What Does Working on a Consultancy Basis Mean for My Job Benefits and Pay?

Hello, my name is Dinesh. I have been newly recruited in a construction firm. I copied down the offer letter sentence below:

"This has reference to your application and subsequent discussions you had with us. We are pleased to retain your services as “Engineer – XXX” on a consultancy assignment basis in our organization as per the terms and conditions agreed with you.

The contract letter detailing the terms and conditions of your consultancy assignment will be issued to you upon joining our organization. You would endeavor to start your assignment at the earliest but in any case not later than the specified date.

Please sign and return the copy of this letter as a token of acceptance of this assignment on a retainership basis."

I received this letter on their company's letterhead. They are telling me I have to work on a consultancy basis, and they told me this is a direct company contract.

Here are my questions:

1. What is a consultancy agreement basis?
2. Will I get the same facilities as permanent staff?
3. Will I get a payslip (they told me I will have a net salary with only TDS deducted from it)?
4. What about other site allowances?

Please help me understand.

1. Consultancy Agreement

- This is a third-party payroll arrangement. You will not be on the direct payroll of the company but on the payroll of a consultancy and will be deputed to the company.

2. Facilities

- Facilities are based on the agreement with the consultancy. They won't be the same as those for permanent staff.

3. Payslip

- Ideally, you should get a payslip, but do check with the consultancy about the same.

4. Allowances

- Again, allowances depend on the agreement with the consultancy.

Further Questions

- Kindly let me know if you have any further questions.

Dear Dinesh,

They have appointed you as a Consultant, not as an employee. Therefore, there is no scope for the applicability of benefits as an employee. That is the reason why the only deduction is TDS, and there is no PF & ESIC. Furthermore, the wording you copied is for the Offer letter; they will issue the actual agreement for the consultant upon your joining.

Thanks,
Lokesh

1. Consultancy Agreement - Is this a third-party payroll situation? You will not be on the direct payroll of the company but on the payroll of a consultancy and will be deputed to the company.

Thanks for your reply.

1. As per discussions we had during the interview, they clearly stated that there is no third party involved. Also, they mentioned that you will be under direct consultation within the company. Does that mean I will be under contract for one or two years? Please explain.

2. Is this some kind of fixed-term contract? If it is, what are the typical terms? Please explain and provide more details about direct consultant employees.

Thanks for your replies. It was really helpful.

Can you explain to me what contractual employment is all about?

1. Is it a fixed term, like 2 years, and after that, will there be no relationship between the company and me?
2. And I don't have PF, allowances, or facilities like other staff do?
3. Will I be treated as staff?

Please reply.

Yes, it is for a fixed period, and the duration is determined by the company. If needed, they can renew the contract.

Generally, employees on a contract do not receive these benefits.

You will not be a permanent employee in the company, and your treatment will depend on the company's culture.