Is EOR hiring in India compliant with local labour law, or is it a compliance risk?

EOR arrangements are legal and common in India, with the EOR entity as the genuine employer of record handling contracts, payroll, and statutory compliance. The risk isn't the EOR structure itself — it's in how the arrangement is operated day to day. If the client company effectively directs the employee's work in a way indistinguishable from a direct employment relationship (setting exact working hours, providing equipment and workspace, exercising the kind of control typical of a direct employer) without the EOR playing any real employer role beyond payroll, that can create exposure on two fronts: employee misclassification risk, and potentially a Permanent Establishment risk for the foreign client company under India's tax rules, since a fixed place of business or a dependent agent acting on the company's behalf can trigger PE.

Structuring the EOR relationship properly — clear documentation of the EOR's employer role, and day-to-day management practices that respect that structure — is what keeps EOR hiring a compliant tool rather than a risk.