Can We Legally Designate an Employee as a Consultant While Offering Full Benefits?

I want to know if we can designate an employee as a Consultant. He will be given an appointment letter, and all terms and conditions will be as an employee, but his designation will only be given as a consultant, like Financial Consultant. He will also be covered under PF and ESI.

Will it be classified as a consultant or a salaried person under IT?

If he is on a full-time basis, he will be classified as an employee (salaried person).

Regards,
R. Ponraj

Hello haneefabd,

Ponraj is right. When you are giving him even PF, etc., he can ONLY be classified as an 'employee'. But why do you want to designate him as a 'consultant' in the first place? If you can provide the details/reasons, maybe someone in this forum can give you alternate ideas on how to handle the issue.

Regards,
TS

He can be designated as "Officer on Special Duty" (OSD) instead of Consultant.

Regards,
R. Ponraj

There is no problem with the designation as long as you have marked his role against the hierarchy defined for the organization. If you have defined a "Consultant" designation, you have to map it to, for example, an "Asst. Manager cadre" or a "Manager" cadre. This would be important to have clarity on into which category he falls for certain benefits as an employee.

Also, you have to clearly identify his role and responsibilities. Often it is difficult to define such roles when compared to more accepted designations like Manager, Customer Support Executive, Design Engineer, etc.

You could also consider, if it suits your organization, giving him a designation based on the organizational hierarchy (for example, Manager - production support) for the HR records and have the visiting cards to suit the business needs as "Consultant". For all career discussions, the designation from HR records holds good.

Hope this helps.

"Clearly, if PF and ESIC are given directly from the company account, then one cannot define him as a consultant because there is no provision to otherwise define a consultant in your standing order. Otherwise, take him through a third party.

Regards"

Mr. Bunti is right; there must be a Standing Order in which it is clearly mentioned the job and responsibility you can assign. The designation as Consultant must be mentioned in the Standing Order of the Company.

Regards,
Shish Ram

Designation can be anything. 'Consultant' designation is being used in many companies for regular employees as well. Efforts should be made to coin such designations which will convey the role, responsibility, and place in the hierarchy properly.

In the instant case, though the person is designated as a Consultant, he is a full-time employee of the organization, he is paid a Salary and not Consultancy Fees; hence, his income has to be treated as 'Income from Salary' and needs to be taxed accordingly.

"I want to know, can we designate an employee as a Consultant? He will be given an appointment letter, and all terms & conditions will be as an employee, but his designation only will be given as a consultant, like Financial consultant. He will also be covered under PF and ESI. Will it be classified as a consultant or a salaried person under IT?"

Dear Haneefabd,

I fully agree with our colleagues who have given their opinions above. See if he is covered by PF & ESIC also. Then, he is an employee only (salaried person only), and the income tax slabs applicable to salaried employees will also be applicable to him.

In order to prove him as a "Consultant," the company must enter into an agreement with him for providing specific services. Only then will he be considered a consultant, and his tax will be deducted accordingly.

Regards,
Shreyas Dave
Muscat

I want to know, can we designate an employee as a Consultant? He will be given an appointment letter, and all terms and conditions will be as an employee, but his designation will only be given as a consultant, like Financial Consultant. He will also be covered under PF and ESI. Will it be classified as a consultant or a salaried person under IT?

If any consultant is paid Professional Charges, then the applicability of all Labour Laws is absolutely not required.

I have corrected the spelling, grammar, and punctuation errors in your input. The text is now properly formatted with appropriate paragraph breaks. Let me know if you need further assistance.

Hi, Haneefabad,

Will you clarify the very purpose of designating an employee as a "Consultant"? In general, a consultant works for a specific assignment and does not need to work as a general employee. The scope of work and payment terms are clearly defined in the 'Agreement' in government stipulated papers.

Regards,
Mohammed Azeez

Dear HR Practitioner,

I am associated with the construction industry and have a system of engaging employees as consultants on a contract basis. In this regard, I have a few queries regarding appointments:

1. Should we provide an offer letter as a professional consultant with a designation to prospective candidates?

2. Should we mention the designation and key responsibility area in the contract agreement?

Awaiting speedy feedback.