Madhu.T.K
Industrial Relations And Labour Laws
Tsivasankaran
Consultant
Malikjs
Gm (hr)
S. Krishnamoorthy
Director Of Private Ltd. Companies
Psaluja
Service
Sunita Sarkar
Hr / Personnel Deptt.
Vinay_p1
Service
Advreshma
Legal Officer
Themitra
Retd Human Resource Manager
+1 Other

1. Is it mandatory to deduct PF or ESI on Stipend or consolidated salary???
2. Is it applicable to Delhi NCR or Other states also???
3. Can it be possible that deduct in factories only or we need to applicable it on HO also???
14th February 2008 From India, Gurgaon
Whether it is consolidated or Basic+ DA +++++ pattern of salary, PF/ ESI is to be paid if the establishment and the EMPLOYEE are covered.
Under EPF Delhi is not exempted area but please check whether the particular place in Delhi where the firm is situated is exempted under ESI.
Stipend paid to trainees OTHER THAN THOSE undergoing training under Aprrentice Act, 1961 attract EPF and ESI contribution. However there is a judgement withholding EPF Organisation from covering Trainees even other than Apprentices under EPF.
Regards,
Madhu.T.K
16th February 2008 From India, Kannur
First of all there is a difference between STIPEND and SALARY.
Provident Fund is not deductable from STIPEND. The Provident Fund Scheme does not provide for deduction / contribution on & from STIPEND.
ESI Act provides for contribution / deductions from & on STIPEND.
Please also note that Consolidated Salary attracts the provisions of both PF & ESI - hence you are liable to to deduct and pay contribution to both PF & ESI.
The Mitra
17th February 2008 From India, Mumbai
Salary is different from stipend Salary pr wages are paid to regular employees or casuals or temporary employees or part time employees and attract ESI and PF

Stipend is paid to Trainees olr Learners. Both Acts exemt Trainees from the provisions of the Act. However, if the Trainees are not proved to be trainees then they will get covered

Some Tests

1. Are you defining productivity measuresw?

2. Are you conducting theory classes for them

3. Are you maintaining record for these classes

4. Are you evaluating them?

5.Are you making them to come in shifts?

There are more questions. Refer to TISCO Judgement on this (Or is it TELCO?) This judgement clearly defines the rules to consider a Trainee as trainee.

I faced a problem in one company. Trainees were not covered under PF The PF inspector examined all records and even allowed that we make them to come in shifts. But when he examined the Productivity linked Bonus scheme, it covered all Trainees for calculating Productivity. That is it. We had no other option but to cover these employees. I also had another experience wher we could show all records of training. But we covered them under ESI Quoting this, PF authoritoes aslked us to cover them under PF. But we took a firm stand that every enforcement authority should be concerned about his area only and we could succeed in convincing them

Siva
18th February 2008 From India, Chennai
I am sorry I did not notice the questions
2, Delhi NCR I have no personal knowledge It must be applicable Just check your neighbours
3.Your HO is an establishment and all shops and establishments are covered under ESI in Delhi. Whetehr you factory is covered or not youe HO has to be covered
Does this answer your query?
Siva
20th February 2008 From India, Chennai
Dear Madhu sir,
which is the judgment withholding EPF Organisation from covering Trainees even other than Apprentices under EPF.
Please give an immediate reply in citehr itself or mail me at
7th June 2008 From India, Kochi
ESI is mandatory to deduct from the stipend. However PF may or may not attract on stipend. This depends on that if there is a agreement or training scheme or company's standing orders providing that the PF would not be applicable on stipend, then it would not be deducted and in absence of such training scheme or standing orders, it would be deemed to be applicable on stipend.
17th June 2008 From India, Delhi
ESI is mandatory on stipend, however PF depends on as to whether there is any training scheme or company's standing orders which provide for PF applicability on stipend. If the training scheme or standing orders say that PF would not be applicable to trainees , then PF deduction is not mandatory but if there is no training scheme or standing orders the PF would automatically deemed to be applicable on stipend which makes it mandatory for PF deduction.
Thanks,
17th June 2008 From India, Delhi
Dear colleague,
Kindly refer the case published in "LLR-2006/263 in respect of RPFC Mangalore v/s Central Aercanut & Coka Mfg Co op ltd" in which as decided by the Hon.ble Supreme Court of India on 3-01-06, pf is not applicable Trainees.
Regards,
Dave
2nd August 2008 From India, Delhi
ESI on stipend or training allowance is disputable. ESI is mandatory only in the case of 'worker' or 'employee'. A trainee is neither a worker nor an employee. The SC's orders defining a trainee in the case of EPF will be applicable to trainees in the case of ESI also. However, as in the case of EPF, there should be Standing Orders of the company certified by the Labour Department of the State Govt.
S. Krishnamoorthy
2nd August 2008 From United States, Roslindale
Dear Sunita,
As far as I know that Salary and Stipend are 2 different things. On Salary which constitutes Basic, HRA, TA Etc PF and ESIC are applicable but on Stipend we need to know whether the person is a trainee, apprentice or consultant. If the person is trainee, apprentice then neither PF or ESIC is applicable as he is not an employee. However, in place of ESIC , workmen compensation act is applicable to trainee, Apprentice.
If the person is consultant giving services then TDS is deducted from consolidated salary.
regards,
Vinay
2nd August 2008
dear shiva
i really appreciate your answer in this regard.
we are just giving designation as trainee to save ESI and PF and
paying them stipend of 10 k or 20 k.we are taking work as regular employee.it is misuse of act.
one company having total strength 300 and out of that 200 are appointed trainee.is it not misuse.
regards
js malik

5th August 2009 From India, Delhi
As Malikjs said, you can not have trainees just to avoid ESI and EPF. If you appoint trainees, there should be a curriculum designed to train them. There should be provisions in the Certified Standing Orders of the company to appoint trainees and the number of trainees shall be in a particular proportion to the regular employees. In the absence of these, the trainees will be regarded as employees who will enjoy all the benefits available to other employees of the company. As such, they are entitled to minimum wages fixed by the government as applicable to the scheduled employment, they will get leave as per law in force, they will get bonus and their service for the purpose of gratuity will be counted from the date on which he started his so called training.
Regards,
Madhu.T.K
5th August 2009 From India, Kannur
kindly clarify if ESI needs to be deducted from registered apprentices stipend.
13th August 2018 From India, Mumbai
Apprentices engaged from RI centres following Apprentice Act will not be covered under ESI (also PF) and therefore, no deduction is to be made from their salary towards ESI
14th August 2018 From India, Kannur
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