Are Piece-Rate Workers Eligible for Provident Fund and ESI Benefits? Seeking Clarification

Dear Friends, please clarify whether the piece-rated workers are eligible for Provident Fund and ESI benefits since their work is based on a piece rate.

Regards,
PBS KUMAR

If the workmen engaged by you are 20 and above, PF will apply irrespective of whether they are regular workmen or piece-rate workmen. I am not aware of the ESI part.

Regards,
Pon

Applicability of PF & ESI for Piece-Rated Workers

PF & ESI both will be applicable if there is an employer-employee relationship. The calculation will be based on the actual amount paid monthly.

Regards,
Kamal

ESI and Piece-Rate Work

In the case of ESI, it is important to consider where the work is carried out on a piece-rate basis. Whether it is on the employer's premises or at the workmen's place, such as BIDI workers, makes a difference. Some workers work on a piece-rate basis in the employer's factory or works, and in such cases, ESI is applicable to those workers. However, some workmen take materials to their place of residence to complete the work, and in this situation, ESI is not applicable to those workmen.

EPF Applicability

EPF is applicable in both the scenarios explained above.

If there is an employer-employee relationship, PF and ESI are applicable. It does not matter where the work is being carried out.

Regards,
Kamal

Very interesting question posed by Kumar ji. Nowadays, to avoid liability under the PF and ESI Acts, employers draft agreements that may be job-oriented or piece-rated. In such cases, if the matter goes to the judiciary, they try to unveil any potential deception. Should they discover that the agreements are mere camouflage or a sham, they rule the case against the employer.

Regards

Dear Kuljit ji, thank you for your comment. Some more clarification, please, from experts in this field. It's a vital question and a day-to-day problem faced by HR professionals. Employers always insist that my work should not be obstructed by these issues. If the statutory authority asks the question again, the employer blames our HR person. So, I request all of you, what are the solutions?

Regards,
PBS KUMAR