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Thread Started by #abhinav tewari

Hi All,
hope you all are doing good.
i work for a call center in the HR Department. we have more than 600 employees and are complying to all statutory compliance pertaining to PF & ESI. recently we have recruited few employees at lower salaries, you can say at 7000 per month. now if we deduct PF & ESI their inhand salary would be very low and we dont want to add that deduction neither on employees nor on us. is there any way by which we can accommodate these employees and there is no PF & ESI Deducted from their salaries, i mean we show them as trainees or any thing which is permissible as per the laws of the land. also what should be the documentation for these employees i mean what kind of appointment letter can we give to them and what should be the salary break up.
i look forward for your support and guidance.
Warm Regards
Abhinav Tiwari
1st October 2015 From India, New Delhi
If you are following Statutory compliance for 600 members then what difference will it make by adding a few more. The only option is you cannot show them on your payroll and treat them as daily wage labor and pay in cash, which will not be possible if you are in BPO.
You can take them as Trainee and pay them stipend, instead of Salary but cannot continue for too long. Also don't worry too much about employee take home, as its mandatory to deduct ESI and PF under stipulated salary range.
Be positive and follow the statutory and company policies.
1st October 2015 From India, Mumbai
Check out the NEEM scheme implemented by the government a year ago.
If you take a trainee from a colleague identified under NEEM for skill development, then these trainees are exempted from all statutory deductions for the period of training
However, ensure that they are covered under NEEM or you will be neck deep in trouble .....
1st October 2015 From India, Mumbai
Hello Abhinav Tiwari,

Srini & Saswata Banerjee have given you actionable suggestions to handle the current scenario.

However, being in HR, I think you should begin to look @ the Statutory Deduction of PF differently........which further going, you ought to begin to inculcate among the employees too.

@ the EoD, PF belongs to the employee.....the only difference being that he/she CAN'T use that amount NOW. Just as the take-home salary CAN'T be touched by any Employer once it's credited into the employee's account, so too the PF. The PF also accrues Interest until any withdrawal is made later. And NO Employer can touch that amount even after resigning.

We face this situation with junior level guys who don't really know about PF nor are they informed about it. The basic perception of Salary is that 'if you don't get it IN-HAND, then you can forget about that amount'.

It pays for the correct this perception & guide the employees to realize the difference between PF & other deductions that don't come back to them ever [IT, PT, etc]. If need be, use the services of outside Experts....many times the word of an outsider carries more weightage than insiders for such a crowd.


2nd October 2015 From India, Hyderabad
Is the low salary of Rs.7000/- consistent with the Minimum Wages Act?
2nd October 2015 From India, Kochi
The problem is that at lower levels statutory dues and deductions form 50% of CTC. The government knows that, as it also knows that junior / fresh employees need more in hand. That is why it has come out with the schemes like NEEM.
A fresher who gets as low as ₹7000 is not concerned about whatever future benefits that PF ESIC will give. He need money to live now, what will happen after 58 years is of lesser concern to him. Many have loans that are costing far more than interest that PF will give.
Pvenu's point was different. How can you pay only ₹7000 when min wages is more. Out side of the metro cities, minimum wages for unskilled employees is not high.
3rd October 2015 From India, Mumbai
Abhinav Sir ,

As per my knowledge here are following points come out of what you have written points are as follows :-

1) If you are employing any employee on 7K , Please check as per your industrial standard Minimum wages you are paying or not?
2) If you wanted to appoint them as Trainee
(you will not be able to exude from PF because as per PF act trainee will be treated those who are covered under Apprenticeship Act Eg. Trainees from govt. ITI / BTRI )
(If you want to lower down PF deduction you can reduce Basic waged and reaming amount to be given in other allowances.)
3) You could not exclude them from ESIC also (but you can reduce deduction by placing Washing allowance in Salary structure it is permissible up to 200rs/month that is also not a big effect)
4) If you wanted to save money of your organization keep them Retention Bonus
so you will get extra increased amount in your hand and till employe left /completes given period.
That Retention Bonus does not give any direct statutory deduction
It will also help to retain employees as in your industry high attrition rate.

