The Startup Founder's India Compliance Checklist

Making your first India hire is exciting. The compliance checklist that goes with it is less so — but missing items here creates legal liability that surfaces months or years later, often at the worst possible time. This checklist covers the eighteen things that matter most, organised by when they need to happen.

Before Day One

1. Compliant offer letter. Must include role, salary, notice period, working location, leave entitlements, and applicable Shops & Establishments Act reference. Indian courts have overturned employment terms not clearly stated in the offer letter.
2. IP assignment clause. Explicitly assign all work product, inventions, and IP created during employment to the company. Must be in the offer letter or a separately signed agreement — verbal understanding is not sufficient.
3. Confidentiality and NDA. Non-disclosure obligations should be in the offer letter. Note: non-compete clauses are generally unenforceable in India post-employment.
4. Background verification. Employment history, education, and criminal check. Minimum 3–5 working days; plan for 10 days if you need reference checks.
5. PF registration with EPFO. Must be done before the employee's first salary cycle. If using an EOR, they handle this; if going direct, register immediately.
6. ESI registration (if applicable). For establishments with 10+ employees and applicable salary threshold. Required before first ESI-eligible employee starts.

First 30 Days

7. Shops & Establishments registration. Required within 30 days of commencing operations in a new state. Even work-from-home employees trigger this requirement.
8. Professional Tax registration (in applicable states). Required in Karnataka, Maharashtra, West Bengal, Telangana, Tamil Nadu, and others.
9. Form 16 issuance process setup. TDS on salary must be deducted from month one and remitted monthly. Annual Form 16 issued by June 15 for the preceding financial year.
10. Gratuity provisioning. Begin accruing gratuity liability from month one. Some companies purchase a group gratuity insurance policy (LIC or private insurer) to fund this obligation.
11. Appointment letter issuance. Distinct from the offer letter — this is the formal employment contract issued after the employee starts. Must include all statutory references.
12. Employee handbook / HR policy shared. Covers leave policy, working hours, disciplinary procedure, grievance mechanism, code of conduct.

When You Reach 10 Employees

13. POSH compliance. Prevention of Sexual Harassment Act applies at 10+ employees. Requires a written POSH policy, an Internal Complaints Committee (ICC), and annual training.
14. Standing Orders. Establishments with 100+ employees must certify Standing Orders under the Industrial Employment (Standing Orders) Act, 1946 — or under applicable state rules.
15. Maternity Benefit Act compliance. All establishments with 10+ employees must provide 26 weeks of paid maternity leave and a crèche facility (for 50+ employees).

Ongoing Compliance

16. Annual statutory returns. PF, ESI, PT, LWF — each has annual or periodic returns that must be filed regardless of whether any contribution was made in the period.
17. Labour compliance audit. Conduct an annual review of all statutory registrations, filings, and payroll deductions. Identify gaps before an inspection does.
18. Employee investment declarations (Form 12BB). Collect at the start of each financial year and verify against actual proofs in Q4. Affects TDS computation for the full year.