Building an onboarding plan in India
Reviewed by Mellow Editorial Team, HR & payroll content team
Effective onboarding in India means completing statutory registrations, structuring a compliant offer, and running a structured first-90-days programme — all before the employee's first day. Skip any of these and you risk compliance gaps, delayed payroll, or early attrition.
Get the paperwork right before Day 1
Most onboarding failures happen in the weeks before the employee joins, not after. Work through this list sequentially.
Collect documents from the employee:
- Aadhaar card and PAN card (both mandatory for payroll and TDS)
- Previous employer's Form 16 (relevant if they are joining mid-year, so you can account for tax already deducted)
- Relieving letter and experience certificates
- Bank account details for salary credit
- EPF UAN (Universal Account Number) if they have one from a previous employer
- ESI IP number, if applicable
Register the employee on statutory platforms:
- Link their UAN to your company's EPF establishment account via the EPFO employer portal
- If their salary is below the ESI wage threshold, register them with ESIC as well
- Ensure their PAN is mapped in your payroll software before the first pay run, so TDS is deducted correctly from month one
A common mistake is treating these registrations as an afterthought. If PAN is missing at the first payroll run, TDS is deducted at a higher flat rate — an unnecessary headache for both sides.
Structure the offer letter correctly
India's four consolidated Labour Codes, in force from 2025, change how wages must be defined. The most significant impact is on the definition of "wages" under the Code on Wages — allowances are more tightly capped relative to basic pay. This affects gratuity calculations, PF contributions, and leave encashment.
Your offer letter should clearly state:
- Basic pay — this is the component on which EPF (12% employee, 12% employer) and gratuity eligibility are calculated
- HRA and other allowances — structured within the limits set by the Labour Codes
- Gross CTC and take-home — shown separately so there is no ambiguity
- Variable pay terms — when it is paid, and under what conditions
- Notice period — aligned with the applicable Labour Code and your internal policy
Avoid vague language like "salary as mutually agreed" or leaving gratuity eligibility unaddressed. Gratuity becomes payable after five years of continuous service, and employees are entitled to know this from the start.
Set up payroll before the first pay cycle
The first salary run sets the tone. To run it cleanly:
1. Confirm the employee's tax regime — new or old. Under the new regime, income tax slabs rise to 30%, a section 87A rebate applies for lower incomes, and a 4% health and education cess applies on top of the tax amount. Employees should declare their preferred regime before the first deduction.
2. Collect their investment declarations (Form 12BB) if they opt for the old regime.
3. Set up the payroll entry with the correct PF structure — basic pay, employer's 12% EPF contribution, and the employee's 12% deduction.
4. Schedule Form 24Q filing reminders for each quarter. TDS deducted must be deposited and reported quarterly; Form 16 is issued annually.
If the employee joins mid-month, confirm your policy on prorated salary and communicate it in writing. Surprises on the first payslip damage trust early.
Run a structured first-30-60-90-day plan
Statutory compliance gets the employee paid. A structured induction plan gets them productive.
First 30 days — orientation:
- Walk through the employee handbook, leave policy, and grievance redressal mechanism (required under the Labour Codes)
- Complete mandatory POSH (Prevention of Sexual Harassment) awareness training
- Assign a buddy or reporting manager point of contact
- Set 30-day role expectations in writing
Days 31–60 — integration:
- First formal check-in with the manager: is the role as described, are there blockers?
- Access to all tools, systems and teams confirmed
- Any probation review milestones documented
Days 61–90 — performance baseline:
- Review initial deliverables against the written expectations set in week one
- Document feedback formally — especially important if you are considering ending probation early, as the Labour Codes have specific requirements around termination notice
Keep a record of all these touchpoints. If a dispute arises later, documented onboarding evidence — offer letter, signed declarations, induction checklists — is your first line of defence.
Know what changes once they pass probation
Probation periods in India are typically three to six months and should be stated in the offer letter. Once confirmed:
- Gratuity eligibility starts counting from the original date of joining, not the confirmation date
- Some employers enhance benefits (health insurance sum insured, variable pay eligibility) at confirmation — communicate these terms upfront so there are no mismatched expectations
- Update the employee's status in your HRMS and payroll system to reflect any salary revision at confirmation
For employers with staff across multiple states, remember that some state-specific shops and establishments rules still sit alongside the central Labour Codes — check whether your state's rules impose any additional onboarding documentation or registration requirements.
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