We have some part-time employees who work only for 3-4 hours a day in the evening at different sites/locations. The owners of these sites/locations, mainly Government Departments, are insisting on us submitting documents related to these employees' PF/ESI, etc. Can anyone help with the applicability of PF/ESI for such part-time employees? Also, what if these employees are working elsewhere and already have PF/ESI benefits there?
Thanks in advance.
From India, Bangalore
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16Thanks in advance.
From India, Bangalore
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Dear Colleague,
The objective of ESI and PF Acts is social security protection for the "employee," whose interests must be protected in cases of old age, accident, sickness, and so on. Hence, the definition of "employee" is extended as widely as possible. Except for those who are specifically excluded, all others are to be covered.
Here you engage a few employees on a part-time basis for 3–4 hours a day and must be paying wages or salaries to them for the work they do. Hence, there is an implied contract established between the employer and the employees. The moment you pay for the work done, they become your employees as you pay compensation for the work done by them. Hence, you need to check whether such remuneration is within the PF/ESI wage ceiling for coverage and need to cover those employees who are not covered under PF and ESI elsewhere. For example, if an accident happens on your premises while they work for you, who will pay the compensation if you do not cover them under ESI and EDLI under PF? Hence, in my view, they are to be covered under PF and ESI, and you need to remit the contribution for them. If someone has a code number allotted under PF & ESI, the contribution remittance can be done under the same number if it is done with a clear understanding with the said employees' employers. If such employees work without the knowledge of their first employer, then as per the second part of your question, it leads to double employment, which is generally legally prohibited, and if someone works under two different employments, it is actionable on them. A note of caution here is for you to correct the system. Hence, review the system fully and take necessary corrective actions at the earliest to avoid complex challenges on such engagements. We are able to comment only to this extent with the given information.
For your reading:
2(f) "employee" means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of [an establishment], and who gets his wages directly or indirectly from the employer, [and includes any person—
(i) employed by or through a contractor in or in connection with the work of the establishment;
(ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), or under the standing orders of the establishment;]
2(9) "employee" means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and—
(i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or
(ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or
(iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service; [and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department, or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment;
[or any person engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), [and includes such person engaged as an apprentice whose training period is extended to any length of time]
but does not include—]
(a) any member of [the Indian] naval, military, or air forces; or
[(b) any person so employed whose wages (excluding remuneration for overtime work) exceed [such wages as may be prescribed by the Central Government]:
Provided that an employee whose wages (excluding remuneration for overtime work) exceed [such wages as may be prescribed by the Central Government] at any time after (and not before) the beginning of the contribution period, shall continue to be an employee until the end of that period;]
From India, Chennai
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The objective of ESI and PF Acts is social security protection for the "employee," whose interests must be protected in cases of old age, accident, sickness, and so on. Hence, the definition of "employee" is extended as widely as possible. Except for those who are specifically excluded, all others are to be covered.
Here you engage a few employees on a part-time basis for 3–4 hours a day and must be paying wages or salaries to them for the work they do. Hence, there is an implied contract established between the employer and the employees. The moment you pay for the work done, they become your employees as you pay compensation for the work done by them. Hence, you need to check whether such remuneration is within the PF/ESI wage ceiling for coverage and need to cover those employees who are not covered under PF and ESI elsewhere. For example, if an accident happens on your premises while they work for you, who will pay the compensation if you do not cover them under ESI and EDLI under PF? Hence, in my view, they are to be covered under PF and ESI, and you need to remit the contribution for them. If someone has a code number allotted under PF & ESI, the contribution remittance can be done under the same number if it is done with a clear understanding with the said employees' employers. If such employees work without the knowledge of their first employer, then as per the second part of your question, it leads to double employment, which is generally legally prohibited, and if someone works under two different employments, it is actionable on them. A note of caution here is for you to correct the system. Hence, review the system fully and take necessary corrective actions at the earliest to avoid complex challenges on such engagements. We are able to comment only to this extent with the given information.
