How Should We Classify and Deduct PF/ESI for Need-Based Workers in Pharma Research?

Classification of Need-Based Workers in Pharma Research

We belong to the Pharma Research Industry, conducting research on healthy human beings. We have in-house doctors, nurses, custodians, and lab technicians employed as per the Shops and Establishment Act. We use a CTC style for our pay process and are an MNC.

My query relates to employees engaged on a need basis. For example, during research, we may require external nurses, doctors, and custodians to support our activities in addition to our regular staff. They are paid for the hours they work. For instance, some nurses work for 2 hours a day, while others work 20-30 hours a week. We call them as needed, and they are compensated for their hours worked. For example, we pay Rs. 92/- per hour.

Classification and Deductions for Need-Based Workers

Do we classify them as contract employees, part-time employees, or just need-based workers? In such cases, should we deduct PF and ESI for them? We are currently deducting TDS and paying them.

If PF and ESI should be paid, how do we determine the structure of their basis? PF has to be paid on the basic (12%).

Some officials say they work on a time basis, hence they are not contract workers, so no PF is applicable. Others say they contribute to our services, so PF should be deducted.

Please clarify my queries urgently. I would be grateful for your answers and suggestions.

With Best Regards,
Devi Balaji

Understanding Employee Classification Under ESI and EPF Acts

The laws, namely the E.S.I. Act, 1948, and the EPF & MPs Act, 1952, along with the rules and regulations framed thereunder, make no distinction between casual, temporary, work-charged, hourly/daily, etc., paid employees. All are considered employees, even though they may be working on a time-rated or piece-rated basis, or what you have called need-based. The only exception is for persons engaged under the Apprenticeship Act, 1961. All are employees within the meaning of the said Acts. In the ESI Act, 1948, there is one more exception concerning non-implemented areas.

You are required to ensure compliance with all such employees, provided their wages are within the limit as laid down under the said Acts. Regarding the ESI Act, it has been mentioned in the rules how to calculate the average daily wages for piece-rated/time-rated employees.

Non-compliance with the above Acts in a timely manner may result in the levy of damages up to 100%, as well as interest as laid down under the relevant rules. To avoid such penalties, you or your establishment may contact the appropriate authorities as established under the above Acts and get the records verified with reference to the position of coverage and compliance under said enactments.

Regards