Saswatabanerjee
Partner - Risk Management
+1 Other

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Dear Friends,

We are a civil engineering firm with 200+ employees. We have employees who are on roll, some are consultants/retainers providing specialized services and many have been kept on job contract under labour agencies etc. The main reason for keeping them under labour agency is that they are being paid a lumpsum amount ranging from 5500 to 10000 without any deduction of PF & ESIC. The employees themselves insist they don't want PF & ESI coverage since this will reduce their take home.

As part of HR, I and my GM hv tried to convince the mgt many a times that it is mandatory to deduct PF & ESI if not from the employees then from the labour agency under which they hv been placed. Let me also tell you that the labour agencies are created from within the organisation itself and max. 8 persons are kept under 1 labour contractor.

But somehow as an HR person I am not in the favour of trying to evade statutory liabilities in this way. Yet the mgt says that big corporate giants or other industries also follow this trend, since it is not possible to take all employees on roll.

I have spoken to many people working in other organizations who are qualified yet not on company rolls and are paid a lump sum amount.

I would like to know how to manage such a large workforce not on company rolls and how other organisations are doing the same.
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1) Either you can take them as Retainer directly. 2) Or you can take them through Third Party as Retainer.
But can we treat employees with such low salaries as 3500 -5000 on retainership. Is it not necessary that only professionals can be retainers. We have not issued appt. letters to such employees considering that their salaries are below minimum wages. But they create problems when they leave the organisation. Can we issue contract agreement letters to such employees and renew them every year
Please guide
Your action is illegal, whatever way you do it.
You may try to hide under the letter ofmthemlaw, but the courts will discard your contentions and hold you liable for the same.
It is a very clear law that all contract workers, irrespective of whether they are under a contractor who needs a license, is required to be paid minimum wages, not allowed to work for more than 8 hours a day, provided with 1 weekly off, and pf esic dues deducted and paid with emoloyer contribution.
Even if the contractor has 8 workers only, the principal employer has more than 20 contract workers and all the rules in contract labour act apply.
As long as workers are doing work there is no problem.
Once they decide to leave, they will file a complain and you will,be in trouble,
Retainer fees paid again, if below minimum wages for 8 hours duty is also considered as illegal. Naming it a retainer does not change anything.
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