Dear Team member , our company has retirement age of 60, now some of our employees are getting retire but management want to continue their service by hiring them as consultant.
kindly advice what are thing should be kept in mind and if possible pls provide me a format of offer letter which will have clause of consultant.
After the retirement the employees can be retained as consultant on retainer ship basis for a period of one year which can be extended from time to time. There has to be an agreement to that effect on a stamp paper. Such agreement contains several terms and conditions. I have a Model draft of this agreement but is not typed on computer. But I can mail it to you if you want as you are from Pune.
S.M. Paranjape, Advocate
Thanks for your kind suggestion regarding draft agreemt/offer letter to the consultants, and experience employees retaining in the same organisation a very good suggestion. Now the question is arises can we take them as a consultant? if we take them as a consultant will they attract ESI scheme or any other statutory obligations?
When they are consultants on retainer ship they are not entitled to benefits under ESI,PF Act or for that matter to the benefits of any labor legislation. It is however to be noted that such retainer ship contract can be put to judicial scrutiny and the court can lift the vail to see the truth. The court should not come to conclusion that the contract is sham and bogus. Therefore the terms of contract should be proper.
S.M. Paranjape, Advocate
The definition of Employee under section 2(9) of the ESI act 1948 reads Employee means any person employed for wages in or in conncetion with the work of a factory or an establishment to which act applies,
A consultant is one who gives professional advice. In the instant case the consultant is not entrusted with the work of rendering professional advice to the company.on the other hand it reveals the existance of master and servant relation ship and his reporting to particualr office to render full time service to the company. The designation of consultant does not reflect the nature of the services to be rendered by the person and the nomenclature given to the retainer ship fee. As such it is clear that the consultant engaged by the company on a retainer ship basis shall be straight away fall within the definition of employee under the ESI Act, as long as their retainer ship fee less than Rs. Ten thousand or less per month.
I have gone through the clause but still there is a doubt as till now i have not come across any of the case which state that you have to deduct ESI for consultant.
even though during ESI inspection the concern authority haven't asked any detail about the consultant.
can you pls put some like by way of a case if any.
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