Zero-hours and casual work in India
Reviewed by Mellow Editorial Team, HR & payroll content team
Casual and zero-hours work in India does not fit neatly into a single legal box. Indian labour law recognises several categories of non-permanent workers, and how you classify and pay them has real compliance consequences.
What "zero-hours" and casual work actually mean in India
The term "zero-hours contract" is a UK concept with no direct equivalent in Indian statute. In India, the closest categories are:
Casual workers — engaged for work that is intermittent, occasional or not part of the regular workload. Most labour legislation treats them differently from permanent employees.
Contract workers — hired through a contractor or on fixed-term arrangements to do specific tasks. The Contract Labour (Regulation and Abolition) Act governs this, though it is being consolidated under the new Labour Codes.
Gig and platform workers — those who work through digital platforms (delivery, ride-hailing, freelance services). This is a fast-growing and legally evolving category.
If someone works variable hours with no guaranteed minimum, they will likely fall into one of these categories in practice. The label you give the arrangement matters less than the actual working pattern and the level of control your business exercises over the person.
The Labour Codes and what changes in 2025
India's four consolidated Labour Codes — on Wages, Industrial Relations, Social Security, and Occupational Safety — are in force from 2025. They simplify and unify dozens of older Acts.
A few points relevant to casual and variable-hour workers:
- The Code on Wages applies to all workers, including casual and contractual workers. Minimum wage obligations do not disappear because someone works irregular hours.
- The Code on Social Security extends certain protections toward gig and platform workers for the first time, though the implementing rules continue to develop state by state.
- The Industrial Relations Code introduces fixed-term employment as a standard, recognised category. A fixed-term employee is entitled to all statutory benefits on a pro-rata basis, including gratuity if their contract runs long enough to trigger the five-year threshold.
The Codes make it harder to justify withholding statutory entitlements on the basis that someone is "just casual".
Wages, tax and statutory deductions
Even for workers with no fixed hours, you must pay at least the applicable minimum wage for each hour or day worked. Minimum wages vary by state and sector.
On the deductions side:
- Income tax (TDS): if cumulative payments to a worker cross the taxable threshold in a financial year, you must deduct TDS at source. Workers with low or variable earnings may benefit from the section 87A rebate under the new regime, but that is their calculation to make when filing — your obligation is to deduct correctly and issue Form 16 where applicable, and to file Form 24Q quarterly.
- EPF: if a casual or contract worker is on your payroll and earns wages that bring them within the Employees' Provident Fund Act's coverage, both the employee's 12% and your 12% employer contribution apply. Whether a given casual worker is "on payroll" in the statutory sense depends on how regularly they work and how the engagement is structured.
- ESI: applies for employees whose wages fall below the notified threshold. Again, coverage turns on whether the person is legally an employee of your establishment.
The practical risk: if a casual worker is later determined to be a regular employee by a labour authority, you could face retrospective claims for EPF, ESI, gratuity and other dues.
Misclassification: the main risk to manage
Indian labour authorities and courts look at the substance of an arrangement, not its label. Factors they consider include how much control you have over the worker's time and method, whether the work is integral to your core business, and how long the arrangement has continued.
Someone who works for you every week for two years, follows your instructions and uses your equipment is unlikely to be treated as a casual worker regardless of what your agreement says. Misclassification exposure includes back-payment of statutory contributions, penalties and reputational risk in disputes.
If you use a genuine contractor relationship or engage workers through a licensed third party, maintain proper documentation: written agreements, invoices, clear scope of work.
Practical steps for employers
- Write it down. A written engagement letter stating the nature of work, basis of pay and the absence of guaranteed hours is basic hygiene. It does not insulate you from misclassification risk, but it establishes the intended terms.
- Track hours and payments carefully. Variable-hour workers require more detailed records, not fewer, since you need to demonstrate minimum wage compliance for every period worked.
- Review state-level rules. Labour is a concurrent subject in India. State governments set minimum wages and may have their own rules on casual and contract work. What applies in Maharashtra may differ from Karnataka or Tamil Nadu.
- Revisit long-running arrangements. If a casual engagement has been running for months or years, it is worth reviewing whether the person now meets the threshold for regular employee status under the applicable law.
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