Is My Trainee Worker Plan Legal? Need Advice on Stipend, Deductions, and Structure

Hi all,

Please guide me. I want to appoint a worker as a Trainee for the period of 11 months on a stipend of Rs. 3500/-, thereafter, I will be appointing him on probation for 3 months, and later on, he will be confirmed.

Now, how do I go about it? Please explain.

1) Is it legal or illegal?
2) During the Trainee period, should PF & PT be deducted or not?
3) If I am paying him Rs. 3500/-, then am I allowed to pay Rs. 2000/- as Basic and Rs. 1000/- as D.A., or should it be paid as consolidated?

Please revert back ASAP.

Raj

Raj,

The appointment letter must clearly state the terms of employment and that the person will be considered for probation after completion of the initial training period and thereafter the Confirmation.

It is best to stick to the statutory payments - viz. Minimum wages applicable at the place where you wish to hire. Also, PF/ESIC (as applicable)/PT applicability must be spelled clearly in the appointment letter to handle any disputes later.

Regards,
Manoj

Dear Manoj,

Thank you for your reply. I have not understood about Statutory payment. Do you mean that I can pay them as Basic + D.A as I have mentioned earlier (2000 + 1500)? Is it legal?

Raj

Why can't you take an employee on a contract basis under the rolls of a consultant?

You need not worry about any other legal issues. You can list your conditions of employment with you. The consultant will pay the employee and take their commission from whatever you pay. I hope this is the best option for you.

Reply if any corrections are needed.

Kamal - HR
Hyderabad

Dear Kamal,

It is unfair legal practices we are following. How can a consultant be an employee? There should be some logic when we are hiring a consultant. Can one company have 80% consultants? Will a consultant raise a bill for their consultancy charges? What type of consultancy will be provided by these consultants? Consultants are service providers, so they are required to have a service tax number and will also charge service tax from the employer. I feel it is a misuse of the name consultancy. Others can also put their views.

Regards,
J. S. Malik

Dear Raj,

Yes, you can appoint trainee workers, but the salary should not be less than the grade rate decided by the state government (meaning minimum wages for skilled, semi-skilled, unskilled, clerk, etc.).

For the duration of the training period, please refer to your company's standing orders (standing orders certified by the deputy labor commissioner); it must include conditions of employment for trainees, probation, permanent positions, etc.

You can appoint a trainee worker for a six-month period, and if the training is not effective, you can extend it for a further three months, and then another three months (completing a cycle for one year).

Trainee workers should receive all legal benefits.

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Best Regards,
Sajid Ansari

Dear Mr. Malik,

Actually, I didn't get you... How can "hiring of employees on a contract basis" be an illegal practice? Can you be more descriptive for my understanding? Let me know something from you on this topic.

Other seniors, please give your suggestions.

Regards,
Kamal

Dear Kamal,

I got confused as you have used the word "consultant." Dear, you can hire workers from contractors on a contract basis; there is no problem. Get yourself registered if the number is more than 20. I replied to some other query; sorry for the inconvenience.

Regards,
Jas Malik

Dear Malikji,

You were right in your earlier response too. These days it is very common to see drivers, peons, etc., being put on the rolls of a "consultant" who will just put up a consolidated bill of services (and pay a pittance to these poor wretched souls). This way the company reduces headcount, as well as expenses, resulting in the improvement of the bottom line (which is what matters to private sector companies).

How far it is illegal under the Minimum Wages Act, Contract Labour Act, ID Act (unfair labor practice) is the headache of the "consultant" (that is why he is called the consultant). I hope you are able to understand what Mr. Kamal is trying to say. Earlier, it was not done so openly, but now this has become a Standard Operating Practice. :p

Coming back to the original query; there are various kinds of trainees like stipendiary trainee, summer trainee, apprentice trainee under the Apprentices Act, etc. Each has to be dealt with in specific ways that are legal.

Regards.