People ops for Indian scale-ups
Reviewed by Mellow Editorial Team, HR & payroll content team
Running people operations well in a high-growth Indian company comes down to one thing: building processes that can absorb headcount growth without breaking. The core challenge is not hiring — it is making sure compliance, payroll and employee experience scale at the same pace as the team.
Get your statutory compliance foundation right early
Every Indian employer, regardless of size, has mandatory obligations that do not wait for you to feel ready.
Provident Fund (EPF) requires both employee and employer to contribute 12% of basic wages each month. Once you cross the EPF registration threshold, there is no opt-out. ESI covers employees below the applicable wage ceiling and adds another layer of monthly contribution and filing.
From 2025, India's four consolidated Labour Codes — on Wages, Industrial Relations, Social Security, and Occupational Safety — are in force. They change how you define wages, calculate gratuity, and structure working-hours policy. If you wrote your employment contracts or HR policies before the Codes came into effect, review them now. Definitions that seemed standard may no longer match the statutory language.
Gratuity becomes payable after five years of continuous service. That feels distant when your company is two years old and your team is ten people. By the time it matters, the liability can be significant. Build a basic gratuity provision into your finance model from day one.
Build a payroll process that produces clean audit trails
Payroll in India is not just a payment run. It generates tax deductions, statutory filings and documents that employees and regulators rely on for years.
TDS (tax deducted at source) must be deducted from salaries each month based on each employee's projected annual income and their declared investments. Under the new income tax regime, slabs rise to 30% at higher income levels, with a section 87A rebate available for lower incomes and a 4% health and education cess applied on top. Employees who have not submitted investment declarations default to the new regime; that affects their net take-home, and they will come to HR when they notice.
Every quarter, you file Form 24Q with the income tax department. At year end, you issue Form 16 to every employee — this is their primary document for filing their personal tax return. Delays or errors in Form 16 create real problems for employees and expose the company to interest and penalties.
The practical advice: do not run payroll on a spreadsheet beyond 15–20 employees. The combination of variable pay, arrears, mid-month joiners, investment declarations and statutory deductions becomes too complex to manage accurately by hand. The cost of a payroll error — re-filing, penalties, employee trust — is higher than the cost of proper tooling.
Design compensation structures that hold up under scrutiny
How you split a salary into components matters more in India than in most markets. The ratio of basic to gross affects EPF contributions, gratuity calculations, HRA exemptions and take-home pay simultaneously. A high basic looks good on paper but raises employer EPF cost and long-term gratuity liability. A very low basic depresses statutory benefits and can create legal exposure under the Labour Codes, which now set minimum wage compliance by reference to a defined wage concept.
When you hire senior employees, agree on cost-to-company (CTC) clearly and document what is included — employer PF, gratuity provision, variable pay and any benefits. Candidates often have different assumptions. A well-structured offer letter removes ambiguity before it becomes a dispute.
For ESOPs, ensure your scheme is documented under the Companies Act and that employees understand the tax treatment at exercise. This is an area where HR, legal and finance need to stay aligned.
Invest in people ops infrastructure before you think you need it
Scale-ups tend to hire their first dedicated HR person when the pain is already acute — typically somewhere between 30 and 60 employees, when founder-led hiring and ad hoc processes have started to visibly fail.
The smarter move is to put lightweight infrastructure in place at 15–20 people: a basic HRIS, documented onboarding and offboarding checklists, a leave policy that matches your statutory obligations, and a consistent offer letter template. None of this is expensive. All of it becomes much harder to retrofit once the team is large and habits are set.
Performance management at scale is a separate challenge. Appraisal cycles tied to compensation reviews generate significant HR workload if they are not systematised. Build a simple, repeatable process early — even if the process itself evolves as the company matures.
Manage distributed and contract hiring carefully
Many Indian scale-ups have team members in multiple states, remote contractors alongside full-time employees, and sometimes international hires on Indian contracts. Each variation adds compliance complexity.
State-specific professional tax applies in most major states and varies by location. Labour welfare fund contributions differ by state. If you engage contractors, the distinction between a genuine independent contractor and a de facto employee matters — misclassification carries risk under the Labour Codes and can affect EPF and ESI liability. Document the nature of each engagement clearly and review it periodically as the work relationship evolves.
For companies hiring across borders — Indian employees working for a foreign entity, or foreign employees on Indian payroll — how Mellow runs payroll across six countries on one platform explains the practical options available.
---
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)