Quick answer: An EOR security deposit is money you pay an employer of record before your team starts, held as protection if an invoice goes unpaid. Because the EOR is the legal employer, it must pay salary, PF and final dues under Indian law even when you pay late. Deposits are commonly sized at one to two months of employment cost.
- The EOR, not you, owes monthly wages before the 7th of the following month under the Code on Wages.
- On exit, final wages are due within two working days under s.17(2), whether or not you have paid.
- EPF and ESIC deposits are due by the 15th of the following month, with interest and damages on delay.
- A deposit is not consideration for GST until the supplier applies it against an invoice.
Why do EOR providers ask for a security deposit?
Legal risk. Your EOR signs the employment contract, so unpaid wages are its liability.
Suppose your invoice is late and an employee resigns that month. The EOR must still fund the full and final settlement within two working days. A deposit covers that gap.
It also protects against sudden exits. A client that stops paying without notice can leave the EOR with salary, notice pay, leave encashment and gratuity to fund.
How is an EOR deposit usually sized?
Against monthly employment cost, not against the fee. One month is common, two where the client is new or headcount grows fast.
Let’s say you hire five people with a total employment cost of ₹1,20,000 each a month.
| Deposit basis | Amount |
|---|---|
| One month of employment cost | ₹6,00,000 |
| Two months of employment cost | ₹12,00,000 |
| Fee-only deposit (rare) | A few hundred US dollars |
Ask how the deposit changes as you add or remove people. Some providers top it up with each hire. Others review it quarterly. Our guide to employer of record cost covers the rest.
Is GST charged on an EOR security deposit?
Not when you pay it. The proviso to s.2(31) of the CGST Act says a deposit is not payment for a supply until the supplier applies it as consideration. You can read the text in this Gujarat advance ruling on the GST Council site.
So if the EOR later uses the deposit to settle an unpaid invoice, GST applies to that invoice in the normal way.
How do you get an EOR deposit back?
Through the master services agreement. It should say when the deposit is refunded, what can be deducted and whether interest is paid. Get the refund date in writing.
The usual trigger is the final invoice after the last employee exits and all statutory dues are cleared. That matters most when you switch EOR provider, because the old deposit and the new one can overlap for a month or two.
How does Remunance handle deposits and invoices?
Remunance prices on a flat fee from USD 99 per employee per month. Salary and statutory costs pass through at cost, so your invoice shows exactly what any deposit protects. We answer client queries within 2 working days, including billing questions. Over 150 international clients from 22 countries trust us with payroll. To see the deposit and invoice terms for your team before you sign, request our commercial terms.
What else do people ask about EOR deposits?
Is an EOR security deposit refundable?
Usually, yes. In full, once the contract ends and all dues are settled.
Can an EOR use the deposit to pay salaries?
Yes. If an invoice is unpaid and the contract allows it, the EOR draws on the deposit to meet payroll, then asks you to restore it before the next cycle.
Do all EOR providers charge a security deposit?
No. Some waive it. Others bill a month in advance instead.