Understanding Apprentice Stipends: How Do Labor Laws Affect ESI and PF Deductions?

Dear all, I have the following queries:

a) What is the rule for a company to give apprentice stipend and incentives under labor laws?

b) Is the stipend and incentive taken into account while calculating ESI/PF deductions and contributions?

I will be grateful if you could clarify.

Regards, MJTR

Stipend Under the Apprentice Act

The stipend is specified under the Apprentice Act. The recent amendment has linked the stipend with minimum wages (earlier it was a fixed amount for each type of apprentice). Apart from this, there may be provisions for apprentices in the standing orders applicable to your unit. That again will have its own rules for the stipend. However, now the stipend can't be below the rates given in the new amendment.

Applicability of PF for Apprentices

For apprentices under the Apprentice Act and under standing orders, PF does not apply. For any other apprentice, by whatever name called, PF applies like it does to any employee.

Thank you very much for your reply. May I know if the standing order is to be obtained for each apprentice, or is it a general one applicable for a particular period? I would be grateful if you could provide a response.

Thanks.

Standing Orders in Factories

Standing orders apply to the factory. There can be only one standing order. Some have their own, while some just follow model standing orders. Some states, like Maharashtra and Gujarat, allow factories to follow model standing orders without getting them certified.

Sections of Standing Orders

The standing orders have different sections. They also define different types of employees. One of them would be apprentices, how they are to be selected, and their terms. I was referring to that part.

You need to refer to your standing orders to see if you are allowed to engage apprentices outside of the Apprentice Act and, if so, under what conditions.