Navigating Contract Agreements for Employees Over 60: What Should Be Included?

Hi,

One of our employees is now above 60 years old. Our company has made an agreement with him to work as a contract employee. Please help me understand what should be included in the agreement for a contract employee. Is he now eligible for PF or leave salary? It is clear to me that ESI should be deducted from his salary. I need a draft for the contract agreement.

Regards...

Hi Sonika,

For a consultant at 60 years old, no ESI, no PF, just sign the contract. I have enclosed the draft for the same, which you may go through and customize according to your needs. The only mandatory thing required is the PAN card/number of the concerned individual.

Please pay attention to the following details: salary, PAN card, duration, leaves, other perks, travel allowance/limits. The rest can be ascertained from the attachment, please.

If you have any queries, please revert at nsr28@rediffmail.com.

Regards,
Neeraj

Hi Neeraj,

Thank you for the reply. I have also contacted the ESI department. A big confusion has been created; according to them, a person above 60 years on a contract basis is eligible for ESI. According to ESI rules, if a person has worked in a company for only one day, that person is also eligible for ESI. I would be very thankful if you could help solve this problem. I am working in Jammu.

Regards,
Sonika

Hi Sonika,

First of all, for ESI omission, you need to do the following things:

1. Sign the contract with the employee.
2. Don't put him on the rolls (of course, this is because he is not an on-roll employee).
3. He shall have to raise a monthly bill to the company, from which your accounts department shall deduct TDS. PAN card requirement.
4. The accounts department shall issue the TDS certificate at the end of the year.

If this procedure is followed, there is no necessity for ESI. We have been doing the same for a long time. You have to treat this employee as a consultant who is hired only to provide consultancy and shall not perform the job as a regular employee does. Certainly, this way, you can answer to ESI officials anytime if asked that this is not your employee, but just hired for consultancy.

Secondly, I hope the fee for such a consultant is going to be more than Rs 10,000.00, which itself shall make the concern ineligible for the ESI.

Regards,
Neeraj