieu of notice or notice waiver:
Employers can substitute the notice period with one month’s wages.
End-of-Service Benefits
Severance/Gratuity
- There is no statutory requirement for additional severance pay beyond notice or notice-in-lieu under the DSE Act.
- If the employee qualifies for gratuity (i.e., 5+ years of service), then Payment of Gratuity Act, 1972 applies but that’s under central law and separate from mutual termination mechanics.
Other Benefits
-
Any outstanding statutory dues should be settled. This includes:
- Wages earned
- Encashment of privilege leave, where applicable
- Mutual termination agreements should ensure that all dues are enumerated and paid.
Offboarding Process for the End of Fixed-term Contracts in New Delhi
If the Fixed-Term Contract Ends Normally
Notice
A fixed-term contract ends automatically on its stated end date under the Industrial Employment (Standing Orders) (Central) Amendment Rules, 2018. If the contract specifies an end date and does not include a renewal or notice clause, neither party is required to give notice when the term expires.
End-of-Service Benefits
Severance/Gratuity
- Fixed-term employees become eligible for pro-rata gratuity after completing at least one year of service, even when the contract ends as planned.
- Gratuity must be calculated proportionately based on the employee’s tenure.
Other Benefits
- Fixed-term employees must receive the same wages, allowances, work hours, and statutory benefits (such as EPF, ESI, bonus, and gratuity) as permanent employees in comparable roles, on a pro-rata basis.
- They are also entitled to leave encashment if covered under standing orders or company policy.
If the Employer Terminates Early
Notice
If an employer ends a fixed-term contract before its scheduled end date, current regulations require:
- At least one week’s notice if the employee has completed one month or more of service
- One week of notice per completed year of service if the employee has worked for two years or more
End-of-Service Benefits
Severance/Gratuity
- If the employee has served for one year or more, they are entitled to pro‑rata gratuity, even if the contract ends early.
- Without reaching one year, gratuity is not due unless contractually specified.
Other Benefits
- Employees terminated early should still receive all due wages, allowances, leave encashment, and other benefits to which they would have been entitled had they completed their term, reflecting the principle of equal treatment.
Termination Documentation
Employers should provide:
- Final payslip
- Settlement statement or summary
- Relieving letter and Experience certificate (typically issued within a reasonable time, often ~15 days post-exit)
Final Payment Timing and Compliance
Final Payment Deadline: Wages due at termination must be paid before the expiry of the second working day after termination.
Penalty: If an employer fails to give notice or pay wages in lieu, a Magistrate may award compensation:
- Up to one month’s salary if the employee’s salary was ≤ ₹100/month, or
- Settlement statement or summary
- Up to ₹100 if salary was above ₹100/month.
Supporting Guides
Frequently Asked Questions
What’s the difference between EPF and ESIC contributions?
EPF (Employees’ Provident Fund) is India’s mandatory retirement savings system. Employers and employees each contribute 12% of salary, capped at ₹1,800/month. ESIC (Employees’ State Insurance Corporation) provides health insurance for lower earners (≤ ₹21,000/month), with employers paying 3.25% and employees paying 0.75%.
Do I need to contribute to EPF for foreign employees?
Yes, if they’re on the payroll. Expat employees contribute 12% of their Base Salary + Special Allowance with no cap, unlike Indian nationals who have a ₹1,800 monthly cap.
What’s gratuity and when does it apply?
Gratuity is India’s severance benefit. Employees who complete five years of service receive 15 days’ wages for each completed year (based on a 26-day month), capped at ₹3,50,000. It applies regardless of termination reason.
How quickly must I pay final wages after termination?
Within two working days of the termination date. Delays can result in penalties awarded by a Magistrate.
Can I terminate an employee without cause in New Delhi?
Yes, as long as you provide one month’s written notice or one month’s wages in lieu for employees with three or more months of service. No justification is required if proper notice is given.
What’s the minimum wage in New Delhi?
Yes, as long as you provide one month’s written notice or one month’s wages in lieu for employees with three or more months of service. No justification is required if proper notice is given.
