Hi All,

I am kalpana, and i work as HR for a Pvt Ltd company in Kerala.

Currently, we follow a system wherein , we start an employee with PF/ESIC enrollment only after they complete 3 months of job in our company.

Till then their salary is shown as 'STIPEND'. Its mentioned in their offer also, that they will be enrolled into PF/ESIC, upon their completion of 3 months service in our company.

Now, my questions are:

1) Are we practicing a right method?

2) Do we have to ensure that these methods shall be used only for any scale of employees (meant any salary level to be kept as cut-off)

3) If we need to be vigilant of any things while preparing an offer letter for such employees.

Friends, i started doing this, as we had a lot of employees quitting the job within a month of joining or before even completing 3 months in our company. And we find it really difficult to manage their PF accounts.

Therefore, kindly advice me further at the earliest possible.

Thanks & Regards


M: +91 85898955554

From India, Kochi
Asso.prof.(commerce & Management)
Srinath Sai Ram
Hr Manager
Manager- Hr & Ir
Kshashikumar Nair
Head - Hr/administration
Human Resource Team
+2 Others

Dear Kalpana,
I am devendra patidar and i am not know that much about Stipend policy. but i am share knowledge which i am know.
A stipend is a payment made to a trainee or learner for living expenses, unlike a salary or wages which are paid to an employee. To receive a stipend, the job must focus on training rather than employment.
If you meet the requirements to be considered a trainee rather than an employee, the amount of the stipend is at the employer's discretion. You do not have to be paid at least the minimum wage per hour worked.
Also, I request to senior HR professionals...Please guide about above questions.

From India, undefined
Dear Kalpana ji, Stipend is given only Apprentice. An apprentice is not covered under epf & esic. He is only paid stipend.
From India, Pune
Stipend paid in the Present case comes under the definition if Salary/Wages both under EPF & ESI Act.Consequently, you have to deduct both PF & ESIC & remit the same forthwith including for omitted Periods.Please stop the system of covering under PF/ESI After completion of 3 Months.Omitted Contribution attracts interest & penalty also.Further, any death occurring during the 3 Months when an Employee is not covered under EPF/ESI Liability is on the Principal Employer.
From India, New Delhi
Dear kalpana
You are required to enroll all employees under Esi and pf from the date of joining. Enrolling after 3 months is a clear violations as pet the acts.
Stipend are wages under Esi and pf act. Unless they are apprentice registered under apprenticeship act.
Employees leaving, is ur internal issue and law is nothing to do with that.
Comply as per the provisions of the act.

From India, Bangalore
I agree with all. You need to comply with the PF and ESIC contributions from the employees' date of joining unless they are recruited under apprenticeship act. Stipend is given only to Apprentices and do not use this in your offer letter or appointment letter for regular employees.
From India, Mumbai

Dear Kalpana Madam
You have to discontinue your present system/practice. The stipend is generally paid to the trainees. Unless these employees are appointed as trainees under the Apprentice Act or under the Standing Order they will fall within the net of both ESI & PF. The ESI & PF Act is applicable from day one i.e. from the date of joining.
In case you need any further clarification you can contact me.
S.G.Management Services
(M) 9831877248 (P) (033) 2429-2298

From India, Kolkata
You have to review your system. How long you can keep them with a trainee tag. It could 6 months or one year beyond which you cannot justify indefinitely keep them as trainee when they are deployed in regular stream. It is also true employees would join and leave and do all the compliance for persons stay with you for a few months. Focus where lies your weakness. In retaining them for longer periods ? An employer is expected to maintain certain labour policies and stricly complying with legal provisions in inevitable. That's why digitising some of the main compliances like EPF, ESI were made ONLINE and periodical returns submission manually also have been done away with. So try to become a model employer never minding these work loads enroute.
From India, Bangalore
Thank you all.
All of your comments & advises are well appreciated & accepted.
I understand that all our employees have the right to enjoy the benefits of being enrolled under EPF/ESIC, however their unethical moves made us to think like this.
Also, we are 14year old company, and have employees working here from its early stages . i.e., majority of our staffs are happily with us from last 10-11 years. So in that way, we always succeeded in retaining our employees.
However, the new biomedical students try to play for gaining work experience with us, to join their further studies.
Therefore, we were a little perplexed as to how to handle these.
Now, we have started a bond system wherein the employees sign to be committed for at-least 2 years in our company.
Hope that would help.
Once again thank you for all your support & timely response, which helped me to fix this issue promptly.

From India, Kochi

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