How to Hire Your First Employee in a New Country Without an Entity

The most common international hiring question from US companies: 'We want to hire someone in India (or the UK, or Canada) — do we need to set up a company there first?' The answer is no — if you use an Employer of Record. This guide explains the EOR process for first international hires.

The EOR Process: How It Works

Step 1: Choose an EOR provider

EOR providers for India and global markets: Remvix (India-specialist), Deel, Remote.com, Rippling Global, Velocity Global, Papaya Global. Evaluation criteria: countries supported, speed to hire, quality of local compliance infrastructure, benefits quality in target country, pricing transparency, and customer support quality. For India-first companies, a provider with deep India expertise and local HR support is preferable to a generic global platform.

Step 2: Agree on employment terms

Work with your chosen candidate to agree on: base salary (in local currency), bonus structure, benefits, start date, and role title. The EOR will advise on market-rate benefits and statutory minimums. Document agreed terms before the EOR generates the contract — changes after contract generation create delays.

Step 3: EOR generates and issues the employment contract

The EOR issues an employment contract compliant with the laws of the employee's country. For India: governed by Indian employment law, includes statutory benefits (EPF, ESIC, Gratuity), compliance with state Shops and Establishments Act, and appropriate notice periods. Review time: 24–72 hours from agreed terms to signed contract.

Step 4: Payroll setup and first payroll run

The EOR sets up the employee in their local payroll system, calculates statutory deductions, and processes the first month's payroll. Timeline: first payroll run 15–30 days after contract signing, depending on the payroll calendar. The EOR invoices you monthly for: gross salary + employer statutory contributions + EOR fee.

Step 5: Ongoing management

You direct the work day-to-day as if the employee were a direct hire. The EOR handles: monthly payroll processing, statutory filings, annual form issuance, leave tracking (to the extent required by local law), and compliance with any statutory changes. HR issues involving employment law (termination, disputes, statutory benefit changes) are managed in coordination with the EOR's local HR team.

Timeline: EOR First Hire

• Day 1–3: Select EOR provider, begin onboarding
• Day 3–7: Finalize employment terms with candidate
• Day 7–10: EOR generates employment contract
• Day 10–14: Contract signed; background check completed
• Day 14–21: Employee start date; access provisioned
• Day 30: First payroll processed
• Total time from decision to employed: 2–4 weeks

EOR Cost Structure

• EOR fee: 15–25% of gross monthly salary, or a flat monthly fee ($400–$800/employee/month for India)
• Employer statutory contributions: passed through at cost (India EPF: 12% of basic; ESIC: 3.25% of gross up to threshold)
• One-time onboarding fee: $200–$500 per employee at some providers
• Total monthly employer cost per India employee example: $3,000 gross salary + $360 EPF + $97 ESIC + $600 EOR fee = $4,057/month
• Annual fully-loaded cost for the same employee: approximately $48,684

EOR vs Direct Contractor: Why EOR Is the Safer Choice

• A direct contractor arrangement is faster and cheaper in the short term — no EOR fee, no statutory contributions
• Risk: if the contractor functions as an employee (integrated into the team, working exclusively for you, managed like a staff member), Indian labor law treats them as an employee regardless of the contract label
• Misclassification consequences in India: back payment of all statutory contributions (EPF, ESIC, Gratuity) from the date the relationship began, penalties, and potential personal liability of the company's directors in India
• The EOR eliminates this risk: the EOR is the employer of record, the employment relationship is fully compliant, and you have contractual protection against compliance failures by the EOR