Question 1

Is third-party payroll legal in India?

Accepted Answer

Yes, third-party payroll is legal in India when contracts, labour laws, & statutory compliances are properly followed by employers nationwide.

Question 2

Who is responsible for PF & ESI in third-party payroll?

Accepted Answer

In third-party payroll, PF & ESI compliance is executed by the vendor, but legal responsibility ultimately remains with the employer organization.

Question 3

Is third-party payroll cheaper than company payroll?

Accepted Answer

Third-party payroll is usually cheaper than company payroll due to lower fixed costs, reduced compliance risk, and operational efficiencies overall.

Question 4

Can third-party payroll employees become permanent?

Accepted Answer

Yes, third-party payroll employees can become permanent when business needs stabilize, and companies choose to absorb them into their own roles internally.

Question 5

Which payroll model is better for startups?

Accepted Answer

Startups benefit most from third-party payroll due to scalability, compliance support, lower costs, faster hiring, and minimal HR overhead requirements.

Question 6

What is the difference between payroll and a payslip?

Accepted Answer

Payroll is the process of paying the salary to each employee, whereas a payslip is a document that tells you how much salary the employee received, the month of salary disbursal, and the designation and other employee information.

Question 7

What is the difference between payroll and compensation?

Accepted Answer

Payroll is the process of depositing salary in employee accounts, and compensation is a specific component of the salary that describes the benefits or allowances the employee is eligible for.

Question 8

What is the difference between payroll and salary?

Accepted Answer

Payroll is the process of depositing the salary into the accounts of the employees, and salary is the amount received in each account once the payroll process is complete.

Question 9

What is the difference between payroll tax and income tax?

Accepted Answer

Payroll tax includes taxes like social security tax, medical care tax, and unemployment tax, etc., which are paid by the employer. Income tax is levied on the income of the individual and is divided into separate slabs, with each having a particular deduction.

Question 10

What does an on-roll job mean?

Accepted Answer

An on-roll job refers to a position where the employee is hired directly by the company and is on the company’s payroll. These employees receive regular salaries, benefits, and are subject to the company’s employment policies and regulations.

Question 11

What is the difference between payroll, on-roll, and off-roll?

Accepted Answer

Payroll is of two types, on-roll and off-roll. In on-roll, you work directly for the company as an employee and are paid directly by the company itself. You also have employee benefits since you are a permanent hire.

Under off-roll payroll, you are working on the third-party company’s payroll and will be paid by them. You are also in a temporary or contract-based role with the client company and are not offered any of the benefits due to full-time hires.

Difference Between Company Payroll and Third-party Payroll

Difference Between Company Payroll and Third-party Payroll

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