Third-Party Payroll Services in India

Put your workforce on TMS’s payroll — we become the employer of record for compliance, you keep full control of the work. Since 2006, TMS has run third-party payroll for clients across every Indian state and union territory, with 8,500+ employees on payroll today and a zero statutory penalty record.

Get a third-party payroll quote in 24 hours. Call +91-22-4896-7640 or use the form below.

What Is Third-Party Payroll?

Third-party payroll is an arrangement where your employees or contract workers are formally employed by a staffing company — the third party — while they continue to work at your premises, under your direction, on your projects. The third party issues appointment letters, runs monthly payroll, deposits PF and ESI, files statutory returns, and carries the employer’s compliance obligations. You pay one consolidated invoice.

In India, third-party payroll is the operating engine behind contract staffing: it is how companies add workforce without adding headcount, and how they move existing teams off their own books without disrupting anyone’s job.

Third-Party Payroll vs Payroll Outsourcing vs Contract Staffing

These three terms get used interchangeably. They are not the same thing, and choosing the wrong one costs money. Here is the distinction most providers skip:

	Who is the legal employer?	What the provider does	When to use it
Payroll outsourcing	You. Employees stay on your rolls.	Processes salaries, payslips, PF/ESI/TDS filings on your behalf	You want admin off your plate but employees stay yours
Third-party payroll	The provider (TMS). Employees move to our rolls.	Employs the workforce, runs payroll, owns statutory compliance	You want headcount, compliance risk and employer obligations off your books
Contract staffing	The provider (TMS).	Third-party payroll plus sourcing and deploying new contract staff	You need to add workers, not just transfer existing ones

In short: payroll outsourcing changes who does the paperwork; third-party payroll changes who the employer is. Contract staffing is third-party payroll plus recruitment. If employees are moving onto our rolls, you are here on the right page. If they are staying on yours, see our payroll outsourcing services page.

Who Uses Third-Party Payroll — and Why

Companies with headcount caps. MNC subsidiaries, listed companies and PE-backed firms often have sanctioned-headcount limits. Third-party payroll lets operations grow while direct headcount stays flat.

CFOs converting fixed cost to variable cost. Employees on third-party payroll are an operating expense that scales with business volume — easier to ramp down, easier to budget, cleaner on the balance sheet.

Businesses offloading compliance risk. PF, ESI, professional tax, LWF, minimum wages, bonus, gratuity, Shops & Establishments, CLRA — every one carries penalty and prosecution risk. On third-party payroll, that risk sits with TMS, backed by our zero-penalty record since 2006.

Project and seasonal workforces. Time-bound projects, festive peaks, new-site ramp-ups — workforces that should never sit on permanent rolls.

Foreign companies testing India. Before incorporating, or alongside a small entity, global firms run Indian teams on our payroll. For fully foreign entities with no Indian presence, our EOR services page covers the dedicated model.

How Third-Party Payroll Works at TMS

There are two routes onto TMS payroll — and the first is the one most providers can’t run well.

Route 1: Transfer your existing employees to TMS payroll

This is TMS’s specialist strength. Your current staff resign from your rolls and are re-appointed by TMS on the same date, with no break in service and no change in take-home pay.

1. Audit & mapping (week 1–2). We map every employee’s CTC, leave balance, PF account and gratuity tenure.
2. Statutory continuity (week 2–6). PF transferred via Form 13 so UAN history is preserved; ESI re-registration; gratuity continuity protected or paid out with full sign-off.
3. Communication. We help you brief employees before anything moves — the single biggest factor in a smooth transfer.
4. First payslip. Net take-home matches to the rupee. Then steady-state monthly payroll.

The full mechanics are on our dedicated payroll transfer services page.

Route 2: Deploy new hires directly on TMS payroll

You select the candidates (or we source them through contract staffing), and TMS issues appointment letters, completes onboarding and statutory registrations, and deploys them to your site — typically within 7–15 days.

What TMS Handles on Third-Party Payroll

• Provident Fund — employer contribution of 12% of PF wages, deposits by the 15th, ECR filing, UAN/KYC management
• ESI — 3.25% employer / 0.75% employee for staff earning up to ₹21,000/month gross
• Professional Tax & LWF — state-wise rates and schedules, maintained state by state for every deployment location
• TDS on salaries — computation, quarterly 24Q returns, Form 16 issuance
• Monthly payslips — delivered through our own HRMS portal, where your team and every employee can see payslips, attendance and leave in real time
• Statutory bonus — minimum 8.33% where applicable (Payment of Bonus Act provisions, now carried into the Code on Wages; eligibility historically at wages up to ₹21,000/month)
• Gratuity provisioning — 4.81% of basic accrued correctly from day one
• Full & final settlements — leave encashment, gratuity, recovery, relieving letters
• Registers, returns and audits — every filing under every applicable Act, every state

CLRA Compliance: What Principal Employers Must Know

If you engage contract labour, the Contract Labour (Regulation & Abolition) Act, 1970 makes you the principal employer — and that status carries duties you cannot outsource away:

• Registration. Establishments engaging contract labour above the threshold must register, and contractors above the threshold need a licence. Under the erstwhile CLRA the threshold was 20 workers in most states (raised to 50 in some, including Maharashtra); the OSH Code, in force since 21 November 2025, sets it at 50 contract workers, with state rules still being notified.
• Verification duty. The principal employer must verify that the contractor actually pays wages and deposits PF/ESI. If the contractor defaults, liability can travel back to you.
• Welfare facilities. Canteens, restrooms, drinking water and first aid at the workplace remain the principal employer’s responsibility where the contractor fails to provide them.

