Dinesh Divekar
Business Mentor, Consultant And Trainer
Bharat Gera
Principal Hr Consultant
Ramesan.pt
Sr. Manager -hr
Srinath Sai Ram
Hr Manager
+1 Other

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Dear Seniors,

In many organisations, college graduates or post graduates are appointed as trainees and are paid STIPEND in which only the ESIC is deducted and no PF. This traineeship period may last from 3 month to 1 year as per the agreement and may be extended if the management wishes to do so.They get a separate appointment letter as trainee which is for fixed period (eg 3 month to 1 year) post which if they are absorbed as regular employee then they are issued fresh appointment with salary. Employees during this period is not eligible for Privilage leave ,PF or other benefits. Only the ESIC is deducted. Also this period is NOT considered while calculating their gratuity. Please confirm if this a right practice as per law? Can employee demand gratuity, PL and PF for the traineeship period? (Please note the traineeship period is different from probation and generally employee need to go through probation period after the traineeship. But in probation they are paid salary with PF and other benefits. So my query is only to the traineeship period?)

I am raising this query because I found many members mentioning that as per law stipend can be paid only to apprentice where PF is not applicable. In any other case stipend is paid to a non apprentice then the stipend is considered as a wage in PF and gratuity act and the employer need to pay PF contribution and gratuity for the traineeship period.

ESI & PF is has to be deducted from the stipend unless your trainee program is recognized, accepted & approved by the appropriate Government.
These trainees are eligible to get bonus also if qualify for the same.

Dear Sir, Which are those programmes other than apprentice.The concept of taking graduates as trainees is a common concept and they are not eligible for any thing other than ESIC.
Dear Gokul,
It appears that you have not apprised yourself with Apprentice Act, 1961. After amendment in 2014, this act is called as The Apprentices (Amendment) Act, 2014.
Please note that persons employed under the provisions of this act are called as Apprentice and not Trainee. Your major confusion is on these two terms. Apprentices are not regular employees therefore, remuneration paid to them is called as stipend and not salary or monthly wages. Since they are not paid monthly wages, question of payment of gratuity does not arise.
Apprentice, on completion of training, if found suitable can be considered for regular employment. Once he becomes regular employee, statutory provisions like gratuity become applicable.
Thanks,
Dinesh Divekar

Dear Sir,
My query is about the trainees that organisations appoint on stipend.Fresh graduate students are taken as trainees and they are paid stipend which make them ineligible for benefits like PF,PL, gratuity , bonus etc.I want to know if this is correct. This query is not about apprentice .

Dear Gokul,

I wish you had read my reply properly.

Before raising the query, I request you to apprise yourself with the labour laws and use the terms and phrases correctly. This is very important in HR field. In spite of my post with detailed explanation, if you come up with the same query then it will surprise everybody.

Monthly payment made to the persons employed under the provisions of Apprentice Act is called as stipend. Stipend amount is fixed by each state government. In fact, duration of the training, tests, quantum of stipend etc is clearly mentioned in the acts made by the respective state government.

Any other person employed by the company is eligible to get the salary. "Trainee" is the designation used in your company. Wages and statutory deduction are not based on what designation you give. The wages paid should be minimum wages and right from first day onward, all the statutory deductions become applicable.

Hope you do not come with the same query again.

Thanks,

Dinesh Divekar

Dear Mr Gokul, As already pointed by Honourable members, you should know about the difference between Stipend(Payment made to Student at the time of learning) & Salary.Only "Apprentices engaged Strictly as per Apprentices Act are exempted from purview of Labour Laws..But they are entitled to leave during the time of their examination.The amount of Stipend paid to an Apprentice is reimbursed to some extent to the Employer.This is done to encourage Employers to engage Apprentices for future Employment.As stated by you Majority of industries are resorting to denial of Statutory benefits on the pretext of "Appointment as Trainee". You have stated that a Trainee is covered under ESI.This is sufficient to conclude that other Labour Laws should also be made applicable to Trainees.There are decided case laws in this connection.Please peruse the attachment which is self explanatory

Attached Files
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File Type: docx Apprentices engaged under Standing Orders not come under EPF Act.docx (11.2 KB, 187 views)

Hi Gokul,
I am not a consultant and a trainer, so if you are not satisfied with my answer you can very well revert.
In your case if you have a standing order and if you have defined trainees / apprentices under classification of workmen, your practices are absolutely right and legally valid.
As per the per definition of employees under EPF Act, two classes of employees are excluded, one is Apprentices under the provisions of Apprentice Act and another is Trainees / Apprentices defined under the provisions of standing orders..
In your case, ensure your standing order has definition of trainees/ apprentices and the length of training period is as per the provisions.
If you are clear, I repeat, do not worry, your practices are legally valid, we can challenge it in court of law even if PF authorities question it.

Simple thing is trainees appointed under apprentice act 1961 are only apprentices and eligible for stipend with esi only all others while you give designation trainee or other are eligible for salary and other every legal compliances as per labour law.
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