Are Trainees and Probationary Employees Eligible for PF & ESI Benefits? Let's Discuss!

Dear All,

My questions are:
1. If a person joins an organization as a trainee and receives a stipend, will he be eligible for PF & ESI?
2. Also, if a person joins as an Executive with terms and conditions stating that he will be on probation for six months, can a company choose not to provide PF & ESI benefits until confirmation? As per my knowledge, PF & ESI are not contingent on whether the person is on probation or confirmed. Please suggest.

Regards,
DG

From Day 1, employees are eligible for both the above-mentioned acts. The nature of the job may be permanent or temporary.

If you have any queries, please feel free to call back.

Ravikumar.S
9892028625

Hi DG,

If a person joins as a trainee, he will not be covered under PF; some companies may cover them under ESI. If a person joins as an Executive, they will be covered under both PF and ESI.

Regards,
Sendil G

Hi DG,

A stipend is a form of monetary payment or salary, such as for an internship or apprenticeship. It is often distinct from a wage or a salary because it does not necessarily represent payment for work performed; instead, it represents a payment that enables somebody to be exempt partly or wholly from waged or salaried employment in order to undertake a role that is normally unpaid. Stipends are usually lower than what would be expected as a permanent salary for similar work. This is because the stipend is complemented by other benefits such as accreditation, instruction, food, and/or accommodation. Employers usually refer to money paid to graduate students as a stipend, rather than as wages, to reflect complementary benefits.

Hence, no PF can be calculated.

If in case it is high (for internship), then it can be given & taken as consultancy fee, which is paid after deducting TDS.

Employer can have an accident policy for the member in both the cases as mentioned above.

For an Employee:

From the very 1st day of his employment, the PF is contributed by the employee & employer & paid to the PF dept on the 15th of every month.

If the gross is less than Rs 15,000/- per month, then ESI is applicable. Employer contributes 4.75% on gross & employee contributes 1.75% on gross, which is paid to the ESI dept on the 21st of every month.

If the Gross is Rs 15,001/- per month, then ESI is not applicable; however, the company has medical insurance for the employee, in many cases parents are also included. The burden of the premium is on the employer & not the employee.

I hope I have made it simple?

If the employee joins as a trainee and receives a stipend, they will not be entitled to any benefits such as ESI, PF, etc. In such cases, the employer will deduct TDS for income tax.

Regards,
Sonia

Hello everyone, I have completed my MBA and am currently working in consultancy as a recruiter. Can anyone guide me on the return on PF and ESI for the company? This question was asked during an interview for a generalist profile, and they also inquired about the general format for payroll. Please provide your response in layman's language. I have no prior experience in this area and am learning everything through online research.

Please reply.

Regards,
Shweta

Dear Friends,

My name is Kumar, and I am in senior management of a limited company in Coimbatore, South India. We have been advised by many persons, including a labor advocate, on the applicability of PF for workmen.

PF Deduction Method

Based on the above advice, we had formulated our PF deduction method as follows:

1. Employees intended for long-term work and continuous stay, which includes staff - PF deduction to start after completion of 240 days of service.

2. Casual, contract, and trainee or apprentice workers are not covered unless they stay more than 240 days of service.

3. PF will be deducted for persons eligible as detailed above on 60% of salary (BASIC+DA) up to a ceiling of Rs 6500.00/month, including the casual workers.

We have been following the above for almost 2-3 years now. Recently, we had a visit from a PF inspector, who has verified our records and has come up with the following observations:

1. The PF has to be covered for an employee right from day one of his induction into the company.

2. All categories of employees - casual, trainee, etc., are to be covered under PF from day one.

3. Apprentice exemption can be allowed only if the company is registered under National Apprenticeship. Otherwise, they will be treated as regular workers and have to be covered under PF.

4. For PF contribution, gross salary is to be considered. Only the HRA portion of the salary, to a maximum extent of 20%, can be exempt.

Now we have been asked to recalculate the amounts right from 1.4.2008 and arrange to remit back payments, irrespective of whether the employee is continuing in employment or not.

I request the help of you seniors in clearly advising what is the correct requirement of the PF rule which can be safely followed without getting into trouble with PF officials and will also be fair to the company.

My advance thanks to all your help.

Best regards,

Kumar