Hiring your first employee in India: checklist
Checklist for hiring your first employee in India: written terms, lawful pay, payroll records, Labour Codes, social security and POSH.
In this guide
Before you recruit, budget for the full cost of employing someone
A first hire adds wages and employer duties. India's four Labour Codes came into force on 21 November 2025, and Central Rules were notified in 2026; the rule and authority that apply can still depend on the establishment, activity, workforce, appropriate government and state rules. Confirm the current position with a labour-law adviser or payroll professional before you publish an offer or run payroll.
Check whether the work is employment or a genuine independent service
Look at the real working arrangement: who controls hours and methods, whose tools are used, how the person is paid, whether they work within your business and what the written contract says. Calling someone a 'consultant' does not settle legal status if the actual relationship is employment. Get advice before using a contractor arrangement to avoid duties that apply to an employee.
Calculate the full monthly and one-time employment cost
Budget gross wages, employer social-security contributions where applicable, paid leave, recruitment, equipment, onboarding, training, insurance, payroll support and any required registration. Check the minimum wage and wage structure set by the appropriate government for the job, location and skill category. Do not use a pay figure from another state or an old online calculator as today's legal minimum.
Write a role with fair hours, outcomes and reporting
State the work, supervisor, location or remote arrangement, expected hours, rest and leave process, tools, training and how performance will be reviewed. Make the work achievable within the paid time. If the role depends on evening travel, client-site visits or handling sensitive customer data, plan safety and access controls before the employee joins.
| Preparation | Owner | Complete or verify |
|---|---|---|
| Role, work location and employee/contractor status reviewed | ||
| State and appropriate-government rules checked | ||
| Wage, full employment cost and payment date budgeted | ||
| Written offer and appointment terms prepared | ||
| Payroll, bank payment and wage-slip process selected | ||
| Social-security thresholds, registrations and records checked | ||
| POSH contact and safe reporting route shared |
Give the employee clear written terms and a respectful first day
Put the essential job and pay terms in writing
The offer or appointment document should identify the legal employer, role, joining date, wage and wage period, payment method and date, working location, expected hours, leave or rest arrangement, notice terms, reporting contact and any probation conditions. Explain deductions and benefits accurately. Have an adviser check statutory terms and do not leave a blank for someone else to change after the employee signs.
Collect only the records needed for employment and payroll
Use a secure checklist for identity, contact, bank-payment and benefit information that is lawfully required. Explain why sensitive information is collected, who can access it and how the employee can correct an error. Store medical, bank and identity records separately from routine performance notes and restrict access to people who administer the employment relationship.
Set up payroll and wage records before the first pay date
Decide who will calculate gross and net pay, verify attendance and leave, approve expenses, issue wage slips and reconcile the bank payment. Central rules prescribe registers and wage-slip processes in their coverage; check the rules for your establishment and governing authority. Keep an audit trail for corrections and give the employee a clear contact for a missing or incorrect payment.
Explain work, safety and how to raise a concern
On the first day, show the employee how to use equipment, protect customer information, report an injury, ask for an accommodation and raise a workplace concern. Share the conduct policy and POSH reporting route. A small business with fewer than ten employees may use a Local Committee complaint route under POSH; a small headcount does not remove the employer's prevention duties.
Check registrations, benefits and records that depend on your business
Check establishment registration and state-specific requirements
The applicable labour code, rules, state Shops and Establishments law, professional tax or local registration can depend on where and how the business operates. A home-based business, office, shop, factory and multi-state employer may have different duties. Check the live portal and notification for the correct jurisdiction; an all-India checklist cannot determine your registration by headcount alone.
Assess social-security coverage rather than assuming it is optional
Check whether EPF, ESI, gratuity, maternity benefit, employee compensation or another scheme applies to the establishment, employee and actual workforce. Thresholds, wage definitions, prior coverage and the relevant notification can matter. Do not promise that a benefit applies or is excluded based only on the number of people you are hiring today; obtain current advice and explain the result to the employee.
Keep a calendar for pay, leave, contributions and returns
Assign a named owner and backup for each monthly or annual task, including payroll approvals, attendance, wage records, leave, contributions, notices and filings. Set calendar reminders early enough to correct a failed payment or portal issue. Keep the employee's records available to them where law or policy requires and store the employer's official copies securely.
Questions about a first hire in India
Can I pay someone a small stipend for a trial month?
Use a lawful written arrangement that matches the real work. If the person is an employee, wage protections still apply; calling regular productive work a trial or stipend does not automatically remove them. Define a short, paid skills assessment before employment only after checking that its terms and duration are lawful.
Does hiring one person automatically require PF or ESI registration?
Not in every case. Coverage depends on the applicable code, establishment type, workforce history, wage and other statutory conditions or notifications. Check the current EPFO/ESIC and labour-authority rules for your business before the first payroll; do not rely on a generic threshold copied from an older law.
Can I use the same employment contract as another business?
Use another contract only as a list of topics. The correct terms depend on your location, role, sector, applicable rules, data access, safety conditions and benefits. Have a qualified adviser tailor it, explain it in a language the employee understands and give the employee a signed copy.
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Sources and publication record
Draft prepared 26 September 2026; project-team editorial review pending · Sources checked .
- Government record: four Labour Codes effective from 21 November 2025Press Information Bureau, Ministry of Labour and Employment
- Gazette of India: Central rules under the Labour Codes, 2026Ministry of Labour and Employment, Government of India
- Code on Wages, 2019India Code, Legislative Department
- Code on Social Security, 2020India Code, Legislative Department
- Occupational Safety, Health and Working Conditions Code, 2020India Code, Legislative Department
- Sexual Harassment of Women at Workplace Act, 2013India Code, Legislative Department
- Ministry of Women and Child Development: POSH Act, Rules and resourcesMinistry of Women and Child Development, Government of India