HR & People Operations GCC in India: Labour Law, Payroll & HRIS Compliance

Why HR Compliance Is the Highest-Risk Area for GCCs in India

India's employment regulatory framework is one of the most layered in the world. A Global Capability Center structured as a private limited company must simultaneously comply with four central labour codes, state-specific shops and establishments acts, and at least five statutory payroll deductions — all enforced by different government agencies with independent audit and penalty mechanisms.

The stakes are material. Under the new Labour Codes effective from November 21, 2025, employment law violations can result in fines up to INR 5 lakh and imprisonment for up to three months. EPF non-compliance attracts penalties of up to INR 3 lakh plus 1% per month interest on delayed deposits. And a single POSH Act violation can lead to fines up to INR 50,000 per incident, with repeat offences doubling the penalty and potentially triggering licence cancellation.

For GCCs scaling from 10 to 500+ employees in India, getting HR compliance right from Day One is not optional — it is a structural requirement that determines whether the centre can operate without legal interruption. This guide covers every obligation, specific rate, and deadline that your HR and finance teams need to know.

India's Four Labour Codes: What Changed in November 2025

India implemented four new Labour Codes on November 21, 2025, consolidating 29 legacy statutes into a unified compliance framework. The four codes are:

• Code on Wages, 2019: Consolidates the Payment of Wages Act, Minimum Wages Act, Payment of Bonus Act, and Equal Remuneration Act
• Industrial Relations Code, 2020: Consolidates the Trade Unions Act, Industrial Employment (Standing Orders) Act, and Industrial Disputes Act
• Code on Social Security, 2020: Consolidates the EPF Act, ESI Act, Payment of Gratuity Act, Maternity Benefit Act, and five other welfare statutes
• Occupational Safety, Health and Working Conditions Code, 2020: Consolidates 13 statutes related to workplace safety and conditions

Critical Changes Affecting GCC HR Operations

The most impactful changes for GCCs include:

The Central Government published draft rules for public consultation in December 2025, with final rules expected by April 1, 2026. Until state-level rules are finalized, employers face a dual compliance environment where legacy state legislation continues to apply alongside the new central codes. For comprehensive compliance management, consider our annual compliance services.

Statutory Payroll Deductions: Rates, Thresholds, and Deadlines

Every GCC in India must process five categories of statutory payroll deductions. Getting any of these wrong — whether in calculation, timing, or filing — triggers automatic penalties with no grace period.

Employee Provident Fund (EPF)

The Employees' Provident Fund is the primary retirement savings scheme for Indian employees. Key parameters:

• Applicability: Establishments with 20 or more employees
• Employee contribution: 12% of basic salary + dearness allowance (DA)
• Employer contribution: 12% of basic salary + DA (of which 8.33% goes to Employees' Pension Scheme and 3.67% to EPF)
• Wage ceiling: Statutory ceiling of INR 15,000/month for employer's pension contribution (employer EPF contribution capped at INR 1,800/month on this ceiling)
• Filing deadline: 15th of the following month
• Penalty for late payment: 1% per month interest on delayed deposits plus damages ranging from 5% to 25% of arrears depending on delay duration
• Registration portal: EPFO Unified Portal (unifiedportal-emp.epfindia.gov.in)

For GCCs, a critical nuance: employees earning above INR 15,000 per month can voluntarily contribute at 12% on their full basic salary, but the employer's obligation is capped at INR 1,800/month toward the pension scheme. Many GCCs opt to match the full 12% as a retention benefit, which increases the total cost of employment by approximately 24% of basic salary.

Employee State Insurance (ESI)

The Employee State Insurance scheme provides health insurance coverage for employees below a wage threshold:

• Applicability: Establishments with 10 or more employees, for employees earning up to INR 21,000/month
• Employer contribution: 3.25% of gross wages
• Employee contribution: 0.75% of gross wages
• Total contribution: 4% of eligible wages
• Filing deadline: 15th of the following month
• Coverage: Medical benefits, sickness benefit, maternity benefit (in addition to statutory maternity leave), disablement benefit

For most GCC employees — particularly in tech roles where salaries exceed INR 21,000/month early in their career — ESI applicability is limited to junior roles and support staff. However, the GCC must still register with ESIC if it has 10+ employees, regardless of how many actually fall below the wage ceiling.

Professional Tax

Professional tax is a state-level levy that varies across jurisdictions. The major GCC locations have the following rates for FY 2026-27:

The employer must register with the relevant state authority, deduct professional tax from employee salaries, and deposit it by the prescribed due date (typically the 15th or 30th of the following month depending on state rules).

