A startup hiring its first employees sits in an awkward compliance position. The statutory obligations are real, but the team handling HR is usually a founder or an early operations hire with no dedicated HR background. Offer letters, payslips, and PF filings are all required and all easy to get wrong without the right tools.
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Most founders expect compliance to kick in once the company is bigger. In practice, several obligations apply from the first hire. The employment relationship creates documentation requirements immediately, including a written record of terms, compensation structure, and the conditions under which the person can be separated.
Statutory obligations layer on as headcount grows. PF registration becomes mandatory at 20 employees in most states, ESI at 10. The Shops and Establishments Act registration, which governs working hours, leave, and other conditions, applies early in most states. The exact trigger varies by state, with some requiring registration from the first employee and others setting a headcount threshold.
The common mistake is treating compliance as something to address when the company is more stable. By then, there are undocumented offers, inconsistent salary structures, and employees who were never enrolled in PF when they should have been. Correcting those retrospectively takes significant time and, in some cases, involves penalties.
| Obligation | Threshold | Timeline |
|---|---|---|
| Shops & Establishments registration | Varies by state; some require from first employee, others set a threshold | Within 30 days of starting operations |
| PF registration | 20 employees (10 in some states) | Within 30 days of crossing threshold |
| ESI registration | 10 employees in most states | Within 15 days of crossing threshold |
| Professional tax | Varies by state | State-specific deadlines |
| TDS on salaries | Any salaried employee above exemption limit | Monthly deduction and quarterly filing |
These are not optional. Each one creates the written record that governs the employment relationship and protects the company if a dispute arises later.
The written record of terms before the person joins. Should state the designation, CTC with component breakup, probation period and its conditions, notice period for both parties, and joining date. A vague or incomplete offer letter is the most common cause of salary disputes when the first payslip arrives.
Issued after the candidate accepts, this is the binding employment contract. It carries the full terms of employment and any specific clauses around confidentiality, non-solicitation, intellectual property, or transfer. Many startups conflate this with the offer letter; they are distinct documents with different legal weight.
Aadhaar for identity verification and PF UAN seeding, PAN for TDS deductions, bank account details for salary disbursement, and address proof. Nominee details are required for PF. Collecting and verifying these at joining prevents problems during PF transfers, gratuity disbursement, and background checks.
A payslip is required every month and must show the gross salary, each allowance and deduction, and the net amount paid. It is also the employee's record for tax filing and loan applications. Generating payslips from inconsistent spreadsheets creates errors that compound over time.
Issued at the end of the probation period. If not issued, the employee may be treated as having attained permanent status by default, which changes the applicable notice period and termination rights. A missed confirmation letter is a common and avoidable oversight in fast-moving teams.
The three obligations that most commonly catch startups off guard are PF, ESI, and the requirement to structure salaries correctly under the new Labour Codes.
PF is mandatory once you employ 20 or more people, or 10 in some states. The employer contributes 12 percent of basic wages and the employee contributes the same. Contributions must be deposited by the 15th of the following month. Late deposits attract interest and penalties that accumulate quickly if the company falls behind for several months.
ESI applies to employees earning up to Rs 21,000 per month in establishments with 10 or more employees. The employer contributes 3.25 percent of gross wages and the employee 0.75 percent. ESI registration must happen within 15 days of crossing the threshold.
The new Labour Codes, effective from late 2025 in states that have notified them, require that basic wages constitute at least 50 percent of total CTC. This affects how many startups have structured salaries, where a low basic with high allowances was common. Salaries structured with a low basic to reduce PF liability may now be non-compliant and require restructuring.
Built for teams where one person handles HR alongside everything else. No minimum headcount, no setup project, no HR expertise required to operate.
Enter the designation, CTC structure, probation terms, and joining date. The offer letter comes out formatted and correct. Pay ₹99 per letter or use the subscription. The first 50 documents are free when you sign up.
Monthly payslips generated from the salary structure and attendance data already in Offrd. No separate spreadsheet to maintain, no manual calculation of PF and ESI deductions each month.
New joiners submit their KYC documents through a structured onboarding flow. Aadhaar, PAN, bank details, and nominee information collected and stored against the employee record from day one.
Offrd surfaces when probation periods are ending so confirmation or extension letters get issued on time. A probationer continuing without a confirmation letter creates ambiguity that is expensive to resolve later.
Increment letters, separation letters, relieving letters, and experience letters all generated from the employee record. Consistent information across every document the employee receives.
Offrd works for a 5-person team on the same terms as a 150-person company. Pay-per-use means you pay for what you generate. Subscription at ₹50 per active employee per month when the volume justifies it.
Offer letters, payslips, onboarding, and compliance, from the same employee record. No minimum headcount.