For your reading:
2(f) "employee" means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of [an establishment], and who gets his wages directly or indirectly from the employer, [and includes any person—
(i) employed by or through a contractor in or in connection with the work of the establishment;
(ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), or under the standing orders of the establishment;]
2(9) "employee" means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and—
(i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or
(ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or
(iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service; [and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department, or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment;
[or any person engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), [and includes such person engaged as an apprentice whose training period is extended to any length of time]
but does not include—]
(a) any member of [the Indian] naval, military, or air forces; or
[(b) any person so employed whose wages (excluding remuneration for overtime work) exceed [such wages as may be prescribed by the Central Government]:
Provided that an employee whose wages (excluding remuneration for overtime work) exceed [such wages as may be prescribed by the Central Government] at any time after (and not before) the beginning of the contribution period, shall continue to be an employee until the end of that period;]
From India, Chennai
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Thank you, Dr. P. Sivakumar, for your detailed explanation.
Applicability of Minimum Wages for Part-Time Employees
Another area of my concern is the applicability of minimum wages for these part-time employees, and I would like to have your opinion on this matter too.
Thanks & Regards,
Hareesh M
From India, Bangalore
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Applicability of Minimum Wages for Part-Time Employees
Another area of my concern is the applicability of minimum wages for these part-time employees, and I would like to have your opinion on this matter too.
Thanks & Regards,
Hareesh M
From India, Bangalore
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Dual Employment and Compliance Issues
If any employee is employed in two organizations on the direct payroll, it constitutes dual employment, as mentioned by Dr. Sivakumar. This situation can lead to compliance issues under PF, ESIC, Bonus, and Gratuity.
Part-Time Workers and Contractor Engagement
There are specialized workers who work on a part-time basis for more than one organization. One possible solution is for these workers to be engaged through a contractor who will oversee all aspects on their behalf and have contracts with the organizations.
Compliance for Highly Specialized Workers
For highly specialized workers whose wages exceed the statutory limit for PF, ESIC, and Bonus (between 1500/- to 2000/- per day), compliance is not necessary. Additionally, if these workers do not complete 240 days of continuous service in a year, they are not eligible for gratuity.
Regards, S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] USD HR Solutions – To strive towards excellence with effort and integrity
From India, New Delhi
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If any employee is employed in two organizations on the direct payroll, it constitutes dual employment, as mentioned by Dr. Sivakumar. This situation can lead to compliance issues under PF, ESIC, Bonus, and Gratuity.
Part-Time Workers and Contractor Engagement
There are specialized workers who work on a part-time basis for more than one organization. One possible solution is for these workers to be engaged through a contractor who will oversee all aspects on their behalf and have contracts with the organizations.
Compliance for Highly Specialized Workers
For highly specialized workers whose wages exceed the statutory limit for PF, ESIC, and Bonus (between 1500/- to 2000/- per day), compliance is not necessary. Additionally, if these workers do not complete 240 days of continuous service in a year, they are not eligible for gratuity.
Regards, S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] USD HR Solutions – To strive towards excellence with effort and integrity
From India, New Delhi
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Applicability of PF and ESIC for Part-Time Workers
PF and ESIC apply to part-time workers as much as they do to full-time workers. Therefore, you need to pay PF and ESIC for them.
As Mr. Bandyopadhyay says, dual employment is a little difficult to manage with reference to PF and ESIC, so you need to look at the compliance options carefully.
Minimum Wages for Part-Time Workers
Minimum wages apply to part-time workers. You need to divide the daily minimum wage rate by 8 to get the minimum hourly rate and ensure that you pay more than that.
From India, Mumbai
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PF and ESIC apply to part-time workers as much as they do to full-time workers. Therefore, you need to pay PF and ESIC for them.
As Mr. Bandyopadhyay says, dual employment is a little difficult to manage with reference to PF and ESIC, so you need to look at the compliance options carefully.
Minimum Wages for Part-Time Workers
Minimum wages apply to part-time workers. You need to divide the daily minimum wage rate by 8 to get the minimum hourly rate and ensure that you pay more than that.
From India, Mumbai
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SC-21-2-2014 reg Part-Time employees.pdf
PF form 2 part A.jpg