Madhu.T.K
Industrial Relations And Labour Laws

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Hi All, Is it possible to hire employees for an outsourcing job with a flat pay (no HRA, DA, PF etc). They will be hired for a fixed term period. Are there any legal binding obligations to this?. How do we maintain the employers books too for contract jobs? Also, is there a possibility of hiring people without being on contract and just give them a fixed pay without any break ups or any other benefits?
From India, Hyderabad
There is no issue if you pay your employees a consolidated salary (salary without any bifurcation and incremental scale) But you cannot include the PF also in it. PF should be calculated from that salary separately. If the flat salary offered is Rs 15000, pay PF Rs 1800 in addition to it, calculated at the rate of 12% of 15000. Similarly, pay ESI in addition to the salary. When the employee leaves the company after 5 years, (even with a break in service of one or two days after each fixed term contract) pay gratuity based on this 15000.
Employers bifurcate salary with small compartments like Basic, HRA, Conveyance, Special allowance etc just to limit their contributions to PF, Gratuity etc on basic salary. Though this practice is wrong and with the clarification of Supreme Court on basic wages for PF, the employers are experimenting on the wages and its structure to find about which all elements would not constitute wages/salary.
Very short, salary means the total sum payable as per contract of employment and there is no rule that you should bifurcate it into basic, HRA, etc.

From India, Kannur
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