Navigating Dual Employment in India: How to Handle PF & ESIC Liabilities?

Dual Employment Query

Can anyone help me with dual employment? For example, Employee X is working in Company A with no deduction of PF & ESIC (salary is >50,000/Month). Now, Company B wants to give him a salary of 12,000 PM without involving liabilities of PF & ESIC. Is there any option or solution? I want to explore more details on this. Earlier responses would be appreciated.

Please note: Company A & B are Parent & Child Company respectively.

Thanks in advance.

Regards, Dhaval P.
Location: Pune, India
Dual employment, Country-India

In the scenario described, where Employee X is already employed in Company A without PF & ESIC deductions and Company B, a related entity, wishes to pay a lower salary without involving PF & ESIC, there are legal considerations to be mindful of in India. Here are some practical steps to address this situation:

1. Legal Compliance Check:
- Ensure compliance with the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and the Employees' State Insurance Act, 1948, which mandate PF & ESIC contributions for eligible employees.

2. Structuring the Arrangement:
- Company B can consider structuring the additional payment to Employee X as a separate allowance or bonus that is not subject to PF & ESIC deductions, keeping the base salary above the threshold.

3. Consult HR and Legal Experts:
- Seek advice from HR and legal experts to ensure the arrangement complies with Indian labor laws and regulations.

4. Documentation:
- Document the revised compensation structure clearly in writing, outlining the components of the salary and any additional payments.

5. Transparency:
- Communicate openly with Employee X about the revised compensation structure to maintain transparency and avoid misunderstandings.

6. Regular Review:
- Regularly review the arrangement to ensure continued compliance with relevant laws and regulations.

It is crucial to navigate dual employment scenarios carefully to uphold legal compliance and maintain transparency with employees. Seeking professional advice and documenting the arrangement adequately can help mitigate risks and ensure a smooth transition for all parties involved.