Dear Seniors,
We have a system of renewing all employee's contracts each year. Usually i have them sign on one contract and share a xerox of it with them for staff's personal records. But some say that its not legal or a good hr practice to not share original contract copy with staff!
Can some seniors advise me if that's the case? Is against HR practices or labor laws to not give original contract to staff? I can make two original ones and share one with staff but my question is what is the correct practice to do?
Pls advise!
Regards,
Vineeta
From India, Delhi
17We have a system of renewing all employee's contracts each year. Usually i have them sign on one contract and share a xerox of it with them for staff's personal records. But some say that its not legal or a good hr practice to not share original contract copy with staff!
Can some seniors advise me if that's the case? Is against HR practices or labor laws to not give original contract to staff? I can make two original ones and share one with staff but my question is what is the correct practice to do?
Pls advise!
Regards,
Vineeta
From India, Delhi
Dear Vineeta,
I find a procedural or even legal lacuna in your current practice.
If you have employees on board then you need to issue them the Appointment letter. In contrast the contract agreements are made with the external parties like service providers, consultants, advisers etc.
What is this practice of making contracts with the employees? Because of the renewal of contract, you are increasing your administrative work. But then is this arrangement done to evade PF/ESI and PT? These type of practices are fine to certain extent but beyond a point do not work. By chance if Labour Officer visits your company, how will you justify the huge number of contracts?
What is the nature of your industry? I feel that you are covered under Shops and Establishment Act. Under the provisions of this act, it is mandatory to issue the appointment order. If your management is not aware of the legal provisions then you need to apprise them accordingly.
Thanks,
Dinesh Divekar
From India, Bangalore
I find a procedural or even legal lacuna in your current practice.
If you have employees on board then you need to issue them the Appointment letter. In contrast the contract agreements are made with the external parties like service providers, consultants, advisers etc.
What is this practice of making contracts with the employees? Because of the renewal of contract, you are increasing your administrative work. But then is this arrangement done to evade PF/ESI and PT? These type of practices are fine to certain extent but beyond a point do not work. By chance if Labour Officer visits your company, how will you justify the huge number of contracts?
What is the nature of your industry? I feel that you are covered under Shops and Establishment Act. Under the provisions of this act, it is mandatory to issue the appointment order. If your management is not aware of the legal provisions then you need to apprise them accordingly.
Thanks,
Dinesh Divekar
From India, Bangalore
@dinesh divekar
Dont worry about that. We are an american liasion office registered by RBI. And under its directive we are supposed to keep employees under a renewable contract (which automatically renews each year) Such arrangements are common with NGOs, so dont worry, we aren't doing anything illegal.
From India, Delhi
Dont worry about that. We are an american liasion office registered by RBI. And under its directive we are supposed to keep employees under a renewable contract (which automatically renews each year) Such arrangements are common with NGOs, so dont worry, we aren't doing anything illegal.
From India, Delhi
Dear Vineeta,
It is not a question of my worrying. Neither I said that you are doing anything illegal. My reply was based on the information that you had provided. Most of the members who raise queries are from commercial organisations and not an NGO. Since you used the word "employees", naturally one can interpret that either you are covered under Shops and Establishment Act or Factories Act.
Government of Delhi has declared "Schedule of Exempted Establishments Under Shops and Estts Act 1954. Click the following link to refer it:
Office Of The Labour Commissioner
Earlier, there was a query on charitable trusts. Senior member, Mr KA Korgaonkar has given long reply to the query. In the same thread, Mr Madhu TK has also given explanation. Click the following link to refer their replies:
https://www.citehr.com/461953-charit...on-labour.html
Your averment "we aren't doing anything illegal" sounds find on this forum, however, when Labour Officer (LO) visits, how the Directors of big institutions develop cold feet that I have seen. This is why I had raised the point of visit of LO. Rather than retaliating to me, you may visit offices of Department of Labour, PF and ESI and find out exemptions applicable to your NGO.
Thanks,
Dinesh Divekar
From India, Bangalore
It is not a question of my worrying. Neither I said that you are doing anything illegal. My reply was based on the information that you had provided. Most of the members who raise queries are from commercial organisations and not an NGO. Since you used the word "employees", naturally one can interpret that either you are covered under Shops and Establishment Act or Factories Act.
Government of Delhi has declared "Schedule of Exempted Establishments Under Shops and Estts Act 1954. Click the following link to refer it:
Office Of The Labour Commissioner
Earlier, there was a query on charitable trusts. Senior member, Mr KA Korgaonkar has given long reply to the query. In the same thread, Mr Madhu TK has also given explanation. Click the following link to refer their replies:
https://www.citehr.com/461953-charit...on-labour.html
Your averment "we aren't doing anything illegal" sounds find on this forum, however, when Labour Officer (LO) visits, how the Directors of big institutions develop cold feet that I have seen. This is why I had raised the point of visit of LO. Rather than retaliating to me, you may visit offices of Department of Labour, PF and ESI and find out exemptions applicable to your NGO.
