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
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

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