Off-Roll Employee: Meaning, Rights & On-Roll Gap
Updated 4 min read
Definition
An off-roll employee is someone who works for a business but is paid by a contractor or agency, not on the company’s own payroll.
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What Is an Off-Roll Employee?
Plenty of people on an Indian shop floor are not on that company’s payroll at all.
An off-roll employee is someone who works for a business but is paid by a contractor or agency, not on the company’s own payroll. In India, the Code on Social Security, 2020 still counts them as an employee. It covers anyone employed directly or through a contractor.
Off-roll describes who pays. It does not describe who has rights.
What Off-Roll Staff Still Get
Section 2(26) of the Code on Social Security covers a person employed “either directly or through a contractor”. That phrase carries most of what follows. It reaches provident fund (PF), employees’ state insurance (ESI) and gratuity alike.
| Benefit | How it applies |
|---|---|
| PF | Due for staff hired through a contractor |
| ESI | The employer pays both shares, then recovers |
| Gratuity | Fixed-term staff qualify after one year |
| Pay parity | No less than a permanent colleague on the same work |
Three branches decide what a person gets:
- Agency staff are covered. The definition itself brings them in, so provident fund money is due on their wages. Section 17(1) then lets the employer recover it from the contractor.
- Fixed-term staff are not agency staff. They are hired direct, on a written contract for a set period. The Industrial Relations Code, 2020 gives them the same wages and benefits as a permanent colleague doing the same work. Gratuity comes after one year, not five.
- A consultant may sit outside. A genuine consultant is not an employee at all. Test the arrangement, not the label on the invoice.
On-Roll vs Off-Roll Employee
The two words describe a payment route. Most people hear a difference in rights.
| Aspect | On-roll | Off-roll |
|---|---|---|
| Pays | The company | A contractor |
| Records | Company payroll | Contractor payroll |
| PF, ESI | Company remits | Company pays, recovers |
| Status | Employee | Still an employee |
Ask who the payslip comes from, then ask who the law looks to. The two answers are often different. Someone can be off-roll and still be an employee of the establishment, because the label sorts the paperwork rather than the duty.
Off-Roll Employee Example
A cold storage warehouse near Hyderabad (an example) runs 62 people in October 2026. Forty sit on its own payroll. Twenty-two come from a manpower agency.
| Group | Paid by | Employer’s duty |
|---|---|---|
| On-roll 40 | Warehouse | Remit PF and ESI |
| Agency 22 | Agency | Warehouse pays, recovers |
Note: this is an invented example for illustration only. The business, headcounts and dates are made up.
An agency packer on ₹14,200 a month shows up on the agency’s payroll, not the warehouse’s. The duty does not move with the payslip.
If the agency misses a month, the warehouse is the one the inspector asks. A hospital in Chennai using housekeeping contractors sits in the same spot, and so does an office using a security agency.
Why the Risk Lands on You
This is the part that surprises owners. Section 17(1) lets the employer recover money from the contractor. That only works because the employer has paid it first.
So the money goes out from you, then comes back. Treating an agency invoice as the end of your duty is how a gap turns up during an inspection.
The safer habit is to ask for proof of deposit every month. A missed month is cheap to fix now and expensive to find later. Our new labour codes checklist covers the fixed-term and contract labour items.
Run On-Roll and Off-Roll in One Place
Knowing what each group is owed helps only if both groups sit in one place. Attendo (formerly Petpooja Payroll) is a complete workforce management system for every kind of business. Full-time staff, hourly contractors and daily-wage staff run as separate payroll groups inside one organisation, each finalised on its own.
Attendance is captured the same way for everyone, so agency staff are not a spreadsheet on the side. If you employ more than one kind of staff, you can see how Attendo works.