Service · Contractor conversion
Convert your India contractors into compliant employees.
Many funded startups start by paying their India engineers as independent contractors. It's fast, but it carries real risk: misclassification, unclear IP ownership, no statutory benefits, and permanent-establishment exposure that surfaces in investor diligence. TWF Labs converts your existing India contractors into fully compliant employees through an Employer of Record — usually in days, with no entity of your own and no disruption to the engineer.
Why this matters now
Indian classification doesn't turn on the contract label — it turns on the substance of the relationship. A full-time, exclusive, embedded engineer is an employee in substance regardless of what the agreement says. That gap is invisible right up until someone has a reason to look.
- Investor & acquirer diligence.Misclassified contractors doing core engineering are a standard red flag in funding and M&A diligence — they surface as unquantified back-pay exposure and unclear IP ownership, exactly when you have the least leverage to fix them quickly.
- IP ownership.Under India's Copyright Act, contractor work does not automatically vest in the company without a valid written assignment. Employment plus a proper assignment closes the gap.
- Substance-over-form reassessment. A full-time, exclusive, embedded engineer can later be recharacterized as an employee — bringing backdated PF, ESI, and gratuity, plus TDS recharacterization.
- No statutory benefits. Contractors get no PF, gratuity, or insurance — which can make it harder to retain senior engineers who expect a real employment package.
We're not going to tell you the tax authorities are about to knock — there's no public record of a no-entity foreign company being penalized for this. The real trigger is diligence. Fix it before then and it's a footnote; fix it after and it's a negotiation.
How it works
How conversion works.
- Step 01Day 0–2
Review
We review your current setup and agreements — scope, exclusivity, tenure, and any existing IP assignment — and flag which engagements genuinely should convert.
- Step 02Day 2–4
Compliant contract
We issue a compliant employment contract via our EOR partner, with CTC structured under the 50% rule (basic + DA ≥ 50% of CTC) and full IP assignment to your company.
- Step 03Day 3–5
Onboard
Payroll, PF/ESI, gratuity, and benefits are set up — with no break in work for the engineer.
- Step 04Ongoing
Ongoing compliance
Monthly payroll, statutory filings, and HR — run end to end as our Compliance & retention service.
What changes for your engineer
- A compliant salary plus statutory benefits — PF, gratuity, and the rest.
- The same role, same team, same work — nothing disrupts.
- Better retention: senior engineers stay where the employment is real and the benefits are real.
| Contractor today | Employee via TWF EOR | |
|---|---|---|
| IP ownership | Often unclear | Assigned to you |
| Statutory benefits | None | Full |
| Misclassification risk | High | Handled |
| Permanent-establishment risk | Possible | Structured |
| Diligence | Red flag | Clean |
Why do this before your next raise
Investors check how your India team is engaged. Clean employment with explicit IP assignment removes a diligence question before it is asked — fix it now and it's a footnote; fix it during a round and it's a negotiation. It also sits naturally alongside EOR employment and our Compliance & retention service. New to all this? See how it works.
Timeline & cost
Most conversions are live within days once agreements are reviewed. Employment then runs on EOR at $129/engineer/month, all-in, on top of salary and statutory employer costs. Conversion handling is included— there's no separate conversion fee; you simply move onto EOR.
Be ready for the real number: converting typically raises gross cost by 15–45% once employer PF, gratuity, and benefits are added. That increase isn't a TWF fee — it's the cost of the work actually belonging to you, properly and defensibly.
Prices are in USD. Services to overseas clients are generally treated as zero-rated exports under Indian GST, so no GST is added where the export conditions are met. Any taxes that do apply will be shown on the invoice as required by law. We'll confirm the treatment for your engagement in writing.
When you should NOT convert
Conversion isn't for everyone. A genuine contractor — multiple clients, milestone or output billing, their own tools, real control over how the work is done — should stay a contractor. Converting them would be the wrong call. This is for the full-time, exclusive, embedded engineer who looks like an employee in everything but the paperwork.
FAQ
Common questions, direct answers.
Is it legal to convert a contractor to an employee in India?
Yes; it is a standard, compliant step, and often the lower-risk structure for long-term full-time work.
Will my engineer lose income or benefits?
No — we structure the offer so take-home is protected and statutory benefits are added.
Do I need an Indian entity?
No. Employment runs through our EOR partner, so you don't register a company.
How long does it take?
Usually a matter of days once agreements are reviewed.
Who owns the IP after conversion?
Your company — IP assignment is explicit in the employment contract.
What does it cost?
Employment is $129 per engineer per month, all-in. Conversion handling is included — there's no separate conversion fee; you simply move onto EOR.
What about IP already created as a contractor?
We flag the gap, put a proper go-forward IP assignment in place as part of employment, and coordinate remediation of previously created work with your counsel.
Convert your India contractors before diligence does it for you.
A free 20-minute review. We'll tell you which engagements should convert — and which shouldn't.