Senior Hires in India Through an EOR: Pay, Insurance and Exit Terms
Senior hires in India run on the same EOR structure as junior ones. The difference is that three things, pay structure, insurance and exit terms, stop being routine.
The short version. You can place a country head or director on an EOR payroll in India. However, senior hires in India behave differently from junior ones in three ways. First, the pay structure has to work with the statutory meaning of wages under the Code on Wages, which lifts the base for provident fund and gratuity on allowance heavy packages. Second, ESIC covers staff only up to a wage limit, so senior hires in India get no statutory medical cover and need mediclaim and accident policies bought commercially. Third, the exit terms matter more than the entry terms, because Indian courts generally will not enforce a non-compete that bites after the job ends.
Why senior hires in India are the stress test
A foreign firm often starts with a junior hire, and an EOR handles that comfortably. The structure only gets tested when you place a country head, a sales director or a regional lead on a package several times the median.
At that level, the money is bigger. The notice period runs longer. Meanwhile, the person carries client relationships and data. Above all, the cost of a bad exit is real.
In short, everything that rounded to nothing on a junior salary now becomes a line worth arguing about.
1. The pay structure question
India's four Labour Codes came into force on 21 November 2025. They fold 29 earlier central laws into four codes, covering wages, social security, industrial relations and safety.
The change with the biggest price tag is the statutory meaning of wages. It is worth stating carefully, because the popular shorthand misleads.
The rule is not simply that basic pay must be half the package. Instead, the Code on Wages says which parts count as wages, leaves a named list of allowances out, then caps that excluded bucket. Where the excluded parts run past half of total pay, the excess counts as wages anyway.
In most cases the result looks the same, which is why the fifty percent shorthand caught on. Still, the mechanism matters when you model a package, because it bites on the excluded allowances rather than on the basic line.
Indian pay was traditionally built the other way round, with a low basic and a stack of allowances. Firms did that precisely to hold down provident fund and gratuity. Therefore, raising the effective wage base raises those costs.
That is the intended effect, not an accident. But it does mean an offer priced on an old structure costs more than an old model says. So budget for total cost of employment, not gross salary.
Finally, note that state rules under the Codes are still landing at different speeds, so the position can differ by state.
2. The insurance gap nobody warns you about
ESIC is the statutory medical and cash benefit scheme. It reaches staff earning up to a monthly wage limit, in workplaces the scheme covers. Senior packages sit well above that limit.
That opens a gap foreign employers do not expect. Your junior hire has statutory medical cover. Your country head has none, unless somebody buys it. There is no automatic step up at the top of the scale, and the contract does not create one by itself.
So you have to buy cover on purpose:
- Group mediclaim, covering hospital care for the person and usually the family, with a set sum insured, room rent caps and a wait period for pre-existing conditions.
- Group personal accident cover, which pays on accidental death and disability. It is a separate product, not a feature of mediclaim.
- Term life cover, where you want it, which is common for leadership roles.
Then settle the practical points. Who holds the policy, the EOR or you? Who pays the premium? What is the sum insured? Are dependants in? What happens to cover during notice?
Of course, a candidate at that level will ask. A vague answer then costs you the hire.
3. Background checks, especially in regulated sectors
For leadership roles, the client usually sets the vetting bar, not Indian law. The common set covers work history, education, court record checks and address. In addition, reference checks sit on top.
In pharma, financial services and healthcare, your own regulator often pushes the bar higher than Indian employment law asks. So agree the standard before the offer goes out. Retro-fitting a check after someone has already resigned elsewhere is uncomfortable for everybody.
4. Exit terms, where the risk actually sits
Most of the risk in senior hires in India is not in the monthly payroll run. It is in the terms of the job, and in the exit.
Notice periods at leadership level usually run longer than for junior staff. Say clearly whether you can pay in lieu, and whether the person can buy their notice out.
Garden leave has to be written in, because a notice period does not imply it. It restrains someone while still employed rather than after, which puts it on firmer ground than a post exit curb. Even so, it still has to be reasonable.
Non-competes, non-solicits and what actually holds
Post employment non-competes generally do not hold in India. Section 27 of the Indian Contract Act makes agreements in restraint of trade void, and Indian courts have consistently refused to enforce curbs that run after the job ends. A clause lifted from a UK or US template will sit in your contract and do nothing.
What holds up better is a tight confidentiality clause, plus clear ownership of IP and client data made during the job. Non-solicit clauses sit in between. Indian courts have not treated them uniformly, and outcomes turn on how narrowly you draw the clause and on the facts. Therefore, treat a non-solicit as a deterrent worth drafting well, not as a guarantee.
