Glossary
The Vocabulary, Without the Jargon
Terms from both sides of the arrangement — the UK costs you are comparing against, and the Indian employment machinery you will hear us mention. Here is what each one actually means.
- Employer of Record (EOR)
- A company already established in India that becomes the legal employer of your hire — holding the contract, running payroll, making statutory contributions and filing with the Indian authorities — while you direct their day-to-day work. It is what lets a UK business employ someone in India without setting up an Indian company.
- Legal entity
- A registered company in India, which is what would otherwise let you put someone on local payroll there. Setting one up means incorporation, a local director, tax registrations and a bank account — months of work and ongoing filing obligations, to employ one or two people.
- EPF (Employees’ Provident Fund)
- India’s statutory retirement savings scheme. Both employer and employee contribute a percentage of basic salary, and it applies once an employee’s basic pay meets the threshold. It is the rough Indian equivalent of an auto-enrolment pension, and it is part of the employment cost on your invoice.
- ESI (Employees’ State Insurance)
- India’s state medical and sickness insurance scheme, mandatory for employees earning below a set monthly wage. Above that threshold employers typically provide private medical cover instead — which is what most professional hires through an EOR will have.
- Gratuity
- A statutory lump sum payable to an Indian employee who has completed five years of continuous service, calculated from their final salary and length of service. A properly run EOR accrues for it from the start rather than presenting it as a surprise years later.
- TDS (Tax Deducted at Source)
- Indian income tax withheld from an employee’s pay by the employer each month and remitted to the tax authorities — the same principle as PAYE in the UK. Your hire’s payslip shows it; you never handle it.
- Employer National Insurance
- What a UK employer pays on top of an employee’s salary, charged at 15% on earnings above the £5,000 secondary threshold for the 2025/26 tax year. It is the largest of the hidden costs the calculator adds to the UK side of the comparison.
- Auto-enrolment (workplace pension)
- The UK requirement to enrol eligible staff into a workplace pension and contribute a minimum of 3% of their qualifying earnings — the band between £6,240 and £50,270, not the whole salary. There is no UK pension obligation for a hire employed in India.
- Employment Allowance
- A UK relief that lets eligible employers reduce their total annual employer National Insurance bill by up to £10,500. It applies across your whole payroll rather than to any single hire, which is why the calculator leaves it out of a per-role comparison.
- Fully loaded cost
- Salary plus every employer-side cost that comes with it, added into one monthly or annual number. It is the only figure worth comparing between a UK hire and an India hire, or between two providers.
- Misclassification
- Treating someone as a self-employed contractor when the working relationship is really employment. It is the risk you take by paying an overseas freelancer full-time hours indefinitely, and it is precisely what an EOR arrangement removes.
- Permanent establishment (PE)
- A tax concept: whether your activity in another country is substantial enough that you have created a taxable presence there. Standard back-office hires do not usually create one, but a person concluding contracts on your behalf can. Worth raising with your own tax adviser if the role is commercial rather than administrative.
- Data controller
- Under UK GDPR, the party that decides how and why personal data is processed — which remains you, not the EOR, when your India-based hire handles customer data. You are responsible for having appropriate safeguards in place for that transfer.
- Notice period
- The warning either side must give before ending employment. Indian notice periods are set by the employment contract and local law, and are commonly one to three months for professional roles — worth knowing both when someone joins you and when they leave.
- IST (Indian Standard Time)
- UTC+5:30. That puts India 4.5 hours ahead of the UK during British Summer Time and 5.5 hours ahead in winter, so a normal Indian working day already overlaps most of a UK one.
- Overlap hours
- The part of the working day your India-based hire shares with your UK team. You specify it before recruitment starts and we hire against it — it is a term of the job, not something to negotiate afterwards.