Ours is a manufacturing (textile) unit setup and running for over a year. Ours doesn't come under PF or any other acts as we employ less than 20 members. We have a difficulty setting up a formal employment contract yet. I have elaborated by questions below. Can someone with knowledge on this throw some light:
1. Some staffs expect bonus (one month salary) and a settlement (for 15 to 30 days salary) to be paid every year as they were paid so by their previous employers. I checked there are many employers that pay bonus and other final settlements (15 to 30 day salary, leave encashment etc) every year by Diwali thereby settling every dues with that employee and start afresh after factory opens after Diwali. (I assume this one is like a fixed one year contract and issue a new contract every year). Unlike where employees are settled when they leave their jobs, this system of full and final settlement every year confuses me. Is this method of employee (permanent or contract) compensation valid or legal?
2. Some say 15 days of salary (in above said scenario) is paid as gratuity every year. Can employers chose to pay gratuity every year instead of paying as whole at the end of employment irrespective of they completed 5 years or not. (For contract employees)
1. Some staffs expect bonus (one month salary) and a settlement (for 15 to 30 days salary) to be paid every year as they were paid so by their previous employers. I checked there are many employers that pay bonus and other final settlements (15 to 30 day salary, leave encashment etc) every year by Diwali thereby settling every dues with that employee and start afresh after factory opens after Diwali. (I assume this one is like a fixed one year contract and issue a new contract every year). Unlike where employees are settled when they leave their jobs, this system of full and final settlement every year confuses me. Is this method of employee (permanent or contract) compensation valid or legal?
2. Some say 15 days of salary (in above said scenario) is paid as gratuity every year. Can employers chose to pay gratuity every year instead of paying as whole at the end of employment irrespective of they completed 5 years or not. (For contract employees)