Thanks,
Dinesh Divekar
From India, Bangalore
@Dinesh
We don't have any exemption. When did i say that?? We give PF, ESI, Gratuity, Personal Accident & Medical Insurance cover and whole lot of other statutory benefits to all our staff .I am not sure why you assumed we don't.
Nonetheless, thanks for your courtesy and response.
From India, Delhi
We don't have any exemption. When did i say that?? We give PF, ESI, Gratuity, Personal Accident & Medical Insurance cover and whole lot of other statutory benefits to all our staff .I am not sure why you assumed we don't.
Nonetheless, thanks for your courtesy and response.
From India, Delhi
Dear Vineeta,
If you are covered under Shops and Establishment Act, then you are bound to issue Appointment Letter to the employees. This appointment letter itself acts as contract between employer and employee under the provisions of Indian Contract Act, 1872. It is mandatory to provide original copy to the employee.
In fact Karnataka Shops and Establishment Rules, 1963 have specific form called Form 10. It is called as Appointment Order. It is mandatory to issue this form to the employees. You may find out whether you have equivalent form under the provisions Shops and Establishment Act of the state that you belong to.
Appointment letter can be issued for Fixed Term Employment (FTE). On completion of the fixed term, you may issue new appointment letter or renew the previous one. However, for renewal, you need to mention explicitly modus operandi of the renewal.
Labour Officers are permitted to inspect issue of appointment letters to the employees.
Thanks,
Dinesh Divekar
From India, Bangalore
If you are covered under Shops and Establishment Act, then you are bound to issue Appointment Letter to the employees. This appointment letter itself acts as contract between employer and employee under the provisions of Indian Contract Act, 1872. It is mandatory to provide original copy to the employee.
In fact Karnataka Shops and Establishment Rules, 1963 have specific form called Form 10. It is called as Appointment Order. It is mandatory to issue this form to the employees. You may find out whether you have equivalent form under the provisions Shops and Establishment Act of the state that you belong to.
Appointment letter can be issued for Fixed Term Employment (FTE). On completion of the fixed term, you may issue new appointment letter or renew the previous one. However, for renewal, you need to mention explicitly modus operandi of the renewal.
Labour Officers are permitted to inspect issue of appointment letters to the employees.
Thanks,
Dinesh Divekar
From India, Bangalore
Dear Vineeta,
In your query it is not cleared why you issue (renew) letters (contract) each year. If they are your permanent employees and you are providing all benefits to them than rather than renewing their contract every year, you should issue them proper Appointment Letter which need not to renew. You can add notice period clause which will be applicable to both parties.
Now come to your point of issuing Xerox copy to the staff. Legally you should print two copies of the letter. Original need to be issued to the individual, the employee will acknowledged the other copy. The acknowledged copy should be in your record as token of acceptance.
The points raised by Mr Dinesh also considerable keeping in view the legal aspects. He is in opinion (may be) you are issuing contract agreement to avoid PF, ESI, PT and other statutory benefits (Most company do such things, in order to avoid statutory cost they issue Contract Agreement for one year and do not cover the person/s under statutory obligations. Such things can be notified and objected not by the LO, but the PF-ESI Inspector can also.
Mr Dinesh always provide legal, technical & logical advice to guidance seeker, so pls don’t prolong the issue any more.
Hope this will solve your query. fellow members can correct me (if needed).
From India, Delhi
In your query it is not cleared why you issue (renew) letters (contract) each year. If they are your permanent employees and you are providing all benefits to them than rather than renewing their contract every year, you should issue them proper Appointment Letter which need not to renew. You can add notice period clause which will be applicable to both parties.
Now come to your point of issuing Xerox copy to the staff. Legally you should print two copies of the letter. Original need to be issued to the individual, the employee will acknowledged the other copy. The acknowledged copy should be in your record as token of acceptance.
The points raised by Mr Dinesh also considerable keeping in view the legal aspects. He is in opinion (may be) you are issuing contract agreement to avoid PF, ESI, PT and other statutory benefits (Most company do such things, in order to avoid statutory cost they issue Contract Agreement for one year and do not cover the person/s under statutory obligations. Such things can be notified and objected not by the LO, but the PF-ESI Inspector can also.
Mr Dinesh always provide legal, technical & logical advice to guidance seeker, so pls don’t prolong the issue any more.
Hope this will solve your query. fellow members can correct me (if needed).
From India, Delhi
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