The practical point is where to spend legal time. Not on a non-compete nobody will enforce. Spend it on confidentiality, IP ownership, and the handover of client relationships during notice.
Termination has to follow the process and notice your contract and the law require. How much statutory protection applies turns partly on whether the role counts as a workman under the industrial relations law. Senior roles carrying managerial or supervisory duties usually sit outside that group. However, the test looks at what the person actually does, not at the job title, and getting it wrong is a common and costly error.
5. Variable pay, equity and the awkward parts
Typically, senior packages rarely stop at salary. Commission plans, annual bonuses and equity all need a route through the EOR structure.
Cash variable pay is simple, because it runs through payroll and gets taxed as employment income.
By contrast, equity is harder, because the EOR employs the person, not the entity issuing the shares. Three separate questions follow. Do the plan rules allow a grant to someone the issuer does not employ? How is the benefit taxed and reported in India? And how do Indian exchange control rules treat a resident buying shares in an overseas company?
Of course you can do it. But design it with advisers rather than assume it, and settle it before the offer goes out.
Two engagements with senior hires in India
An international business was hiring senior sales leadership in India to grow its local market, including a Pharmaceutical Sales Director. TMS ran end to end onboarding, documentation, payroll setup and ongoing admin for those roles. The senior hires came on board while the client focused on growth.
A pharmaceutical company in the United Kingdom was running its India team on a structured employment model, with mediclaim and accident insurance for better staff protection. TMS handled payroll, documentation and HR, and coordinated the insurance cover.
Both make the same point about senior hires in India from different angles. At this level, the difference is not whether payroll lands on time. It is whether the terms, the benefits and the exit provisions are right.
Checklist before you make senior hires in India
- Model total cost of employment under the current wage rules, not gross salary.
- Confirm the basic pay share in the offer structure.
- Decide mediclaim and group accident cover, the sum insured, and whether dependants are in.
- Agree who holds the policy and who pays the premium.
- Set the vetting standard in writing, before the offer.
- Fix notice both ways, and say whether payment in lieu applies.
- Draft confidentiality, non-solicit and IP terms properly. Do not lean on a non-compete.
- Settle how variable pay and any equity get delivered and taxed.
- Confirm which state's rules apply, since notifications are still landing.
How TMS handles senior hires in India
TMS has run as an Indian HR and compliance firm since 2006. Around 8,500 people sit on TMS payroll across all 28 states, for clients in more than 20 countries. Leadership placements, including in regulated fields such as pharma, sit within that book. The two engagements above are examples.
In practice that means offer structuring that works with the current wage rules. It means coordinating mediclaim and accident cover where a client wants protection above the statutory floor. And it means employment terms written for India, not copied from another country.
The TMS compliance team checks every statutory position against current central and state notifications. Where a question belongs to a lawyer or a tax adviser, TMS says so rather than answering it.
Placing a country head, a sales director or a regional lead in India? Get a tailored quote.
More TMS guides
Deeper reference material on the topics in this post:
Frequently asked questions
Can you make senior hires in India through an EOR?
Yes, because seniority does not limit the structure. What changes is that pay structure, insurance and exit terms need far more care than for a junior hire.
Does ESIC cover senior hires in India?
Generally no. The scheme reaches staff earning up to a monthly wage limit, and senior packages sit above it. So there is no statutory medical cover at that level, and you buy group mediclaim and accident policies instead.
Is a non-compete enforceable in India?
Post employment non-competes generally do not hold, because Section 27 of the Indian Contract Act makes restraint of trade void. Curbs that run during the job are treated differently. Confidentiality and IP clauses are the reliable ones. Non-solicit sits in between, and outcomes depend on drafting and facts.
How do the Labour Codes affect senior pay in India?
Through the statutory meaning of wages. Allowances left out of that meaning are capped at half of total pay, and any excess counts as wages anyway. On packages built around a low basic, that lifts the base for provident fund and gratuity. People summarise it as a fifty percent basic rule, but it works on the excluded allowances instead.
Can senior hires in India get stock options from the parent company?
Sometimes, though not automatically. The EOR employs them, not the issuing entity. So check the plan rules, the Indian tax and reporting position, and exchange control with advisers before you promise anything in an offer.
This post is general information about senior hires in India. It is not legal, tax or investment advice, and you should not structure any employment, insurance or equity arrangement on it alone. Rules change, and state level rules under the Labour Codes are still landing.