Better way pay them as per minimum wages and comply for all as you are doing compliance for 600employees , management also will not be allow to go out of statutory limits.

Yogesh Ahire
3rd October 2015 From India , Pune
Taking basic down below minimum wages is a bad idea. The Supreme Court is likely to give its decision on the above matter against the employers and with retrospective effect.
4th October 2015 From India, Mumbai
Hi All,
Thank you so much for your valuable inputs.
i understand we must comply with all the statutory compliance those are applicable to us and also understand the value addition / benefits of PF & ESI but these employees are at very junior / entry level. they dont understand the benefits of PF & ESI all they are bothered about is their inhand salary. i have tried various permutations & combinations on their salary structures. if we deduct PF & ESI their inhand salary reduces to around Rs.5500 and if we add PF & ESI in employer's scope i.e. employer pays the whole share, Employer's & Employee's, then the employer's liability is increased by Rs.1500 per head / employee.
i think, Srini's idea of taking them as trainees and paying them stipend is a good idea. also to not to show them on continuous service we can give a break of say 7-10 days, what do you say?
Warm Regards
5th October 2015 From India, New Delhi
Dear Abhinav,
If you wanted 100% compliance
And appoint them as Trainee
Till PF deductions come because trainees are covered under PF act (only Trainees are excluded those who are covered under Apprenticeship Act.)
There is no such path that you should skip from PF AND ESIC if you wanted to appoint them on Muster / Trainee.
Yogesh Ahire.
5th October 2015 From India , Pune
Dear Seniors, Kindly suggest that any chance that we can show the employees as consultants after deducting TDS from their salary in these type of situations. Please advise. With Regards, Nandini
5th October 2015 From Pakistan, Lahore
How many such "trainees / consultant " do you have ?
The answer will depend on that.
In any case this cannot be changed once the employee has already joined. It has to be done before they join. If you try to change it later, the department will not accept it and will consider it as a fraud. Then you will be liable for all penalties.
6th October 2015 From India, Mumbai
Hi Abhinav, I am completely new to generalist profile can you please help me with your number so i will be able to take advises from you. Hope you dont mind n support me...
6th October 2015 From India, Mumbai
Dear Saswata,
Thanks for your reply.
When any employee is joining for some 10000k salary per month at the time of joining itself if we can mention him as a consultant and if we deduct his TDS then he will need not to be covered for PF/ESI.
Please confirm.
With Regards,
6th October 2015 From Pakistan, Lahore
In case the Apprentices are taken under the Apprentices Act or Standing orders they can be exempted.
6th October 2015 From India, Chennai
Adding to views of Mr Saswata Banerjee given above, I am of the opinion that 'Consultants' will not be bound to the service rules of the company because they will not be employee under any law? By designation, they are supposed to provide consultancy only and will submit bills for payment. Hence, I suspect that any department will accept the plea that consultants are working 8 to 10 hours in the establishment.
7th October 2015 From India, Panipat
Hi All,
Hope you all are doing good. thank you so much for all your valuable suggestions. i think keeping them as consultant wont be a good idea as it will just increase the paper work and burden on accounts & finance department.
i think we need to have more brain storming on this and think of something out of the box. i am also trying my best to find a way out and will surely post out here.
Warm Regards
Abhinav :-)
7th October 2015 From India, New Delhi
Hello Abhinav,
Maybe you can consider to hire them on Fixed Tenure Contract & keep renewing them after the current Contract expires OR whenever you wish to hike his/her salary so that the PF wouldn't be an issue.....whichever is earlier.
@ Saswata Banerjee--
Do you think this can work-out from the F&A angle?
7th October 2015 From India, Hyderabad
Consider the new joiners as trainees for a certain period (say 1 yr).
In my opinion, salary is less & most of them depend on net take home to meet their monthly expenses.
Discuss with the employees about the importance of such deductions & proceed accordingly.
Few may accept the proposal & others may opt it after certain period.
7th October 2015 From India, Vijayawada
But this does not solve his Problem of paying PF ESIC which he wants to avoid without hiking salary.
By the way, my post has been deleted. Though some of you read it.
I think someone reported it as spam ....

8th October 2015 From India, Mumbai
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