HR and payroll for food and beverage in India
Reviewed by Mellow Editorial Team, HR & payroll content team
Running HR and payroll for a food and beverage business in India means managing a workforce that is largely hourly, shift-based and seasonal — with statutory obligations that apply from day one of employment, regardless of headcount.
The workforce reality in F&B
Food and beverage operations — restaurants, cloud kitchens, QSRs, catering companies, food manufacturing units — typically employ a mix of full-time kitchen and floor staff, part-time or casual workers, and contractual labour sourced through third-party vendors. Each category has different compliance implications.
Permanent employees on your payroll attract the full range of statutory deductions: EPF contributions at 12% from the employee and 12% from the employer, ESI coverage for those below the applicable wage threshold, professional tax (where the state levies it), and income tax TDS where applicable. Contract workers engaged through a licensed contractor fall under the Contract Labour (Regulation and Abolition) Act — though with India's four Labour Codes now in force from 2025, the rules around this are consolidating.
The high attrition common in F&B makes it tempting to keep workers off formal payroll. That is a compliance risk that catches up quickly — especially if there is a labour inspection or a gratuity dispute.
Wage structure and the tipped/service-charge question
Many restaurants pool a service charge and distribute it to staff. This is not a statutory requirement, and its treatment for payroll purposes is often mishandled. Service charge distributions are taxable income for the employee. If you are paying these out through payroll, they must be included in gross salary for TDS calculation. If you are paying them informally in cash, you are creating a tax liability for the employee and a documentation problem for yourself.
Basic wage structuring also matters more in F&B than in most sectors. Because EPF and gratuity are calculated on basic wages, employers sometimes inflate allowances to suppress the basic salary component. This reduces employer EPF liability in the short term but can create legal exposure — courts and authorities have consistently held that artificially low basic wages for EPF purposes are not permissible.
Keep your basic wage at a proportion of gross that reflects actual compensation, not a figure engineered around a statutory minimum.
Shift rosters, overtime and the Shops and Establishments Act
F&B businesses are governed primarily by the Shops and Commercial Establishments Acts of their respective states, which set rules on working hours, rest intervals, weekly offs, and overtime rates. These rules vary by state. A Mumbai restaurant operates under the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act; a Bengaluru cloud kitchen under the Karnataka equivalent.
Overtime must be paid at double the ordinary wage rate under most state acts. If your restaurant runs double shifts or your manufacturing unit runs 24 hours, you need a system to track actual hours worked per employee. A paper register is legally sufficient but operationally unreliable — inaccurate attendance data is one of the most common reasons F&B payroll goes wrong.
Nightwork for women is permitted under the Labour Codes with certain safety and consent conditions, which is practically relevant for shifts in food processing and late-service restaurants.
Seasonal and contractual staff
Catering companies and event F&B operations often bring on large numbers of workers for a season or a single event. The legal temptation is to classify these workers as purely contractual or gig workers. The classification matters: if a worker is economically dependent on you, works under your supervision, and uses your equipment, labour authorities are likely to treat them as an employee regardless of what your contract says.
For genuine short-term engagements, use fixed-term employment contracts. Under the Labour Codes, fixed-term employees are entitled to proportional gratuity even if they do not complete five years — unlike permanent employees, who must serve the full five-year qualifying period. If you are hiring seasonal staff repeatedly on fixed-term contracts, factor this gratuity liability into your cost planning.
TDS, Form 16 and quarterly filing
If your salaried F&B employees cross the income tax threshold, you must deduct TDS on salary, deposit it with the government, file Form 24Q every quarter, and issue Form 16 to each employee at the financial year end. The new tax regime has a section 87A rebate available for lower incomes, which affects how much TDS you actually need to deduct for many of your lower-paid permanent staff.
For a restaurant chain or food manufacturer with hundreds of employees across multiple locations, the quarterly filing discipline is non-negotiable. Missed or incorrect 24Q filings attract interest and penalties, and employees cannot reconcile their tax returns without an accurate Form 16.
If your payroll is still being processed manually or on spreadsheets, the quarterly compliance calendar — EPF, ESI, TDS, professional tax, labour welfare fund — is where errors accumulate fastest. A clear payroll calendar with ownership assigned to a specific person, or a payroll platform that automates the deposit schedule, is worth building before your headcount grows rather than after.
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