Hi, my company is currently paying salaries in cash to all employees. Now, they want to transfer the salaries to the bank accounts of each individual, whether they are laborers or staff. However, our company does not provide PF benefits to any employee and only provides ESIC to a few employees. They are planning to convert some existing employees into contractors. So, after that, can we provide salaries to our employees in their bank accounts if we only want to give them the ESIC benefit, not PF? If yes, how?
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First of all, you cannot pay salaries in cash. Second, you cannot make one employee a contractor in name only and shift all your employees under his umbrella. Even if you engage a contractor, liabilities such as ESI, PF, etc., will fall on your shoulders unless the contractor has separate ESI and EPF registrations.
Additionally, you cannot engage contract labor (when placing employees under a contractor, those employees become contract labor) in core operational activities that are of a continuous nature. These actions could lead to legal complications. Therefore, it is advisable to register eligible workers under your own ESI and EPF accounts and operate the business without fear.
Even under a contract of service, you must bear the costs of wages, bonuses, PF, ESI, etc. So, what real benefit is there in having a contractor involved? Essentially, none.
From India, Kannur
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4526Additionally, you cannot engage contract labor (when placing employees under a contractor, those employees become contract labor) in core operational activities that are of a continuous nature. These actions could lead to legal complications. Therefore, it is advisable to register eligible workers under your own ESI and EPF accounts and operate the business without fear.
Even under a contract of service, you must bear the costs of wages, bonuses, PF, ESI, etc. So, what real benefit is there in having a contractor involved? Essentially, none.
From India, Kannur
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Online payment of PF mandatory from 1.1.2016.pdf
Employee Benefits.doc