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Employer of record India cost is best planned as a range, not a flat markup. For three illustrative Bengaluru hires, salary plus the included employer costs runs from ₹1.25 million to ₹1.28 million a year on ₹1.2 million salary, ₹2.48 million to ₹2.54 million on ₹2.4 million, and ₹4.94 million to ₹5.05 million on ₹4.8 million. Add the EOR service fee, benefits, FX terms, one-time charges, and contingencies separately. The range reflects capped EPF-related costs and a gratuity planning allowance tied to the employee's statutory wage base.
Borderless AI's current India EOR list fee is US$579 per employee per month. That is US$6,948 a year before any commercial adjustment. It stays in US dollars below because the invoice currency and exchange method belong in the provider quote, not in the INR employment-cost model.
Three Bengaluru budgets before the EOR fee
The calculation is:
Annual planning range = gross cash salary + employer EPF + EDLI + marginal EPF administration + gratuity planning allowance
The verified minimum column removes the gratuity allowance and every unresolved quote or conditional item. It is salary + ₹23,400 under the stated PF assumptions. The wider planning range adds a gratuity allowance based on statutory wages equal to 50% to 100% of gross cash.
Scope for every row: Bengaluru, Karnataka; age 32; indefinite office employment; employer with at least 20 workers and EPF coverage; employee already an EPF member; PF contributions capped at ₹15,000 a month; no higher-wage PF option; salary includes all guaranteed cash; salary is assumed above the ESI and applicable statutory-bonus eligibility thresholds. Effective September 8, 2026. Illustrative estimate, not a quote.
The rows hold every rate-driving fact constant except salary. They exclude the EOR fee, benefits, FX, one-time costs, and the quote or contingency items described below. The planning uplift is not a complete statutory burden rate.
Add the EOR fee as its own budget layer
An EOR becomes the local legal employer and administers the employment relationship. Its commercial fee does not replace salary or statutory employer costs.
Ask the provider to say which payroll administration and statutory filing work the service fee includes. The ₹900 annual EPF administration row is a statutory charge in the model. It should not be duplicated as a second provider administration fee without an itemized reason.
Why one India employer-cost percentage is misleading
India brought its four Labour Codes into force on November 21, 2025. The codes did not turn every employer cost into one percentage of gross salary. EPF, ESI, gratuity, state funds, and employee deductions still use different bases and triggers.
The PF cap makes the uplift fall as salary rises
For these employees, the employer EPF share is 12% of the ₹15,000 monthly statutory ceiling, or ₹1,800 a month. The pension allocation sits inside that 12%; it is not another 8.33% on top. EDLI adds ₹75 a month, and the EPF administration rate adds a marginal ₹75 a month.
That produces the same ₹23,400 annual employer addition at all three salaries. As salary rises, the fixed amount becomes a smaller percentage of gross pay. This is why the model's planning uplift falls from 4.35% to 6.76% at ₹1.2 million salary to 2.89% to 5.30% at ₹4.8 million.
The EPF administration notification also sets a ₹500 monthly minimum for an active establishment. If an EOR allocated that entire floor to one employee, the annual model would rise by ₹5,100. That is an intentionally conservative sensitivity, not the recommended marginal allocation for an EOR with other contributory members.
Gratuity is a liability, not automatic monthly cash
For an indefinite employee, gratuity normally becomes payable after five years of continuous service, with exceptions such as death or disablement. The one-year branch applies to a qualifying fixed-term employee, not the indefinite scenarios above. The same Ministry FAQ also confirms that the revised wage definition applies to gratuity from November 21, 2025.
The role table therefore uses gratuity as a planning allowance, not a claim that cash leaves the business every month. The low end assumes statutory wages equal 50% of gross cash. The high end uses 100%. The allowance is:
Gross annual salary × wage share × 15 ÷ 26 ÷ 12
The actual wage structure, tenure, payment event, and any gratuity insurance or funding requirement belong in the final quote and specialist review.
