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Dear Seniors,
I am working as HR Executive in a electronic manufacturing company.
My management wanted to know that is there any option to provide stipend to a Fresher without any statutory deductions or additions.
Pls clarify...
Thanks & Regards,
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Dear Babu,
You can show the Employee and pay them stipend as a Trainee or you can make them to work as Apprentice and pay their salary through bank itself but better do not show the apprentice in Muster's......
No ESI for Apprentice you need to pay ESI for Trainee ESI is must but no pf is applicable for both..... Regards, Ramkishore
There are rules applicable to apprentices You can not just select and appoint someone as an apprentice Please make sure that you are following the procedure else you will have a bigger problem
Dear Saswatabanerjee

I agree that several basic apprentice Forms and Register's to be maintained but if you are recruiting less than 5 peoples it's not that much required please refer some important synopsis of Apprenticeship Act

In exercise of the powers conferred by, subsection of section 37 Apprentices Act, 1961 (52 of 1961) and after consulting the Central Apprenticeship Council, the Central Government hereby makes the following rules in supersession of the Apprenticeship Rules,1962, except as respects things done or omitted to be done before such supersession, namely:-

Standard of Education -

(1) A person shall be eligible for being engaged as a trade apprentice - if he

satisfies the minimum educational qualifications as specified in Schedule-1.

(2) A person shall be eligible for being engaged as a Graduate or Technician

or Technician (Vocational) apprentice if he satisfies one of the minimum

educational qualifications specified in Schedule-IA:

Provided that:

(a) no Engineering Graduate or Diploma Holder or Vocational Certificate

holder who had training or job experience for a period one year or

more, after the attainment of these qualifications shall be eligible for

being engaged as an apprentice under the Act;

(b) no Sandwich Course Student shall be eligible for being engaged as an apprentice under the Act after passing the final examination of the technical institution wherein such student is undergoing the course unless so approved by the Regional Central Apprenticeship Advisers;

(c) a person who has been a Graduate or Technician or Technician (Vocational) apprentice under the Act and in whose case the contract of apprenticeship was terminated for any reason whatsoever shall not be eligible for being engaged as an apprentice again under the Act without the prior approval of the Apprenticeship Adviser.

Standard of Physical Fitness

(1) A person shall be eligible for being engaged as an apprentice if he satisfies

the minimum standards of physical fitness specified in Schedule-II.

Provided that a person who has undergone institutional training

in a school or other institution recognised by or affiliated to the National

Council or the All India Council or a Statutory University or a State Board

of Technical Education and has passed the examination or tests

conducted by these bodies, or is undergoing institutional training in a

school or institution so recognised or affiliated in order that he may

require a degree or diploma in engineering or technology or certificate in

vocational course or equivalent qualification shall, if he has already

undergone medical examination in accordance with the rules for the

admission to the school or institution, be deemed to have complied with

the provisions of this rule.

Registration of Contract of Apprenticeship

(1) Every employer shall send to the Apprenticeship Adviser the contract

of apprenticeship for registration within three months of the date on

which it was signed.

Period of Apprenticeship Training

(1) The period of apprenticeship training in the case of trade apprentices referred to in clause (b) of Section 6 of the Act shall be as specified in schedule-I.

Compensation for termination of apprenticeship

Where the contract of apprenticeship is terminated through failure on the part of any employer in carrying out the terms and conditions thereof, such employer shall be liable to pay the apprentice compensation of an amount equivalent to his three months last drawn stipend.

Record and returns

(1) Establishments referred to in items (b) and (c) of sub-clause (1) of clause (d) of section 2 of the Act shall submit returns as hereinafter provided to the respective Regional Director.

(2) Establishments referred to in item (b) of sub-clause (2) of clause (d) of Section 2 of the Act shall submit returns as hereinunder provided to the respective State Apprenticeship Adviser.

(3) Within seven days from the date a trade apprentice joins an establishment, the employer shall prepare the return in form Apprenticeship – 4 in Schedule-III in duplicate and shall submit one return to the Regional Director or State Apprenticeship Adviser as the case may be, and the other to the Principal or Head of the Institute where Basic Training or Related Instructions shall be imparted.

(4) As soon as a trade apprentice joins the establishment, the employer shall prepare an index card (Envelope) in Form Apprenticeship -I in Schedule-III in duplicate and shall submit one of the cards to the Regional Director or State Apprenticeship Adviser, as the case may be, within a period of fifteen days of the date of registration of the contract of apprenticeship and retain the other one with him.

(5) (a) Every employer shall maintain a record of Basic Training or Practical Training and Related Instructions in Form Apprenticeship-IA in Schedule-III, Information regarding Basic Training or Practical Training shall be based on the syllabus approved by the Central Apprenticeship Council and operations actually performed by the trade apprentice during the half year under review, every employer shall send a copy of this report to the Regional Director or the State Apprenticeship Adviser, as the case may be, at the end of every half year, and the said report shall be kept inside form Apprenticeship-I.

These rules applies where the ratio of the Apprenticeship is more than 1:2 Ratio but it will not apply for the Apprentice who are working less in number say like below 5-10.....

Firstly select the trade then select the ratio of peoples to be placed in each department then proceed with the statutory requirements if it is more than 5-10 Employees


Dear Ram
Yes, your synopsis is what i was talking of.
One point additional - there is a limit on number of apprentice that can be employed in an unit. That number is decided by the apprentice advisor.
Also you need to register each of the apprentices (as you have stated)
Further the period is also decided by apprentice advisor (generally 1 year)
If the rules are followed, then its ok.
In fact, i have seen some companies in rural Maharashtra save good amount of money in using apprentices (as they are paid far less) even for things like data entry staff

Hi Ramdass, If they are registered under Apprentices ACt, then the stipend is applicable without any statutory deductions. but if they are copmany trainee, then it is compuslory. Regards,
Dear Ramksihore,
As you see the defination of Employee OR Worker for PF and ESI Act,Payment of Bonus Act you can know yourself cleary.
You may also check the defination of Wages for both these acts.
The Word stipend is execlusively for the compensation of training to those apprentice who are governed by seperate legislature like Apprenticeship Act.
What is satus of your companies Standing order.Have you shwon a class of worker as Apprentice in your standing orders.Please verify this also.
But at the end as per my opinion there is no way to exempt your trainee form statutory deduction But you can opt a legal opinion of your legal advise if is there any scope to get exemption from PF to the apprentice if you have classified them in your certified standing order.
I hope this may be help the situtaion.
Mangesh Wakodkar

Good input’s Mangesh Wakodkar mean while Kindly change the name as R.D.Babu.... Regards, Ramkishore
Yeah The apprentice is been used for cost cutting in many companies as they can work for the same stipend for 1 year and there will be no statutory deductions if the number is higher all this statutory related should be maintained and simentenously the Apprentice may write the exam at Apprentice board and fight for their permanent ship in company....

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