If your company / factory comprises more then 20 employees
then PF act becomes applicable .
For registration of PF and ESI its better you contact your local ESI
office and PF authority to get the complete details .
Offer letters are issued to candidates who are about to join the organisation.
instead you can go ahead with appointment letters for the employees who
have not received the same .
Thanx for your reply, but could you pls tell me that till date the employees were getting salary in cash so any PF & ESI is not deducted. So if i registered the company with PF & ESI what should be my next step to regularize the statutory procedure.
If you dont have PF ESIC, PT no. then no issue. we will process your payroll and we will provide you All benefit of statutory compliance. you no need to invest you Rs. 70,000 or 80,000/- for registration.
just call on 23060101 - induslink services
Its good that your company has started regularising its affairs.
As an HR you have a lot of activities to be undertaken. See that the Offer letter/Appointment letter you issue are apt so that registration and other activities under the EPF& MP Act 1952 gets complied with.
Accordingly you can start processing for Payroll also. So far you may have worked only on the Net Pay concept, as all payments are in cash. Henceforth you shall have to take care of other components too. In fact it would be ideal if you can arrive at Pay bands for all employees, working out with their designations/job role; qualification and experience, seniority in the company and the salary that they are actually getting.
Do feel free to seek further help, as you go about setting up a regular HR department and HR functions. It will help if you can also share your academic qualifications and experience, to enable members to give appropriate guidance to you.
Thanks for your valuable suggestions. Pls note I am an MBA in HR from Symbiosis with an experience of 5 yrs in HR. Would like to ask you about the following points, if you could pls provide me with the reply:
1. Standard No of days for monthly salary calculation.
2. Currently company is providing only the offer letters not the appointment letters, in that case is company anyways bound under any statutory non compliance.
3. Company's main business is selling debentures in market and reinvesting the money in other sectors, so this case is the company is also liable for the PF & ESI for those employees working in other sectors.
1. Avg.salary calculated for 30 days (including paid holidays). If you have to pay proportinately, say for 10, 15 days etc. take average salary per day (divided by 30 days) and pay. Some firms take actual no.of working days in a month (say 25, 26 days) and arrive at per day salary. Some use total calendar days, say 28, 29, 30 & 31 days. This goes according to the practice followed in the firm.
2. Yes, offer letter is not to be taken as Appointment letter for the simple reason that any offer doesn't contain the whole text of Terms & conditions. Secondly it will remain as "offer" this can be confirmed only by the Apptt.letter. Even statutorily Apptt. letter is a document form part of statutory records. An offer letter could be there or not, this takes as a binding document only when it is accepted by the offered, when it is not accepted it has no role to play.
3. Is your firm regd.under NBFC ? or remains only as an Investment co. ? Do you also lend or borrow money, collect deposits from public ? Much would depend on the status of your operations. In any case there is no Exemption from PF/ESI if you are not a banking Co. for which separate provisions will apply.
I agree with the comments posted by kumar s., on your queries; and further I would like to add the following :
1 : Standard no. of days taken is either 30 or actual days in that month (from 28 to 31); depending on the legacy practices of the company. Now, for monthly salary this includes Sundays/Weekly Off, Closed Holidays.
For per day absence in case of Leave Without Pay, the monthly salary is divided by the NUMBER of days taken in "standard no. of days in a month" to arrive at a day's salary.
2.: It is safer to start with "Öffer Letter" as its not legally binding; and the next step is the Appointment Letter, which implies a commitment for employment. The formal Date of Joining is crucial; as it signals the application and Compliance of the Statutory provisions like PF, ESI etc. In other words, once Appointment Letter is issued and the employee has "joined" on roll, there is no escape from legal compliances.
3. : Your company would be covered under the Shops and Establishment Act; as evident from your description of its activities. Accordingly all the related/applicable labour legislations like PF, ESI etc shall apply.
Thanks for informing that you are an MBA with 5 years of HR experience - it will make communication easier and unambiguous.