I am a sole proprietor with 3 people working under me. I know PF, ESI and TDS is not applicable. However, recently a lawyer confused me by saying, I cannot pay SALARY or issue SALARY SLIPS, I must use the word Professional Fees for the monthly amounts I pay to them.
1. Can I or can I not pay "Salary"? The appointment letters I had given them stated a monthly remuneration. Now that they requested me for salary slip, this confusion came up.
2. Does anyone have the format of salary slip or professional fees slip I can provide to them?
10th December 2018 From India, Kolkata
Dear friend,
The earliest form of running a business is sole proprietorship and I think still it is the most common type of business venture. When such a sole proprietor hires people on regular basis to run the business, there arises a substantial employer-employee relationship with mutual rights and obligations called as the contract of employment and such hired people automatically become his employees and the hire or reward periodically paid to them for their services is called as salary or wages.
Sole proprietorship is a legally recognized form of business entity and as such, so long as people are employed, it is not exempted from the Labor Laws by virtue of its constitution. Besides, his sole proprietorship status can not empower him to convert the contract of service entered into with his employees as a contract for service. Only your Lawyer friend should explain his contention!
10th December 2018 From India, Salem
Sorry, I could not understand. Can I continue to pay them using the word Salary or not? If yes, I request a salary slip format please.
10th December 2018 From India, Kolkata
You have to pay their remuneration in the name of salary only. You can use the wages slips under the Minimum Wages Act, 1948 which would be available in stores selling the various labor law forms and registers.
11th December 2018 From India, Salem
Dear Debjani M
With all appreciation to the reply from Mr. Umakanthan, I would like to mention that the intention of your lawyer friend i to hire the persons as "consultant" and pay them "Professional Fees" with the intention to avoid any unforeseen liability in terms if employer -employee relationship like ESIC, and providing you ease of operating for easy and smmth termination of their engagement, in case required.
Shailesh Parikh
99 98 97 10 65
Vadodara
11th December 2018 From India, Mumbai
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