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India market entry · Project office payroll

Payroll and Labour Law Compliance for Project Offices in India

Prepared by S U and Company's CA-led advisory team · Published 27 October 2026 · About S U and Company

A project team is hired fast, usually on fixed-term contracts tied to the project's own timeline, and often mixes direct hires, contract labour and expats on a single site. The compliance obligations are largely the same as any other Indian employer's, but the fixed-term structure and the eventual, planned end date change how a few of them actually play out.

Quick answer

What payroll and labour law compliance does a project office need in India?

A project office must pay salaries on time, deduct tax at source, comply with social security laws (EPF, ESIC, gratuity), pay professional tax where states levy it, follow the four Labour Codes in force since 21 November 2025, handle contract labour obligations on site, and register its expats with the FRRO within 14 days of arrival.

1. Fixed-term contracts and gratuity

Project employment contracts are typically fixed-term, tied to the project's own timeline, with leave and conduct policies following the Labour Codes and the applicable state Shops and Establishments law. Under the Code on Social Security, 2020, fixed-term employees are eligible for gratuity after just one year of service, on a pro-rata basis, rather than the usual five years that applies to open-ended employment — a point worth building into project budgeting from the outset rather than discovering at project close.

2. Social security

Social security compliance runs under the Code on Social Security, 2020, covering EPF and pension, ESIC, gratuity, and maternity benefit where applicable. EPF generally applies once an establishment reaches 20 or more employees, and ESIC above the notified size for employees within the applicable wage limit, checked against the project's own headcount and wages rather than a group-wide figure.

Expats on the project are generally treated as international workers and contribute to EPF on their full salary with no ceiling, unless a social security agreement between India and their home country exempts them — no agreement is currently known to be in force with Russia or Sri Lanka, so expats from those countries are generally covered without an exemption. See our EPF for international workers guide for the detail.

3. Professional tax and the welfare cess

Professional tax is a state-level salary deduction, applying wherever the project site or staff are located, and needs its own registration, payment and return cycle in each relevant state. Separately, a project office engaging contract labour has duties as a principal employer once headcount crosses the notified threshold, and a welfare cess on construction cost can apply specifically to building and construction projects — both worth checking against the contract and site type before the project starts, not partway through.

4. The Labour Codes

The four Labour Codes — wages, industrial relations, social security and workplace safety — have been in force since 21 November 2025, with central rules notified on 8 May 2026 and state-level rules still following in stages. The Code on Wages' 50% rule (wages must be at least half of total remuneration) applies to project payroll the same way it applies to a branch office's — see our branch office payroll guide for that detail.

5. Expats and FRRO

An expat generally needs an employment visa, carrying a minimum annual salary condition of USD 25,000. A separate project visa category exists, but only for certain sectors such as power and steel — most project assignments still run on the standard employment visa. A foreign national on a visa valid for more than 180 days must register with the FRRO within 14 days of arrival, with extensions and exit permits also running through the FRRO. See our visa and relocation guide.

6. Joining and project-end settlements

On joining, KYC and bank details are collected, the employee is registered for social security and professional tax, and a contract is issued. At project end — for the whole team at once, rather than staggered individual exits — pending salary, leave encashment and gratuity where due are settled, PF exit records are completed, and relieving letters are issued. Planning this mass exit alongside the project's own completion accounts avoids a scramble in the final weeks.

Frequently asked questions

Do project staff on fixed-term contracts get gratuity?

Generally yes. Under the Code on Social Security, 2020, fixed-term employees are eligible for gratuity after one year of service, on a pro-rata basis, rather than the usual five years that applies to open-ended employment.

Do contract labour rules and a construction welfare cess apply to a project site?

Possibly. A project office that engages contract labour has duties as a principal employer once headcount crosses the notified threshold, and a welfare cess on construction cost can apply to building and construction projects specifically.

What visa does an expat need to work on a project in India?

Generally an employment visa, carrying a minimum annual salary condition of USD 25,000. A separate project visa category exists, but only for certain sectors such as power and steel.

When must a project office register for EPF and ESIC?

EPF generally applies once an establishment reaches 20 or more employees, and ESIC above the notified size for employees within the applicable wage limit — checked against the project’s own headcount and wage levels, not a group-wide figure.

What happens when project staff join and when the project ends?

On joining, KYC and bank details are collected, the employee is registered for social security and professional tax, and a contract is issued. At project end, pending salary, leave encashment and gratuity where due are settled, PF exit records are completed, and relieving letters are issued.

Which labour laws apply to a project office in India?

The four Labour Codes — covering wages, industrial relations, social security and workplace safety — have been in force since 21 November 2025, with central rules notified on 8 May 2026 and state-level rules still following. State Shops and Establishments laws apply alongside them.

How S U and Company can help

We run project payroll, handle EPF/ESIC and professional tax registrations, manage contract-labour compliance on site, and support FRRO registration for expats. See our accounting and audit guide and ROC compliance guide, or explore the US-to-India entry guides.

Sources and further reading