Employing on Retainership - Are they classified as Employees and whether they are covered under PF?

We are employing certain individuals who are being paid on lumpsum basis every month. Those who are registered with GST ( outgo above 2 lakhs per month) we are paying with GST against their claim saying they are rendering advisory services and for others the lumpsum amount ( below 2 lakhs per month) is paid without any claim/invoice raised by them.

1. Are they classified as Employees and whether they are covered under PF
2. Is it necessary to effect lumpsum payment only against claim/invoice even if they are not covered under GST?
3. Is there any age criteria to employ individuals on a retainer-ship basis

Regards

Dear friend,

" Retainership" is a contract for service between an employer and an independent person with special knowledge and experience in any particular subject or field of activity related to the organization of the employer in order to tender appropriate advice on complex issues as and when required.

Therefore, it is a contract for service entered into between the employer and the person retained as advisor and as such he is not an employee of any sort in the employer's organization and is free to render such service to as many organizations as he prefers subject to the conditions of confidentiality and timely compliance.

Thus the compensation paid to him generally in advance is only a fee charged for the services to be rendered. Hence it is not 'salary' as is paid to an employee and the retainer fee is subject to income tax deduction on TDS basis and Service Tax depending on his total turn over. Therefore, no labor laws pertaining to the establishment of the employer including EPF Act would be applicable to a retainer.

No age criterion is applicable to a retainer.

The concern employee should submit invoice with GST. Employer will deduct TDS as applicable and pay to the employee. Employee in turn will pay GST to the authority. In absence of any valid invoice, it may be appear as improper arrangement and many complications will arise in future.

S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
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