Tax Deducted at Source (TDS) on Salaries

Under Section 192 of the Income Tax Act, every employer must deduct TDS from employee salaries based on the employee's chosen tax regime — old regime with deductions or new regime with lower flat rates. Key deadlines:

• TDS payment: By the 7th of the following month (March TDS by April 30)
• Quarterly TDS return: Form 24Q within 31 days of quarter-end
• Form 16: Annual TDS certificate to be issued by June 15

Labour Welfare Fund

Several states require contributions to the Labour Welfare Fund, typically a nominal amount (INR 25-100 per employee per half-year) paid jointly by employer and employee. Filing frequency varies by state — Karnataka and Maharashtra require half-yearly filing, while Telangana requires annual filing.

Gratuity, Maternity Benefits, and Leave Policies

Beyond monthly payroll deductions, GCCs must provision for and comply with three critical employment benefit frameworks.

Gratuity

The Payment of Gratuity Act — now subsumed under the Code on Social Security, 2020 — requires payment upon separation for employees who have completed qualifying service. Post-November 2025 changes:

• Qualifying period: 5 years for permanent employees; 1 year for fixed-term employees
• Calculation: 15 days' wages for each completed year of service (last drawn salary x 15/26 x years of service)
• Maximum payout: INR 20 lakh statutory ceiling for private-sector employees (the Code on Social Security empowers the Central Government to revise this; the INR 25 lakh figure applies to central-government employees)
• Payment timeline: Within 30 days from the date it becomes payable
• Provisioning: GCCs should provision approximately 4.81% of basic salary annually for gratuity liability

Maternity Benefits

The Maternity Benefit Act provisions (now under the Social Security Code) apply to all GCCs:

• Paid leave: 26 weeks for the first two children; 12 weeks for the third child onwards
• Pre-natal leave: Up to 8 weeks can be taken before the expected date of delivery
• Adoption/surrogacy: 12 weeks of paid leave
• Creche facility: Mandatory for establishments with 50 or more employees
• Work-from-home: Employer must allow work-from-home options post maternity leave where the nature of work permits

Leave Policies Under the New Codes

The Occupational Safety Code prescribes minimum leave entitlements:

• Annual leave: 1 day for every 20 days worked (approximately 15 days per year)
• Sick leave: Varies by state Shops and Establishments Act — typically 7-12 days
• Casual leave: Varies by state — typically 7-12 days
• National and festival holidays: Minimum 4-5 mandatory national holidays plus state-specific festival holidays

GCCs typically offer more generous leave policies than statutory minimums. However, the statutory leave entitlements represent the non-negotiable floor, and any leave policy document must explicitly meet or exceed these thresholds.

POSH Act Compliance: A Non-Negotiable Framework

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 — the POSH Act — requires every organization with 10 or more employees to implement a comprehensive anti-sexual-harassment framework. For GCCs, this means adapting the global parent's policies to India-specific legal requirements.

Mandatory Requirements

• Internal Complaints Committee (ICC): Must include a senior woman employee as presiding officer, at least two employee members, and one external member from an NGO or women's rights organization
• Written policy: Must be in English and the local language of the workplace
• Annual training: Awareness sessions for all employees, with separate training for ICC members
• Annual report: Filed with the District Officer by January 31 each year, covering complaints received, resolved, and pending
• Display obligations: Information about the ICC and complaint process must be displayed prominently at the workplace

Penalties for Non-Compliance

• First offence: Fine up to INR 50,000
• Repeat offence: Double the fine plus potential cancellation of business licence or registration
• Failure to constitute ICC: Court-imposed damages in case of complaints

A common mistake among GCCs is assuming that the global parent's harassment policy satisfies Indian requirements. It does not. Indian law requires a specific ICC constitution, inquiry procedure, and reporting format that global policies almost never cover. For a deeper understanding of employment law obligations, see our article on 20 questions about Indian employment law.

HRIS and Payroll Software: India-Specific Requirements

Selecting the right HRIS and payroll software for an Indian GCC is not just an operational decision — it is a compliance decision. The software must handle India-specific statutory calculations that Western payroll systems simply cannot process.

Non-Negotiable Software Capabilities

Popular India-Compliant HRIS Platforms

The market for India-compliant HRIS platforms includes:

• greytHR: Strong statutory compliance, auto-updates for rate changes, INR 3,000-7,000/month for 50-200 employees
• Zoho People + Payroll: Integrated suite with Indian compliance modules, INR 2,500-6,000/month
• Keka: Modern interface with strong payroll compliance, INR 4,000-10,000/month
• Darwinbox: Enterprise-grade, preferred by larger GCCs (100+ employees), custom pricing
• ADP India: Global integration with India statutory compliance, suitable for GCCs wanting one global platform

The critical evaluation criterion is not features — it is how quickly the vendor updates statutory rates when the government changes them. EPF administrative charges, ESI rates, professional tax slabs, and TDS rules change periodically, and the HRIS must reflect these changes before the next payroll run.

State-Level Registrations and Shops & Establishments Act

Beyond central labour codes, every GCC must comply with state-level employment regulations. The primary state-level obligation is registration under the relevant Shops and Establishments Act.

