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Dear Team, One of our senior staff is getting retired on this month. The company is interested to have him after retirement.
He will be working as a consultant during the contract period.

1. How many years of contract can be given?
2. Pls let me know what is letter we can provide during his appointment as a consultant. Please share.


From India, Madras

Dear Jayalatheesh,
What you are entering into is a contract for service which is devoid of employer-employee relationship between the parties to the contract . The tenure of the contract may be initially for a fixed period of say one to two years with the enabling clause for further extension from time to time subject to necessity and willingness of the parties as mutually agreed. In case of foreclosure of the contract by either of the parties, a clause providing for notice and foreclosure compensation to the other should be incorporated. The compensation payable to the consultant should be retainer basis subject to TDS and service tax as applicable.

From India, Salem
Pan Singh Dangwal

As per my opinion,

Mr Umakanthan has given well explained clarification of your query. I would like to add few:-

1. You should frame a formal agreement in which important clauses should be mentioned like, Scope and description of Service, period, Remuneration fees, Contract foreclosure terms and its compensation, Confidentiality, Invoicing and payment detail, Conflict of Interest etc.
2. Intimation of company policies and procedures which required to do the services under the contract.
3. Under COW Act, now Gratuity is payable to the FTC on completion of one year service.
4. You have to deduct applicable TDS (TDS of Professional) on the billing/pymt (whichever is earlier) as per govt. norms.

Senior can give more inputs on the matter.

From India, Delhi

Dear Jayalatheesh,
The person can be hired for one year as a consultant on piece rate basis/ per day basis but payment will be made at the end of month on deduction of appropriate tax applicable. The agreement can be end up by the promisor at any time with a notice of 7 days and similarly promisee can do so by giving notice of 30 days without cost. You can reengage a person making new contract after one year, if his services required.

From India, Mumbai
Mohan Ganjale
Dear Jayalatheesh,

You can hired this person on retainership basis.
He is not eligible for PF , Gratuity , Bonus, Leave, etc.
You can fix his retainership period for one year.
Also fix his fees on monthly basis.
He can submit his bill on month to month basis.
You can deduct his TDS as per act.
During the period of his retainership with you he shall not engage himself directly or indirectly with or without remuneration on whole time or part time basis in any trade, business, occupation, employment or calling other than that of the company. He shall not undertake any activities, which are contrary to or inconsistent either with the company’s interest or with your duties and obligation as retainership of your organization. He will not indulge in any subversive activities, riotous behavior, sabotage etc. and will work peacefully and abide by rules, regulation and practices as they exist or as may be modified from time to time as applicable to the establishment to which you may be attached.


Mohan Ganjale

From India, Pune
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