HR and payroll for ecommerce in India
Reviewed by Mellow Editorial Team, HR & payroll content team
Running payroll for an ecommerce business in India follows the same statutory framework as any other employer, but the sector's specific workforce mix — full-time warehouse staff, gig delivery partners, contractual customer support agents and salaried corporate employees — creates compliance obligations that most generic payroll guides overlook.
The workforce is not one thing
Most ecommerce operations run at least three distinct worker categories simultaneously.
Salaried employees — tech, marketing, finance, category management — are on fixed monthly payroll. Standard income tax slabs under the new regime apply, rising to 30% at the highest bracket, with a 4% health and education cess on tax payable. TDS is deducted monthly, and you file Form 24Q every quarter. At year-end, employees receive Form 16.
Contract and fixed-term workers — common in customer support and last-mile operations — may be employees of a staffing agency or direct hires on fixed-term contracts. If they are on your rolls, your EPF and ESI obligations apply in full. If they sit on a contractor's rolls, audit the contractor's compliance carefully. Under India's consolidated Labour Codes, which came into force in 2025, principal employers carry vicarious liability for contractor workers on their premises.
Gig workers — platform delivery partners paid per order — do not sit neatly in either category. They are not employees for EPF or ESI purposes today, though the Code on Social Security, 2020 (one of the four Labour Codes) creates a framework for extending social security to gig and platform workers. No national implementation rules have been notified for this specific provision as of mid-2026, but Karnataka and Rajasthan have passed state-level gig worker legislation. Monitor this space; the direction of regulation is clear even if the timeline is not.
Seasonality is a payroll operations problem
Ecommerce volumes spike hard — sale events, festive season, new category launches. Your warehouse headcount can double in six weeks and shrink again in two. That creates payroll problems that steady-state businesses rarely face.
Monthly additions and exits increase the chance of calculation errors, wrong CTC structuring and arrear payments. A few practical controls help:
- Lock a cut-off date (typically the 25th or 26th of each month) for additions and exits. Any change after cut-off goes into next month's payroll with a clear arrear line.
- Maintain a joining and exit tracker separate from your HRMS that is reconciled before each payroll run. Warehouse HR teams who handle physical onboarding often work separately from the payroll team; the gap between them is where errors accumulate.
- Pay contract workers on a separate payroll cycle if possible. Mixing them with permanent staff in one run makes variance analysis harder and statutory filings messier.
EPF and ESI at scale
EPF applies to establishments with 20 or more employees. Most ecommerce businesses hit that threshold quickly. The contribution rate is 12% from the employee and 12% from the employer on applicable wages. ESI applies to employees below the prescribed wage threshold and covers health insurance administered through ESIC.
At high headcount, two issues come up repeatedly.
First, wage definition. EPF contributions are calculated on basic wages. Ecommerce companies sometimes structure CTC with a low basic and high allowances to reduce the EPF outgo. EPFO has challenged this in enforcement cases where the structure appears designed purely to suppress contributions. Keep basic wages at a defensible proportion of gross.
Second, contractor compliance audits. If you use a warehouse staffing contractor, your vendor agreement should require monthly proof of EPF and ESI deposits for workers deployed to you. Request UAN-level ECR (Electronic Challan cum Return) data. In an EPFO inspection, this documentation is what separates a manageable inquiry from a significant liability.
Structuring CTC for warehouse and logistics roles
Warehouse associates, packers and delivery staff typically earn closer to minimum wage. The structure of their CTC matters for take-home and compliance.
For employees near the ESI wage threshold, a small wage restructure can inadvertently push someone above the threshold and cut off their ESIC health cover — relevant to them and a change you should communicate clearly. Review threshold applicability each time you revise compensation for this workforce segment.
Overtime is a real cost in this sector. The Labour Codes regulate daily and weekly working hours and overtime rates. Build overtime tracking into your attendance system, not as an afterthought. If your warehouse runs on shift-based attendance data from a biometric system, ensure that data feeds into payroll automatically. Manual keying of hours is where overtime errors and wage theft allegations originate.
Tax filing obligations specific to ecommerce employers
There is no separate employer tax filing category for ecommerce businesses. You file Form 24Q quarterly, issue Form 16 annually, and maintain payroll registers as required under applicable labour law. The volume of low-wage, high-turnover employees does make Form 16 issuance operationally heavier — many associates leave mid-year, creating a large population of former employees who technically need Part A of Form 16 for their TDS records. Automate this wherever possible rather than treating it as a once-a-year manual task.
If you work with influencers or freelancers for marketing, TDS obligations under the relevant sections of the Income Tax Act apply to those payments too — this is a payroll-adjacent compliance area that ecommerce finance teams often handle inconsistently.
---
Run HR and payroll in India with Mellow
Mellow brings HR, payroll and 12 AI agents into one platform — built to handle India properly, with payroll included, from £4 per employee per month. The AI agents don't just answer questions; they generate contracts, run cost estimates and draft letters for you.
[Start a free trial →](/register)