HR and payroll for transport and logistics in India
Reviewed by Mellow Editorial Team, HR & payroll content team
Running payroll and HR for a transport and logistics business in India is more complex than for a typical office employer. Your workforce spans drivers, loaders, warehouse staff and office employees — each with different wage rules, shift patterns and statutory obligations.
The workforce is rarely simple
Most logistics operations mix multiple worker categories: permanent employees on the rolls, fixed-term contract workers, piece-rate or trip-rate drivers, and third-party agency staff. Each category carries different statutory treatment.
Permanent employees attract the full range of obligations — EPF (12% employee contribution, 12% employer contribution), ESI where applicable, gratuity after five years of continuous service, and TDS deductions reported on Form 16 with quarterly filings on Form 24Q.
Contract workers sourced through a contractor or staffing agency are the contractor's responsibility in the first instance, but under the Contract Labour (Regulation and Abolition) Act — which is being consolidated into the Labour Codes — principal employers can be held liable if the contractor defaults on wages or statutory contributions. Keep written agreements that specify who files and pays what.
Piece-rate and trip-rate drivers present a different problem: their variable pay makes it hard to define a consistent "wage" for EPF and ESI calculation purposes. The Supreme Court has consistently held that most regular allowances must be included in the wage base. Take legal advice before structuring pay to exclude components.
Wage compliance across states
India has a central minimum wage framework, but states notify their own scheduled rates for different categories of employment. Transport and logistics typically falls under one or more scheduled employments — road transport, loading and unloading, warehousing — and the applicable rate varies by state, skill level and sometimes zone (urban, semi-urban, rural).
If you operate depots or warehouses in multiple states, you need the notified minimum wage for each location for each worker category. This is not optional: underpaying minimum wages is a criminal offence, and labour inspections in logistics are common.
The four consolidated Labour Codes — the Wages Code, Industrial Relations Code, Social Security Code and Occupational Safety Code — are in force from 2025. The Wages Code introduces a single definition of "floor wage" that sets a national minimum below which no state can go, but state-level rates above this floor remain in effect. Review your pay structures against both.
Working hours, overtime and rest rules
The Motor Transport Workers Act governs working conditions for road transport workers specifically. Key points:
- Drivers and other transport workers are entitled to rest intervals, weekly rest and limits on daily working hours.
- Overtime attracts a premium rate. The exact multiple depends on the applicable state rules and the Wages Code.
- Night-shift logistics operations must account for rest period requirements — running a 24/7 warehouse or hub without structured shift rotation creates compliance exposure.
Document actual hours worked. In practice, many logistics businesses operate informally on this front, which creates liability when disputes arise. A basic digital attendance system — even a simple app-based punch-in — gives you defensible records.
EPF, ESI and the multi-location registration problem
EPF registration is per establishment, not per company. If you run depots in Chennai, Pune and Guwahati, each is a separate establishment for EPFO purposes and needs its own code. The same principle applies to ESI. Managing contributions, returns and inspections across multiple codes in multiple regions is administratively heavy.
Assign clear ownership of each registration — whether in-house or through a compliance vendor — and set up a calendar for due dates. Missed EPF or ESI payments attract interest and penalties that compound quickly.
For ESI specifically, the wage threshold determines coverage. Employees below the threshold must be enrolled; those above fall outside the scheme. In logistics, where basic wages vary widely between categories, audit your rolls periodically to confirm correct classification — particularly when you revise wages and someone crosses the threshold.
Gratuity and high attrition
Logistics has one of the higher attrition rates of any Indian sector. Most employers focus on gratuity only when someone actually leaves after five years, but the liability accrues from day one. If you have a large permanent workforce, consider whether to fund the gratuity liability through a group gratuity scheme with an insurer. It smooths the cash-flow impact and demonstrates compliance maturity to auditors and investors.
For workers who leave before five years, no gratuity is payable under the current law — but document separation dates carefully. Disputes about continuous service periods (counting breaks, contract renewals, transfers between depots) are common in this sector.
Payroll structure for variable pay
A driver's gross pay might include a fixed basic, a conveyance allowance, a per-trip incentive, and a night-halt allowance. Getting the wage definition right matters because EPF and ESI contributions, gratuity calculations and minimum wage comparisons all rest on it.
The Wages Code's definition of "wages" is broader than many employers assume: most regular payments count unless they fall into specific exclusions. Structure pay transparently, document the basis for any exclusion you apply, and reconcile your gross pay components against the statutory wage definition at least once a year — especially after any pay revision. For businesses managing this across states and categories, a payroll platform that handles multi-country and multi-state compliance is worth evaluating once your headcount justifies it.
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