Navigating Compliance for Remote Workers: Employee or Contractor and Salary Practices?

Case Study: Employment Compliance for Remote Workers

Suppose a person X is based in Assam and is working for a private limited company Y from his home in Assam. The closest office of the private limited company Y is based in Delhi. Company Y is paying that person Rs. 16,000 per month. Is it legal or compliant if company Y shows person X as a full-time employee of the company on payroll? Person X has no other income source. Or does company Y have to show that person X as a contractor, making TDS applicable?

Compliance Documentation Requirements

Also, for compliance purposes, what are the documents (PAN card, appointment letter, etc.) we should keep in our company file for such employees?

Salary Increment and Payment Frequency Compliance

Is there any compliance requirement that makes it mandatory to increase the salary of employees every year, or can we keep it the same if the employee is happy?

Can we transfer a few months' salary of an employee together, or is it mandatory to transfer it every month? The employee is happy if we transfer the salary together. Please let us know.

Regards,
Khusboo

Payroll Considerations for Person X

The person X has to be shown in the payroll of company Y, irrespective of the company base. Since person X is receiving only Rs. 16,000 per month, he is not liable to pay income tax, and hence no TDS is applicable.

Regards,
Pon