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UPDATED NOV 5, 2026Everything 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 | Annual leave depends on the state, establishment, applicable labour law and agreement. Toku will confirm the entitlement for the hire. |
| 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 the new hire through the Toku platform for the employment agreement, statutory registrations and payroll setup. See Onboard Contributors as a Client Admin in Toku for the steps. Toku will confirm the expected onboarding timing for your hire.
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. Minimum wage requirements depend on the applicable jurisdiction, occupation and skill classification. Pay structure and the treatment of allowances depend on applicable wage rules. Toku will confirm the current minimum, salary structure and payroll arrangements for the hire.
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 | Annual leave depends on the state, establishment, applicable labour law and agreement. Toku will confirm the entitlement for the hire. | 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
India's statutory schemes (Provident Fund retirement savings, the Employees' Pension Scheme, ESI health and maternity coverage for lower-wage employees, gratuity after qualifying service, and maternity benefits) run through payroll as shown in Employer Costs above. On top of this, Toku provides fully employer-sponsored group medical and personal accident insurance with ICICI Lombard, administered by Plum, plus an annual health check-up and Plum wellness benefits, for the employee and eligible family. There is a strict 30-day enrollment window for new hires.
Benefits at a Glance
| Item | Detail |
|---|---|
| Policy year | October 11, 2026 - October 10, 2027 |
| Group medical insurance | ICICI Lombard, administered via the Plum app |
| Sum insured (medical) | ā¹7,00,000 per family (floater) |
| Outpatient (OPD) cover | Up to ā¹10,000 per year: consultations, medicines, diagnostics, dental and vision |
| Personal accident insurance | ā¹50,00,000 sum insured per employee (employee only), worldwide |
| Annual health check-up | One Plum Core Check-up (98 markers) per family per year |
| Cost | 100% employer-sponsored for employee AND eligible family |
| Payroll deductions | None: no tax or deductions for medical benefits |
| Co-pay / deductible / room rent limit | None |
| Enrollment window | Within 30 days of date of hire, no exceptions |
| Pre-existing conditions | Covered from day one |
Group Medical Insurance
Coverage is through ICICI Lombard, serviced via the Plum app:
| Benefit | Detail |
|---|---|
| Members | Employee + spouse + up to 4 children + parents or parents-in-law (no cross-selection) |
| Sum insured | ā¹7,00,000 per family |
| Age range | 1 day - 90 years |
| Co-pay / deductible | None |
| Room rent / disease-wise capping | No limit |
| Pre-existing diseases | Covered from day 1, no waiting period |
| Hospitalization | Pre-hospitalization 60 days; post-hospitalization 90 days; daycare treatments covered |
| Maternity | Up to ā¹1,00,000 (first two children, normal & C-section), incl. pre/post-natal up to ā¹20,000 |
| Newborn | Covered from day 1 up to sum insured |
| Ambulance | Road up to ā¹5,000 per hospitalization; air up to ā¹1,00,000 |
| Outpatient (OPD) | Up to ā¹10,000, no sub-limits: consultations, prescribed diagnostics and medicines, dental, spectacles/lenses (where medically advised), physiotherapy, mental health therapy, vaccinations and more |
| Modern treatments | CyberKnife, stem cell etc. up to 50% of sum insured; oral chemotherapy up to ā¹3,00,000 |
| Vision (in-patient) | Cataract covered; LASIK (Ā±6.5D) covered |
| Mental health | Psychiatric and mental illness hospitalization up to sum insured |
| Other | AYUSH, domiciliary hospitalization, congenital conditions, cochlear implant, organ donor treatment costs |
Dependent coverage is generous: spouse/partner, up to 4 children, and either parents or parents-in-law (not both) can be covered, fully employer-sponsored.
Group Personal Accident Insurance
Sum insured ā¹50,00,000 per employee (employees aged 18 - 65, covered worldwide): accidental death and permanent total disability at 100%; permanent partial disability up to 100% based on the extent of disability; temporary total disability at 2% of sum insured or ā¹10,000/week or actual weekly salary (whichever is lowest), for up to 104 weeks; accident medical expenses up to ā¹2,00,000; children's education benefit up to ā¹10,000 per child (max 2) in case of death or permanent total disability.
Health & Wellness
- Annual health check-up: one Plum Core Check-up per family per year (98 markers incl. heart, diabetes, thyroid, kidney, liver, vitamin D & B12), booked in the Plum app with home sample collection.
- Telehealth consultations, online wellness sessions, 1:1 financial wellness consultations and Plum Perks (discounts across 100+ health and wellness brands), all in the Plum app.
Costs & Who Pays
All benefits are 100% employer-sponsored (billed to you) for the employee and eligible family members. There are no payroll deductions and no benefit-in-kind tax for medical benefits in India.
Estimated cost: about ā¹11,370 (approximately USD 120) per employee per month, including 18% GST. This is a flat rate per employee, regardless of age or the number of dependents covered, and is billed to you each month while the employee is enrolled. It covers medical insurance, accident insurance and the annual health check-up for the October 2026 - October 2027 policy year. The USD amount will vary slightly with exchange rates.
Enrollment: the 30-Day Rule
Employees receive an email from benefits@toku.com before their effective date to opt in/out and add dependents. Employees must be added within 30 days of their date of hire, with no exceptions after the window closes. Dependents must be added at initial enrollment; mid-policy additions are only possible for qualifying life events (newborns within 30 days of birth, new spouse within 30 days of marriage). Make sure your new hires complete this promptly.
Claims & Support
Employees manage everything through the Plum app: digital health card, network hospital search, cashless claims (about 90% approved in under an hour), and reimbursement claims (paid within about 15 days once approved). Support:
- 24Ć7 emergency and planned-hospitalization helpline: 1800 30 911 911
- Everything else: in-app chat in the Plum app
- Escalations: care@plumhq.com Toku shares Plum's 2026 - 27 employee handbook (Toku X Plum 2026 - 2027 Employee Handbook PDF) with every enrolled employee in their Toku documents.
What You Need to Know About Benefits
- Budget about ā¹11,370 (approximately USD 120) per employee per month, a flat rate regardless of age or dependents.
- The 30-day enrollment window is strict: make sure new hires respond to the enrollment email and add all dependents at the start.
- Retirement is through the statutory Provident Fund and Employees' Pension Scheme (see Employer Costs above); gratuity applies after 5 years of service.
- There are no payroll deductions for these benefits. See India Supplemental Benefits for the employee-facing details.
Common Extras
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.
Annual Leave at Termination
This section describes statutory annual leave. Any additional contractual or company-provided leave above the statutory minimum may follow different carryover, expiry, or payout rules under the employee's agreement or applicable policy, subject to local law.
Statutory leave termination payout: State dependent. Leave encashment can arise under central labour rules and state Shops and Establishments laws, so the employee's work state matters.
Statutory carryover / look-back: Carryforward caps and encashment rules vary materially by state and worker classification. The existing guide notes common caps of roughly 30-45 days, but that is not a universal national rule.
Admin responsibility: Always provide Toku the employee's state of work and keep earned leave balances by year. Do not delete balances or apply one India-wide carryover rule.
Important exceptions: Managerial/corporate employee coverage can differ from worker coverage, and state law may impose different encashment rules. Toku must confirm the applicable state rule before final pay is communicated.
See the Annual Leave / PTO Carryover & Termination Payout Guide for the cross-country framework.
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 updated November 5, 2026 (onboarding link, pay and annual leave guidance only). Last verified October 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.