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Dear All,
We have recruited an employee on contract basis for 3 months, I have following queries on this Issue:
  • Do I need to include his name on the muster rolls and payroll of the company
  • Do i need to enroll the employee for PF and ESI and deduct the same from his salary?
I request all to kindly give valuable suggestions on this issue.
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Hello Archana,
There are different treatments for your query.
A: Either you can treat those contract employees as consultant to your organisation and deduct TDS@10.3 %( Professional Charges)
B:If those employees are recruited directly by your company , then there is no need to pay the PF and ESI and bother about the deduction of the same from them. Remember that the organisation has to pay them the agreed pay.
C: If those employees are recruited by any other Man power consultancy and they render service in your organisation , then it is the duty of the same consultancy to pay the PF and ESI to those employees.
Note: Dont show those employees name in Employees master list. Just Show them as consultant. That is the ideal way. If you think humanity point of view, then you got to give them the social security in terms of PF and ESI.
Dear Archana,
It is understood that you have directly recruited one employee on contractual basis for a limited period of 3 months directly ie., not through a contractor. If he is recruited directly then the payment of wages responsibility lies with you ie., the company, if the company is covered under ESI & PF then he should also be covered under ESI & PF. Once he is covered under ESI & PF his contributions need to be paid.
Consiudering all the above facts the company need to pay salary, PF & ESI need to be deducted and paid by the company along with all the other employees who are on regular rolls.
There is a seperate register for attendance and payment of wages for employees on contract rolls hence you can enter his / her name in tht concerned register or else you can maintain a seperate register instead of including in the regular employees register.
Regards - kamesh
Dear Archana,
Mr. Kamesh is correct. Once the employee is recruited even for one day also he is to be covered under PF and ESI provided his salary in with in the Ceiling limits of PF and ESI. Hence you have to cover that employee and show him in your Rolls.
D. Phani Kumar
Dear archana
you have u pay the contribution of urs employees even they are on crntract basis or permanent. If one emplyee employeed in concern its must to pay contribution of epf and esi. All employees are same for contirbution.
pawan bhatia
Dear Archana,
I know very little respect to all of members but as per our company, I want to explain you this. If you want to recruit some manpower for ur company only for 3 months, then it is necessary to include them their EPF & ESI contribution ( if they are eligible for those facility), if they are under contractor, then also you need to pay for them (if contractor is failing for payment then principal employer (you) liable to pay all payment with interest).
For any clarification feel free to ask me.
Thanks & regards,

Subject - Re: Regarding PF and ESI coverage of contract employees
Dear Archana,
If payment made for a contract employees of professional charges than no need to deduct pf and esic, only tds is applicable. But in other case pf esi is applicale to all whether employed directly or through contract.
Vinod Chauhan
Dear All,
I agreed to the statement that PF and ESI is applicable to the Contract Staff but i want to know if any body is for 3 months only what benifit an employee/contract person would get ,as in ESIC the Rule says that an employee would be eligible for benifits after completing 3 months of contribution submitted and IN Pf he/she should not be able to withdraw his/her all amount . He would be able to withdraw 15.67% of the contribution.
Dear mr. Mayur
prvident fund and employees state insurance scheme is a social security scheme if a peerson died after doing one month job then his family will get life time pension and if a person died on duty then his family will got the life time pension from esic thats the main benifits of pf and esic.
pawan bhatia
If you have hired the person through contractor and contractor having PF& ESIC registration , then its the duty of the contractor to deposit the dues , if contractor don't posses the same then its the duty of principle employer to deposit the dues for that you don't need to employ the employee on your roll employee will remain as contractor employee you have to show the employee as contractor while filling the challan of the PF show the employee in contractor column and deposit the amount. This will full fill the compliance.
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