PF and ESI if no salary amount is pre-fixed and is totally based on performance? - CiteHR
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We are an Establishment covered under PF and ESI and other labour lawS and deducting PF/ESI of all Employees. Now if we hire a Person( approx 10 in No) to sell our financial Products and both mutually agrees that we will pay him fixed amount if he sell such amount of our product. In other words, no amount is pre-fixed which shall be paid and it is totally based on his performance.
Now pl clarify, in this case, if the payment so made attract the provisions of PF AND ESI. If the Employer-Employee relationship is established in this case?? If not, what is the nature of payment made??

1. Sir, so far as ESI Act, 1948 and rules/regulations framed thereunder are concerned, such payments in the form of incentive or performance on the basis of sales etc. are wages and contribution is required to be paid on such wages.
2. It is irrelevant whether the said amount of incentive or sales incentive is pre-fixed or not. Only relevance is that such payments are relating to or in connection with the factory/unit to which said Act applies.

If only ESI is applicable?? What about the PF Contributions?? If it is possible that we pay him the amount as an "Commission" ?? In that case also employer-employee relationship exixt or we can say that they are working as an our Agents on commission basis.

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