Understanding Apprentice Pay and Benefits in Kerala's Construction Industry: What Are the Rules?

Apprentice Payment and Benefits in the Construction Industry in Kerala

Do employers need to pay the apprentice? If yes, is there a slab for the stipend in the construction industry in Kerala? Are they eligible for PF/ESI? Should they be given a letter of apprenticeship? Are there any specific points to be included?

Apprenticeship and Legal Compliance

Apprenticeship has to be as per the Apprenticeship Act of 1961, which means there is a contract of apprenticeship signed by the employer and apprentice and registered under the Act, for it to be recognized as such. This caveat is important as several organizations would label their trainees as apprentices to avoid mandatory legal compliances, only to encounter issues later. It is clarified that apprentices engaged under the Apprenticeship Act of 1961, after registering with the Related Instruction Centre (RI Centre) of the Government, are exempted from both EPF and ESI regulations; otherwise, they are required to be covered under both Acts.

Stipend and Reimbursement

An apprentice is paid a stipend by the employer initially, and later the government reimburses the amount according to its notified rates. Importantly, the stipend does not fall under the category of wages under either of the Acts.

Engaging Trainees in Designated and Non-Designated Trades

You can engage trainees under both designated trades as well as non-designated trades. If you have an employment strength of more than 40 employees, it is mandatory that you engage 2.5% of your total strength of permanent employees as trainees. If you do not have work related to designated trades, you can opt for non-designated trades, which may even include Front Office Executives and housekeeping staff.

Stipend and Benefits for Trainees

The stipend to be paid shall be equal to 70% of the minimum wages applicable to semi-skilled workers for the first year, 80% of the same during the second year, and 90% of the same during the third year. Since they are not workmen but are trainees, they need not be paid PF or ESI. Under the National Apprentice Promotion Scheme, a small amount of stipend paid by you (I believe it is subject to a maximum of Rs 1500 per month) is refunded to the employer by the government.

For more details, please visit https://www.apprenticeshipindia.gov.in/