HR and payroll for logistics in India
Reviewed by Mellow Editorial Team, HR & payroll content team
Logistics employers in India deal with a workforce split between office staff and a large, mobile field force — drivers, warehouse workers, last-mile delivery personnel. Standard payroll rules apply to everyone, but the operational realities of the sector create specific compliance and administration challenges that generic HR guides rarely address.
The workforce reality in logistics
Most logistics businesses run two distinct payroll tracks. Corporate and operations staff are typically salaried, on-rolls employees with straightforward monthly payroll. Field staff — truck drivers, warehouse loaders, helpers, delivery executives — are often paid weekly or fortnightly, may be engaged through contractors, and have high attrition.
This split creates immediate compliance questions. Employees on your rolls, regardless of role, attract EPF at 12% each from employer and employee, ESI where wages fall below the applicable threshold, and full income tax obligations including TDS where earnings cross taxable limits. Contract workers engaged through a licensed labour contractor are the contractor's payroll responsibility — but principal employers in logistics remain jointly liable if the contractor defaults. Document contractor licences, payment records and compliance certificates carefully.
EPF and ESI in a high-turnover field workforce
EPF and ESI administration is operationally heavy in logistics because staff join and leave frequently. Every new field hire needs a UAN (Universal Account Number) activated before the first wage credit. For workers who already have a UAN from a previous employer, the account must be linked — not a new one created. Duplicate UANs create problems during withdrawals and transfers that come back to the employer.
ESI coverage is wage-based. Workers below the current threshold must be enrolled; those above it fall outside ESI. In logistics, wages for helpers and loaders often sit close to the threshold, so any increment or bonus payment that pushes monthly wages over the limit requires updating ESI records from the following month. Track this actively — inspectors in logistics are common because the sector employs large numbers of low-wage workers.
Attrition is high. When a worker leaves, file the EPF exit date promptly. Delayed exit markings prevent ex-employees from withdrawing their PF and generate grievances that can escalate to labour authorities.
Wages, overtime and the Labour Codes
India's four consolidated Labour Codes came into force in 2025. For logistics employers, the Occupational Safety, Health and Working Conditions Code is particularly relevant. Driving and warehouse operations carry physical risk; compliance obligations around working hours, rest periods, and hazard management now sit under a single consolidated framework rather than multiple older Acts.
On wages, the Code on Wages requires that the wage component structure not be artificially engineered to minimise PF contributions. The definition of "wages" under the new codes is broader than the old Basic plus DA formula many logistics firms used. If allowances together exceed a specified proportion of total compensation, the excess is treated as wages for PF calculation purposes. Review your CTC structures — particularly for drivers and supervisors — to ensure PF is being calculated on the correct base.
Overtime is common in warehouses, especially around peak seasons. The law requires overtime to be paid at twice the ordinary rate. Keep records. Labour inspections in warehouses frequently focus on attendance registers and overtime records, and missing documentation creates liability even when the payments were actually made.
TDS and Form 16 for a mixed workforce
For salaried employees, TDS is deducted monthly under the applicable income tax slabs. India's new tax regime is now the default; employees can opt for the old regime by declaring it. Under the new regime, slabs rise progressively to 30%, a section 87A rebate applies for lower incomes, and a 4% health and education cess applies on top of income tax. Collect investment declarations at the start of the financial year and revised declarations before February.
Form 24Q is filed quarterly. Form 16 must be issued to every employee from whose salary TDS was deducted. In logistics, some field staff earn below taxable limits and attract zero TDS — they still need Form 16 Part A showing nil deduction if they request it, and many do when applying for loans or rental housing.
For gig or platform-based delivery workers engaged as service providers rather than employees, TDS under a different section applies to service payments above the threshold. This is a separate obligation from payroll TDS and needs its own tracking.
Gratuity and end-of-service calculations
Gratuity is payable to any employee who completes five continuous years of service. In logistics, the practical complication is defining "continuous service" for workers who may have had gaps, transfers between depots, or periods on contract before being absorbed on rolls. Courts have generally taken a liberal view of continuity — when in doubt, calculate gratuity rather than withhold it.
For drivers and warehouse staff, the gratuity formula uses last drawn wages including basic and dearness allowance. Given the revised definition of wages under the Labour Codes, verify that your gratuity calculation base is consistent with what you are reporting as wages for PF purposes. An inconsistency here is a red flag in audits.
Keep a gratuity provision in your books from the date each employee completes one year. Waiting until the five-year mark to recognise the liability is bad accounting practice and can create cash-flow pressure at the point of separation.
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