Raj Kumar Hansdah
Shrm, Od, Hrd, Pms
Consultant & G.m.
Hr , Personnel & Admin
Bank Employee
+4 Others

Thread Started by #prachidesai306

Dear Seniors,
I have joined a company very recently, the company is in money marketing and doing its business since last 4 years but have not done its registration under PF or ESIC Act.
Employees are getting its salary through cash, therefore neither any payslip is given to any employee nor any statutory deduction is made.
As an HR I have been asked to prepare the offer letters for all employees then have to start the PF & ESI deduction of the employees.
I would request my seniors to kindly guide me how should i start the PF & ESI deduction procedure so the company statutory compliance can be maintained.
Prachi Desai
4th February 2013 From India, Kolkata
Hi ,
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 .
Rajeev Dixit
4th February 2013 From India, Bangalore
Dear Sir,
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.
Prachi Desai
4th February 2013 From India, Kolkata
Dear Team,
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
Induslink Services
4th February 2013 From India, Mumbai
You have to get it registered even if your strength is 10. It's good sign you started regularising some legal issues. Some where you have to start. When you file your regn.papers they may ask you some documents including Balance sheet/Acs, IT Return etc. These are all can be managed nicely. Best thing is to contact the Officer in charge of your office area/business for EPF/ESIC (are you in Kolkatta ? I am told in Kolkatta and Mumbai anything is possible am I correct ?) and ask them what to do, they will guide you with everything. You have to spend some money also. Are you prepared to spend? No option one day or other these are all have to be faced. Don't get panic, like you there are lakhs and lakhs of firms are in India. You will get it done.
5th February 2013 From India, Bangalore
Hi Prachi
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.
Warm regards.
5th February 2013 From India, Delhi
Dear Sir,
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.
Prachi Desai
6th February 2013 From India, Kolkata
Prachi It is good at least your company started initiating steps to regularize the statutory obligations. B.Saikumar Mumbai
6th February 2013 From India, Mumbai

Dear friend,

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.

6th February 2013 From India, Bangalore
Dear Prachi

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.

Warm regards.
6th February 2013 From India, Delhi
Dear Sirs,
I am thankful to both of my seniors for the guidance that has been provided to me.
Further would request you to kindly guide me with my following queries:
1. if currently I issue only the offers letters and after getting registered under PF & ESI issue the appointment letters to the employees. Will this be ok?.
2. Can a company issue any no. of offers letters without any binding?
3. The salary of employee who is under payroll of the company should be above the minimum wages act of that particular state?
4. Is this compulsory that the salary should have component of Basic, HRA, Bonus etc? if no, then pls mention the statutory component of monthly salary for an employee.
5. For payment of bonus, is there any rule to be followed?
6. Is it mandatory for a company to disburse the salary through bank only or is there any other alternative to pay the salary as well.?
Prachi Desai
7th February 2013 From India, Kolkata

1. If you have decided to appoint any one, you need not wait till the regn. for PF/ESI which may be done in a normal course. It's a better admn.norms to issue the apptt.letter either just before joining or immediately after joining.

2. The no.(quantum) of offer letters is limited to the vacancies available and no.of candidates selected for the respective posts. Don't commit a mistake of issuing more than one offer letter per post to be filled up. The second offer can be issued only after deciding the fate of the first offer letter issued to the selected candidate which means, the second offer can be processed for a particular post only when the person offered declined to join or not accepted the post you offered, ensuring that the very first offer letter is duly cancelled/invalidated properly. This is very important to avoid any confusion/litigations.

3.Any appointment cannot be made for salary/wages less than the Minimum wages notified by the state/central govt.

4. You could either split the salary into basic, DA, HRA, CCA, conveyance and other allowances or show at a consolidated salary all merged into one. But to satisfy certain legal provisions it should be split into basic and other components. This will also help you to properly streamline certain expenses,IT, PR/ESI, Bonus, gratuity etc.

5. All Acts/Rules including Bonus is applicable & to be complied with

6. Initially you may disburse in cash. And it is not appropriate to continue this practice. Crediting to the bank a/cs.of employees always best and convenient.

