Trainee Salary Structure

Dear All,
We have hired a Trainee with Monthly Salary of Rs.62500/-. I want to know Should i directly show the whole amount as Stipend/Basic or should i provide him a bifurcation of Basic, HRA, Conveyance All, Medical All & other alowances.
If i directly show the amount in Basic, then he have to pay a more TDS as he will not be entitled for exemption like HRA, Conveyance Allowance and Medical Allowance.
I want a legal aspect of hiring someone with huge package on trainee basis and what is the salary structure to be.
Thanks and regards,
Ajay
ajayp1983@yahoo.co.in

Dear Ajay,
From legal aspects:
some one will be considered as trainee only as per Apprenticeship Act.
I believe this is not in your case.
So as per law he will be treated as an employee of your organisation and will be subjected to PF & gratuity.
So please give him a salary breakup, otherwise he will be overburden with tax.

Dear Ajay,

Find out the answers to the following questions first :

A. Do the new joinee has any qualification like B.Tech/M.Tech/BE/ME/MBA/MBBS/BDS etc and if yes is he/she been put under the training of similar trade?

B. Does he/she had completed his/her highest qualification of similar nature as mentioned in point A with in last 3 years?

C. Does He/She posses less than one year of experience?

D. Is your establishment been registered to take trade trainees?

If the answer is no to any of the mentioned points.then you can never ever consider the person as a trainee as per the Apprentice Act,1961.

It is a common mistake that we some time commit by taking non trade trainees as apprentice trainees.

So in case you find even one of the condition is not satisfying,you have to mark the person as an Employee,not a trainee,and in that case payment to him/her has to be under Salary heads that you may bifurcate as per your company policy and it shall have statutory liabilities depending on the heads of bifurcation.

Mr.Ajay
Apart from Apprentices Act, trainees can also be appointed under Standing Orders or even under your service rules.The legal implications depend up on the purpose for which he is appointed and the nature of routine at your comapny that he is required to do irrespective whether what you pay is called stipend or salary.
B.Saikumar
HR & Labour Law advsior
Mumbai