Dear Members, Hope everyone is in excellent health. My close friend has started a company that is a startup and is approx 3 months old. My friend being a thorough professional follows every rule to the line and has asked me for some HR advice in light of the new wage code 2019.
1) As per the new Act it will be necessary to keep Basic at 50% of total salary. In this event, I had suggested to cap the PF contribution to Rs 15000 of Basic. However, with rapid changes in policies is the right approach to take.
2) As of now I understand that startups are exempt from the Payment of Bonus Act for the first 5 years. Which if correct I had suggested her to keep the Basic salary of all her employees where possible to above Rs 21000. However, the new wage code is silent on the issue where the Basic salary is above 50%. In my friend's case if the Basic salary is kept above Rs 21000 then the basic salary is more than 50% of the total gross salary of the majority of employees. Is this illegal.
3) I also want to understand the concept of the magic number of 20 employees or more to be eligible for PF. If hypothetically there are 30 employees in a company. Now 19 employees are on roll of the company and 11 are shown as contract employees of a third party or as independent consultants. In such a case is there any contravention of any law. Further, will the PF act be applicable as the employees are in 2 different classes i.e one being full-time and the other being contractual or consultants. The consultants will be paid a lump sum amount with no bifurcation.
Kindly advice.
1) As per the new Act it will be necessary to keep Basic at 50% of total salary. In this event, I had suggested to cap the PF contribution to Rs 15000 of Basic. However, with rapid changes in policies is the right approach to take.
2) As of now I understand that startups are exempt from the Payment of Bonus Act for the first 5 years. Which if correct I had suggested her to keep the Basic salary of all her employees where possible to above Rs 21000. However, the new wage code is silent on the issue where the Basic salary is above 50%. In my friend's case if the Basic salary is kept above Rs 21000 then the basic salary is more than 50% of the total gross salary of the majority of employees. Is this illegal.
3) I also want to understand the concept of the magic number of 20 employees or more to be eligible for PF. If hypothetically there are 30 employees in a company. Now 19 employees are on roll of the company and 11 are shown as contract employees of a third party or as independent consultants. In such a case is there any contravention of any law. Further, will the PF act be applicable as the employees are in 2 different classes i.e one being full-time and the other being contractual or consultants. The consultants will be paid a lump sum amount with no bifurcation.
Kindly advice.