7th February 2013 From India, Bangalore
Thanks for disclosing your qualification and experience. It helps in conveying the response appropriately. I shall briefly reiterate the recommended steps for your queries.
1. Yes; perfectly OK; in fact, it is strongly recommended.
2. Yes; subject to its manpower requirements.
3. Yes, definitely.
4. Yes, Basic, DA is a must. HRA .
5. Yes. Payment of Bonus Act. Minimum one month's salary.
6. Cash or Bank.
Hope the above helps.
Warm regards.
8th February 2013 From India, Delhi
Pls help:
1. What are the mandate registrations for an limited company to be done like PF, ESI bonus act etc??
2. If the basic salary of the employees is more than Rs 6500/- then also is it mandatory to get the registration of PF?
3. Under ESIC Act, when an employee is covered under the act what are the obligations of the company towards the employees apart from the statutory deductions?
4. In salary is it compulsory to have the DA component in it? if yes then do we need to follow the DA points/any specific rate of DA or it depends on company to pay as per their convenience?
5. For a company who is selling its debentures in the market is it mandatory to have a NOC from RBI, whereas the company has a registration from ministry of corporate affairs?
Prachi Desai
9th February 2013 From India, Kolkata
Dear PD,

For 1-2 :Attached is some lessons on EPF, pl.go thro'.

3. See the attached notes. Pl.use these attachments duly updated.

4. DA: Also refer my earlier post on this. If you're Unionised employees it is advisable to have Basic, Fixed DA, Variable DA (linked to Whole Sale price index/Consumer Price index indices which are published by the Central Govt. for every quarter. Accordingly FDA/VDA keep changing every qr. or half yearly based on these indices. It's all depend on general practice followed in your line of business. For e.g. many IT related firms follow CTC model which again comprises of components like basic, DA, HRA or house rent/lease+other allowances & perquisites. It is prudent to follow the pattern in your line to enable you for fixation of salary etc. to your employees which will be comparable with others in such business.

5. I think the matters relating to the trade in debentures to be regulated by the SEBI, RBI (FEMA cases) and ROC. You may check with concerned authorities as the trade is a very specialised one and information on your trade has to be kept confidential.

9th February 2013 From India, Bangalore

Attached Files
Membership is required for download. Create An Account First
File Type: doc PF salient data.doc (66.5 KB, 308 views)
File Type: doc PF-Know Employees Provident Fund-CHART-L-4.doc (83.0 KB, 309 views)
File Type: doc Benefits from PF.doc (36.0 KB, 185 views)
File Type: doc ESI Act.gist.doc (356.0 KB, 178 views)
File Type: doc Salient Infn.on ESI.doc (85.5 KB, 155 views)

Dear Prachi
For your queries #1 and #5, please seek the assistance of a legal consultant.
2. PF registration is based on the "number" of employees and not on the quantum of their basic salary.
3. Please go through the ESI Act and its provisions.
4. Please "search" CiteHR and you will find several threads on it, like the following:
Warm regards.
10th February 2013 From India, Delhi
Wiith regard to point No:(1), in my view and as per the P.F provisions, there is no relationship between issuing appointment letters and registration under P.F. The establishment needs to register itself with P.F once it comes to employ 20 persons on any day during the preceding 12 months. With regard to pint No:(5) an employee who worked for a minimum of 30 days in the account year and drawing Rs. 10000/= or less p.m as wages, is eligible for bonus provided your establishment employs 20 persons on any day during the preceding 12 months. However the bonus needs to be computed on wages not exceeding Rs.3500/-p.m only.
HR & Labour Law Advsor
10th February 2013 From India, Mumbai
Dear Sir, Im Prashant R. Deshmukh lst month join one Facility Management Services Industries. on e quarry- what is the rule for trainee PF ESIC Compulsory for trainee or not.please help me..
20th February 2013 From India, Bhopal
Dear Sirs,
Pls help me in getting idea about the PF & ESI registration amount:
1. Does the registration amount differ from state to state?
2. What is the amount for registration of PF & ESIC for West Bengal
14th March 2013 From India, Kolkata
Please anyone answer me how to get epf uploaded datas of all employees from 1995
3rd May 2017 From India, Kochi
Reply (Add What You Know) Start New Discussion

Cite.Co - is a repository of information created by your industry peers and experienced seniors. Register Here and help by adding your inputs to this topic/query page.
Prime Sponsor: TALENTEDGE - Certification Courses for career growth from top institutes like IIM / XLRI direct to device (online digital learning)

About Us Advertise Contact Us
Privacy Policy Disclaimer Terms Of Service

All rights reserved @ 2019 Cite.Co™