This is exactly why the choice of payroll partner matters more than the per-employee fee. TMS holds CLRA licences where required, provides monthly compliance proof through the HRMS portal (challans, ECRs, wage registers), and gives your auditors a clean paper trail. Note that the four new Labour Codes, in force since 21 November 2025, consolidate and update these obligations — our compliance team tracks state-level rules as they are notified.

Pricing: How Third-Party Payroll Is Charged

Third-party payroll in India is priced on a per-employee-per-month (PEPM) basis, structured one of two ways:

• Cost-plus / markup model. You pay the employee’s full CTC (salary + employer PF + ESI + gratuity provision + bonus) plus a service markup — either a percentage of CTC or a fixed fee per head. Most enterprise engagements use this model because it is fully transparent.
• Fixed PEPM fee. A flat management fee per employee per month on top of actuals — simpler for stable, large headcounts.

What drives your total cost is not the markup — it is the statutory loading on top of gross salary (employer PF 12%, ESI 3.25% where applicable, gratuity 4.81% of basic, bonus 8.33% minimum where applicable). Our contract staffing cost calculator shows exactly how a CTC builds up, so you can compare quotes line by line.

Third-Party Payroll Services in Mumbai

TMS is headquartered in Mumbai and runs third-party payroll for clients across the city and MMR — Lower Parel, BKC, Andheri, Powai, Navi Mumbai, Thane — spanning BFSI back offices, pharma, logistics, IT/ITES and retail head offices.

Mumbai deployments come with Maharashtra-specific obligations that trip up national providers: Maharashtra Professional Tax registration and monthly PT deductions (₹200/month, ₹300 in February, for employees earning above ₹10,000 — with due dates advanced to the 15th of the month from March 2026), Maharashtra Labour Welfare Fund contributions (half-yearly June/December cycles, remitted by 15 July and 15 January), Shops & Establishments registration, and Maharashtra’s contract-labour licence process. Our Mumbai team handles all of these locally, with a dedicated account manager your HR team can meet in person.

Whether you are moving 25 employees off your rolls or deploying 500 contract staff across MMR sites, TMS provides the same audit-ready compliance stack, backed by two decades of Maharashtra statutory experience.

Why TMS

• Since 2006, zero statutory penalties — not one client penalised for a TMS compliance failure
• 8,500+ employees on payroll across 100+ cities
• Every state & UT covered — one partner, one invoice, pan-India
• Own HRMS portal — clients and employees see payslips, challans and compliance proof in real time
• Dedicated account teams — a named account manager and payroll team, not a ticket queue
• Transfer specialists — the provider Indian companies use to move existing teams, not just add new ones

Frequently Asked Questions

What is the difference between third-party payroll and payroll outsourcing?

In payroll outsourcing, employees remain on your company’s rolls and the provider only processes salaries and filings on your behalf. In third-party payroll, employees move onto the provider’s rolls — TMS becomes the legal employer and carries the statutory obligations, while the employees continue working under your day-to-day direction.

Is third-party payroll legal in India?

Yes. It operates under the Contract Labour (Regulation & Abolition) Act, 1970 and allied labour laws. The provider must hold applicable contract-labour licences and the principal employer must be registered where thresholds apply — now 50 contract workers under the OSH Code (formerly 20–50 state-wise under CLRA). TMS manages both sides of this compliance.

Do employees lose PF or gratuity benefits when they move to third-party payroll?

No — if the transfer is run correctly. PF balances and service history move via UAN-based Form 13 transfer, and gratuity continuity is preserved or settled with full employee sign-off. TMS guarantees no break in service and take-home pay matched to the rupee.

What does third-party payroll cost per employee?

Total cost = gross salary + statutory loading (employer PF 12%, ESI 3.25% for eligible staff, gratuity provision 4.81% of basic, statutory bonus where applicable) + the provider’s PEPM fee or markup. Use our contract staffing cost calculator for a line-by-line build-up.

Who is liable if PF or ESI is not deposited for third-party payroll employees?

Primarily the employer of record — TMS. However, under CLRA the principal employer has a duty to verify compliance, and liability can revert if the contractor defaults. This is why TMS gives clients monthly deposit proof (challans and ECRs) through the HRMS portal.

Can we move only part of our workforce to third-party payroll?

Yes. Most clients keep core roles on their own rolls and move support, operations, project or field teams to TMS. There is no rigid minimum — engagement size is flexible.

How quickly can employees be deployed on TMS payroll?

New hires: typically 7–15 days from documentation. Transfers of existing teams: a structured 30–60 day migration, timed to a salary cycle so no one’s pay is disturbed.

Does third-party payroll work for companies outside metros?

Yes. TMS runs payroll in every Indian state and union territory, with employees across 100+ cities — the same compliance stack applies whether staff sit in Mumbai or a tier-3 town.