Queries
CHR 629
Dear CHR,

One of my my known organization is into training, development and placements. It pays salary to the all of their employees as "consultation fees" as lumsum(consolidated pay) and shows into their accounts as Consulting Charges and deducts "prfessional tax" 5.2 per centage at source itself.

This organization is registered as consulting pvt ltd. and having 3 Divisions with 3 different names as seperate legall entity and registered as Training Company, Development Company and MAIN ONE as Consulting Company Pvt Ltd, but all of these 3 division employees getting salary as "CONSULTATION FEES" from the main Consulting Company pvt ltd.

My question is, can any company can pay to ALL OF HIS EMPLOYEES AS CONSULTATION FEE instead of salary by mear registering company as CONSULTING PVT LTD? is it valid practice? if not what kind of allowences/eminities/facilities/perks(like HRA, DA, EA, CCA, PF, GPF, Insurance etc.,) will entitle by these employees.

This organization's strength is around 40-50 members(employees, management etc)

and what laws applicable to these kind of organizations.

could you breif me out what laws making them to do so, and which law can prevent them to do so?



Expecting your early reply.

thanking you,

ramanuj

[Admin: Sent by ramanuj through email]
26th February 2005 From India, Gurgaon

PARTICIPATING IN DISCUSSION:
CHR
Founder Cite.co
Jenny_annthomas
Hr Executive

Well..It is possible to give consultation fees to the people who come under the functions that the company has outsourced..but its not possible to give a consultation fee for the core functions or departments of that company.
For example: In a BPO, HR, Administration,Training, Accounts and may be a part of the operations can be outsourced.but the core functions of the company like finance and Operations cannot be outsourced as these are funtions that have to deal internally within the company. I hope to have satisfied your query.Please revert in case u have further queries.

30th April 2008 From India, Mumbai

Dear Jenny,
I think more detailed reply is required to understand, especially :
a) how the consultants working in 3 separate companies can get consultation fee from a single company?
b) Who are the beneficiary of PF/ Insurance etc. when none of them are employees?
c) Is it possible to operate 3 establishments either legally or practically with out permanent employees?
Regards,
Venkatesh
2nd May 2008 From India, Hyderabad

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