Employers in India are required to contribute to the Employees' Provident Fund (EPF) at 12% of basic salary, Employees' State Insurance (ESI) at 3.25% of gross salary (where applicable), and pay gratuity under the Payment of Gratuity Act, 1972 after five years of service. Statutory benefits also include paid leave (such as earned leave and sick leave), maternity leave as per the Maternity Benefit Act, and compliance with the Payment of Bonus Act for eligible employees.

Employers must deduct Tax Deducted at Source (TDS) from employee salaries according to the Income Tax Act, 1961, based on prevailing income tax slabs and applicable exemptions. Additionally, employers are responsible for depositing both their and the employee's statutory contributions (e.g., EPF, ESI) with the relevant authorities each month.

Beyond base salary and statutory contributions, employers should budget for gratuity liabilities, mandatory bonuses (8.33% to 20% of wages under the Payment of Bonus Act, subject to eligibility), and recruitment/onboarding costs, which can range from INR 50,000 to INR 2,00,000 per hire. Administrative compliance fees, statutory auditor costs, and potential severance payouts under the Industrial Disputes Act are also significant.

Employers must comply with minimum wage laws set by the respective State Governments, observe prescribed working hour limits under the Factories Act, 1948 or Shops and Establishments Act, and follow statutory notice periods and severance pay guidelines for terminations. Collective bargaining agreements, where present, may impose additional obligations regarding wages and benefits.

Employment contracts in India commonly include a probation period ranging from 3 to 6 months, after which employees are confirmed as permanent staff. It is standard to offer fixed-term, permanent, or contract positions, and customary benefits beyond statutory minimums may include health insurance, meal allowances, and transport reimbursements, especially in the IT and services sectors.