Umakanthan53
Labour Law & Hr Consultant
Nagarkar Vinayak L
Hr-consultant
+1 Other

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Dear All,
I am working in a Start-up based in Mumbai. I would like to know what are the legal implication involved when we convert Employees on Professional fees to Payroll.
Is it wise to convert them into Payroll or is it wise to keep them on Professional Fees.
Total employee strength is 200
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Dear Kena Shah,
It depends on the volume and continuous extent of the works /services for which such professionals are engaged on fee or retainer basis. It is basically a "contract for service" only.
When such people are brought on the rolls, they become the regular employees of the establishment. As such they can be pulled up for lapses, if any on their work under the "contract of service". Moreover, they are entitled to all the benefits of employment and security of tenure under the contract of employment. On the other hand, if they are merely engaged on assignment basis, at the most you can terminate the contract.
Therefore, it is for the Management to decide depending on the requirements of such works.
Dear madam,
In my view, it is far more advantageous to engage professional specialist on fixed monthly fees or on retaiership basis than on payroll. In this arrangement , you do not have to incur any additional or consequential cost like, PF, Bonus, Gratuity Leave LTA, etc and moreover, his services are liable to be terminated any time with notice.
Regards,
Vinayak Nagarkar
HR- Consultant
Thanks!! Let's say if we put them in Payroll then apart from ESIC, PF, Gratuity, which other laws are applicable. As our finance head mentioned that it reduces company's cost which I am unable to understand it.
Cost reduction will depend on salary offered vis-a-vis fee which was being paid.
Both systems have their pro and cons .
Tabulate them and decide.
Col.Suresh Rathi
Dear Suresh,
Can you help me from where I can get the details as when I tried to find out I couldnt get the exact pro's and cons. If there are any links on this forum it would be really of great help.
Pros
1.He will be your employee-you may give him specific targets for completion, supervision and query resolution will be faster.
2.As an employee, his dedication will be much more
3.Easier to communicate and that will save time
4.Salary will /should be less than what was being paid when was consultant but from his side regular income and job security.
5.May be useful to train other staff
Cons
1.Will have to monitor performance on regular basis.
2.Will be entitled to Bonus, Gratuity, leave, leave encashment.
3.May turn out to be a costly proposition in case regular requirement dries up
These are few points but all
Regards,
Col.Suresh Rathi
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