Navigating Cash Handling and Trainee Policies: Are Trainees Authorized Employees?

Being a financial service company, we have a significant amount of cash in transit and with employees collected from the field. The company has taken out Money Insurance and Fidelity Guarantee for any potential loss, which specifies that it is applicable only if the cash is with an authorized employee. According to the company policy, new field staff undergo a two-month training period as trainees and are not enrolled under PF/ESIC during this time.

Questions Arising from Company Policy

The questions that arise are:

1. Can we consider the trainees as authorized employees of the company since they handle cash even during their training period?
2. Is it mandatory to enroll trainees under PF/ESIC from their first day of joining?
3. Is there a possible solution to this issue?

I am eagerly awaiting a response as this matter is urgent.

Thanks.

Understanding Trainee and Apprentice Designations

Trainee/Apprentice designations are more or less the same, and individuals recruited under these categories for a fixed period are provisionally taken to learn a particular job skill. According to the Apprenticeship Act, these category employees are not considered regular employees of the company. However, employees who are taken as trainees/company apprentices in a company will be covered under social security enactments under ESI and PF. In view of the above, it is to be noted that:

• Considering trainees as authorized persons to handle cash issues is not relevant for extending PF and ESI to such employees. It will purely depend on trust and the nature of employment, which will have certain terms and conditions or guidance given by the employer to employees in accordance with their respective job descriptions.

• If you employ any person other than an Act Apprentice, you are required to extend PF & ESI facilities to such a person, provided your company employs a number of persons as per the relevant clauses of respective enactments, i.e., from an applicability point of view.

• The only solution is that you should not link PF and ESI issues with entrusting cash handling work to your trainee cadre employees. Instead, you should observe their general behavior, honesty, and dedication towards such work, etc.

Regards

Trainees as Authorized Employees

1) Can we consider the trainee as an authorized employee of the company as they handle cash even during traineeships? - Not applicable.

Mandatory Enrollment under PF/ESIC

2) Is it mandatory to enroll the trainee under PF/ESIC from their first day of joining? - YES YES YES.

Possible Solutions

3) Can we have a solution to this issue? - You can collect a refundable deposit and an affidavit from them. Do remember that even if your senior staff abscond with cash, you cannot retrieve it from PF or gratuity contributions.

Reference: https://www.citehr.com/511035-i-am-w...#ixzz3ImX9NCYX

Thank you very much for your advice. In furtherance of my earlier query, I request guidance/suggestions on the following:

1) The ground staff (experiencing high attrition) in our company (an NBFC) consists of rural youths. Before regular onboarding, they receive a consolidated salary without any statutory deductions. After demonstrating satisfactory performance in the initial two months, they are enrolled for PF/ESIC. Is this legal?

2) In the event of any loss or accident, the money/fidelity insurance company requires PF/ESIC details of the employees. Is there a way to consider our ground staff as regular/authorized employees of the company in the initial two months so that we can comply with statutory norms (following the practice mentioned above)?

Kindly advise.

Thanks!!

Regards,
Manmohansinh

Any employee, excluding an apprentice, is coverable under ESIC/EPF from their very first day of joining. Therefore, your practice is illegal. If the name of such self-styled or so-called trainees is not entered in the prescribed records, how will you prove them as your employees?

Regards,
P.K. Sharma

PF Eligibility for Trainees

The trainee, as explained by you, is eligible for PF. If you are not covering them, you are committing a violation and can be penalized. If the employee is eligible and you are paying a consolidated salary, the entire amount shall be eligible for PF contribution and Gratuity. You should avail the services of LABOR LAW CONSULTANTS and put the things in order.