ESI and statutory bonus are not universal additions
Official ESIC material gives a 3.25% employer ESI rate and 0.75% employee rate for covered employees, with the standard wage ceiling at ₹21,000 a month. Every scenario here is above that ceiling, so no employer ESI amount appears in the base arithmetic. A lower salary or different wage-coverage fact can reverse that result.
The scenarios assume each employee is outside statutory-bonus eligibility. The Code on Wages makes the threshold notification-dependent; the Ministry's published ₹21,000 benchmark is the historical screen used here, while the lowest scenario starts at ₹100,000 a month. Confirm the current appropriate-government notification and wage definition at quote stage. Contractual or performance bonuses remain separate employer choices. Neither ESI nor bonus should be copied as zero into a different employee's budget without rerunning the eligibility test.
Karnataka adds a small but unresolved employee-class branch
Karnataka Act No. 05 of 2026 changed the relevant non-factory establishment threshold from more than 50 people to 10 or more. The 20-plus establishment assumption meets that size test. The statute's employee definition does not cleanly resolve every managerial knowledge-work role, so the base table leaves the employer contribution outside the arithmetic until actual duties are classified.
If the employee is covered, the current Karnataka fund guidance adds ₹100 a year for the employer. The employee's ₹50 contribution is an employee deduction, not employer cost. Other states can use different funds, rates, or no equivalent charge, so this Bengaluru sensitivity is not an India-wide amount.
Keep employee deductions outside employer burden
Employee EPF, employee ESI when covered, professional tax, and salary income-tax withholding reduce net pay. The employer deducts and remits them, but they do not become an employer-funded cost unless the employment agreement includes a gross-up.
Keep these lines on the payroll reconciliation so the employee can see how gross pay becomes net pay. Do not add them to the employer-cost table and then charge them again through the EOR invoice.
Turn the planning range into a quote
Send the same facts to every EOR. A useful quote should reconcile to payroll, not stop at a monthly platform price.
For a broader provider and service comparison, use our India EOR guide. For the separate exit decision, see the India termination guide.
Where this estimate stops
The table is a controlled planning model, not a national quote. It does not price private benefits, salary replacement during leave, maternity, occupational injury, termination, equipment, workspace, FX, invoice taxes, or non-standard provider work. Those items can be mandatory, event-driven, contractual, or commercially important even when no public flat rate exists.
The estimate also assumes locally work-authorized employees. Immigration and relocation are outside scope. A lower-paid employee can bring ESI and statutory bonus into the calculation, while a different PF history, higher-wage option, state, job classification, salary structure, or contract term can change the result.
Frequently asked questions
How much does an employer of record cost in India?
Borderless AI lists its India EOR fee at US$579 per employee per month. The employer budget also includes the employee's INR salary, applicable employer statutory costs, benefits, FX, and any one-time or non-standard charges. In the three illustrative Bengaluru scenarios above, salary plus the included employer costs ranges from ₹1.25 million to ₹5.05 million a year depending on salary, before the EOR fee and quote-dependent items.
Is the EOR service fee the full cost of hiring in India?
No. The service fee is one commercial line. Add gross salary, applicable employer EPF and insurance charges, gratuity planning, benefits, currency terms, one-time costs, and event-driven liabilities separately. Keep employee deductions outside employer burden unless the contract includes a gross-up.
Is employer EPF always 12% of the employee's full salary?
No. The rate applies to the correct statutory wage base, and the ₹15,000 monthly ceiling is central to these scenarios. An existing member, a new high-wage employee, or a valid higher-wage option can produce different treatment. The pension share sits inside the employer's 12%; it is not added on top.
Is gratuity a monthly employer payment in India?
Not in these indefinite-employment scenarios. Gratuity is a contingent legal liability tied to qualifying service and a payment event. The table uses a separate planning allowance based on 50% to 100% of gross cash as the statutory wage base; it does not claim that gratuity is paid monthly or that one flat percentage fits every salary structure.
Price the actual India hire
Bring the role, Bengaluru or other work state, salary components, start date, PF history, benefits, expected headcount, and contract term. Borderless AI can return an itemized India quote that keeps employment costs, employee deductions, service fees, and one-time charges separate.