Key State-Specific Registrations

Renewal periods vary: Karnataka requires annual renewal, while Maharashtra and Telangana issue registrations valid for 3-5 years. Missing renewal can lead to penalties and — in extreme cases — closure orders from the labour inspector.

Contract Labour Registration

If a GCC engages contract workers (housekeeping, security, cafeteria, transport), it must obtain registration under the Contract Labour (Regulation and Abolition) Act where it employs 20 or more contract workers. The principal employer (GCC) is jointly liable for wage payment and statutory benefit compliance of contract workers — a fact that many foreign companies discover only during labour inspections.

Building the HR Compliance Calendar

A well-managed GCC HR function tracks the following recurring compliance deadlines:

The total annual cost of HR compliance management for a 100-500 employee GCC — including payroll software, labour law advisory, and statutory audit — ranges from INR 8-20 lakh (USD 9,500-24,000). This covers HRIS subscription (INR 3-8 lakh), external labour law consultant (INR 2-5 lakh), and payroll processing services (INR 3-7 lakh).

Common HR Compliance Mistakes GCCs Make

Based on our experience working with GCC clients in India, here are the five most frequent HR compliance failures:

1. Applying the global parent's salary structure without restructuring for the 50% basic rule: Post-November 2025, basic salary must be at least 50% of gross wages. GCCs that mirror the parent company's CTC breakdown — with high allowances and low basic — face statutory non-compliance and potential back-claims from employees for underpaid EPF/gratuity.
2. Not registering with ESIC because "no employees earn below INR 21,000": The registration obligation is triggered at 10+ employees regardless of individual wage levels. Even if all employees exceed the ESI wage ceiling, the GCC must register and file nil returns. Non-registration carries penalties of INR 5,000 per day.
3. Using the global POSH policy without India-specific adaptation: Indian law requires a specifically constituted ICC with an external member. A global anti-harassment policy — however comprehensive — does not satisfy the POSH Act. Courts have held that absence of a properly constituted ICC results in vicarious liability for the company.
4. Classifying contract workers as consultants to avoid EPF/ESI obligations: Indian labour courts apply a substance-over-form test. If a "consultant" works fixed hours at the GCC's premises under the GCC's supervision, they are likely an employee under labour law — and the GCC faces backdated EPF/ESI liability plus penalties. See our EOR vs PEO vs contractor comparison for structuring guidance.
5. Ignoring state-level holiday and working-hours regulations: Each state prescribes its own list of mandatory holidays and weekly off rules. A GCC in Bangalore operating on US holidays may violate Karnataka's mandatory holiday requirements — specifically for Rajyotsava Day, Ugadi, and other state festivals.

Scaling HR Operations: 10 to 100 to 500 Employees

The compliance burden changes materially at each growth threshold:

10 Employees: First Trigger Point

• POSH Act ICC constitution becomes mandatory
• ESI registration required
• Shops & Establishments registration required
• Minimum: 1 dedicated HR person + payroll software

20 Employees: EPF Trigger

• EPF registration becomes mandatory
• Monthly ECR filing with EPFO begins
• Contract labour registration if using 20+ contract workers
• Minimum: 1 HR + 1 payroll/admin person

50 Employees: Maternity Creche Obligation

• Creche facility becomes mandatory (either in-house or tie-up with external provider within 500 meters)
• Standing orders under Industrial Relations Code may apply
• Minimum: 2-person HR team + external labour law advisor

100+ Employees: Full Compliance Infrastructure

• Internal audit of HR compliance becomes practical necessity
• Dedicated compliance officer recommended
• Multiple state registrations if operating across locations
• Full HRIS with automated statutory compliance
• Minimum: 3-5 person HR team + external payroll provider + labour law consultant

For GCCs planning rapid scaling, read our guide on GCC talent strategy and hiring at scale for workforce planning alongside compliance architecture.

Key Takeaways

• Four new Labour Codes took effect November 21, 2025: The 50% basic salary rule, one-year gratuity for fixed-term workers, and equal benefits for contract employees materially change payroll cost calculations for every GCC.
• Five mandatory payroll deductions must be processed every month: EPF (12% employer + 12% employee on basic), ESI (3.25% + 0.75% for eligible employees), professional tax (max INR 2,500/year), TDS on salaries, and Labour Welfare Fund — each with strict deadlines and automatic penalties.
• POSH compliance requires India-specific adaptation: Global parent company policies do not satisfy Indian legal requirements. An ICC with an external member, annual training, and annual reporting to the District Officer are mandatory for any GCC with 10+ employees.
• HRIS must be India-compliant: Western payroll systems cannot process Indian statutory calculations. Select a platform with auto-updated EPF/ESI rates, dual-regime TDS computation, and state-specific professional tax slabs.
• Total HR compliance cost is INR 8-20 lakh per year: A worthwhile investment given that EPF non-compliance alone can trigger penalties of INR 3 lakh plus backdated contributions with 12% interest, and POSH violations carry fines of INR 50,000 per incident.