Hey,
We hire trainees on a stipend of Rs. 12,000 monthly. They are hired for a period of 1 year after which they are absorbed on the company rolls. Is there a necessity to have their PF deducted/deposited?
Please suggest.
Regards,
Neha
From India, New Delhi
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We hire trainees on a stipend of Rs. 12,000 monthly. They are hired for a period of 1 year after which they are absorbed on the company rolls. Is there a necessity to have their PF deducted/deposited?
Please suggest.
Regards,
Neha
From India, New Delhi
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Dear Neha,
Trainees kept on stipend without the approval of the apprentice advisor are considered employees of the organization, and all acts will apply to them. In this case, their basic salary is Rs. 12,000, so they may be excluded as employees since the basic salary exceeds Rs. 6,500.
Thank you,
J. S. Malik
From India, Delhi
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174Trainees kept on stipend without the approval of the apprentice advisor are considered employees of the organization, and all acts will apply to them. In this case, their basic salary is Rs. 12,000, so they may be excluded as employees since the basic salary exceeds Rs. 6,500.
Thank you,
J. S. Malik
From India, Delhi
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Dear neha, Its depend on your company policy, whereas PF is applicable on CTC . regards, Ashish
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Dear Sir, if they approved form Apprentice advisor then they are in deduction of PF. Ashish
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Thanks, Mr. Malik and Ashish.
However, I would like to know -
1. Who is an apprentice advisor? My company is registered in Delhi, and the trainees are in Goa.
2. We deduct PF for regular employees whose basic is more than 6500 as well. So should we be deducted PF for trainees as well?
3. In this case, should we deposit backdated PF?
4. If the stipend is less than 10,000, is ESI Act also applicable?
5. The trainees' names do not figure in the payroll register. There is a separate sheet prepared for that, and they do not get any payslips.
Kindly clarify.
Regards,
Neha
From India, New Delhi
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However, I would like to know -
1. Who is an apprentice advisor? My company is registered in Delhi, and the trainees are in Goa.
2. We deduct PF for regular employees whose basic is more than 6500 as well. So should we be deducted PF for trainees as well?
3. In this case, should we deposit backdated PF?
4. If the stipend is less than 10,000, is ESI Act also applicable?
5. The trainees' names do not figure in the payroll register. There is a separate sheet prepared for that, and they do not get any payslips.
Kindly clarify.
Regards,
Neha
From India, New Delhi
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Dear Neha,
As you have asked about the apprentice advisor, I don't know about Delhi where its office is, but I am in Noida, and our apprentice advisor sits in Kanpur.
It is your internal matter as you are deducting PF if the salary is more than 6500. There is a problem if you deduct their PF now; it will be deducted on how much salary because you have not done any bifurcation. So, you will now deduct on 6500, but when you will absorb them, their basic should not be less than 6500.
If the stipend will be less than 10k, then the ESI Act will also be applicable.
As you have mentioned that trainees are not shown on the payroll register, and a separate sheet is made for them. Now the question comes: how and where are you booking their amount in the balance sheet? If you are not booking their salary in the balance sheet and paying off the record, then during PF/ESI inspection, you will not be caught. However, things are, of course, illegal.
Thanks,
J S Malik
From India, Delhi
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As you have asked about the apprentice advisor, I don't know about Delhi where its office is, but I am in Noida, and our apprentice advisor sits in Kanpur.
It is your internal matter as you are deducting PF if the salary is more than 6500. There is a problem if you deduct their PF now; it will be deducted on how much salary because you have not done any bifurcation. So, you will now deduct on 6500, but when you will absorb them, their basic should not be less than 6500.
If the stipend will be less than 10k, then the ESI Act will also be applicable.
As you have mentioned that trainees are not shown on the payroll register, and a separate sheet is made for them. Now the question comes: how and where are you booking their amount in the balance sheet? If you are not booking their salary in the balance sheet and paying off the record, then during PF/ESI inspection, you will not be caught. However, things are, of course, illegal.
Thanks,
J S Malik
From India, Delhi
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Dear All,
If in your standing order, it is mentioned that the Trainee is excluded from PF, you are authorized not to deduct PF (SC Judgment). A Trainee is not liable for PF if the provision is available in your standing order.
Regards,
Tushar Chauhan
From India, Mumbai
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If in your standing order, it is mentioned that the Trainee is excluded from PF, you are authorized not to deduct PF (SC Judgment). A Trainee is not liable for PF if the provision is available in your standing order.
Regards,
Tushar Chauhan
From India, Mumbai
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Dear all,
My salary is 12k per month, in our company we don't receive salary breakups. In this situation, am I eligible for PF? If not, what is the PF ceiling amount for deduction eligibility? Can you please share your ideas?
Regards,
RK
From India, Bangalore
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My salary is 12k per month, in our company we don't receive salary breakups. In this situation, am I eligible for PF? If not, what is the PF ceiling amount for deduction eligibility? Can you please share your ideas?
Regards,
RK
From India, Bangalore
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Hi Neha,
You must have certified standing orders from the state government, and under the classification of workmen, apprentice, or trainees has been defined as 'Apprentice or Trainee is a learner who is receiving training either on payment of a certain fee or grants or aids in allowance during the period of his training during a specified time as fixed by the management or as and when specified under the Minimum Wages Act on such emoluments. An apprentice or trainee shall not be entitled to any kind of bonus or leave with wages, and such emolument will not be subject to any deductions of PF & ESI. Further,
The Supreme Court has held in the case of Central Aeronut & Coco Marketing & Processing Co. Ltd, Mangalore, that trainees were paid stipend during the period of training, and they were engaged under the standing orders of the establishment. It was held that they were not employees within section 2(f) of the EPF Act, and similar law is applicable under the ESI Act.
Please go through your standing orders.
:wink:
From India, Ludhiana
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You must have certified standing orders from the state government, and under the classification of workmen, apprentice, or trainees has been defined as 'Apprentice or Trainee is a learner who is receiving training either on payment of a certain fee or grants or aids in allowance during the period of his training during a specified time as fixed by the management or as and when specified under the Minimum Wages Act on such emoluments. An apprentice or trainee shall not be entitled to any kind of bonus or leave with wages, and such emolument will not be subject to any deductions of PF & ESI. Further,
The Supreme Court has held in the case of Central Aeronut & Coco Marketing & Processing Co. Ltd, Mangalore, that trainees were paid stipend during the period of training, and they were engaged under the standing orders of the establishment. It was held that they were not employees within section 2(f) of the EPF Act, and similar law is applicable under the ESI Act.
Please go through your standing orders.
:wink:
From India, Ludhiana
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Dear Neha,
It is not necessary to deduct PF/ESI or anything from trainees as they are not under the roles of the Company. How can you deduct those? If they are in regular roles, you can rightly deduct from their salaries. Salary is different from Stipend. After completion of the training period, they come under On the Roles. I think it is necessary for you.
With Regards,
Ramesh Andra
From India, Hyderabad
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It is not necessary to deduct PF/ESI or anything from trainees as they are not under the roles of the Company. How can you deduct those? If they are in regular roles, you can rightly deduct from their salaries. Salary is different from Stipend. After completion of the training period, they come under On the Roles. I think it is necessary for you.
With Regards,
Ramesh Andra
From India, Hyderabad
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Hi Ms. Neha,
I will not take a different view, but I would like to streamline the discussion:
Before taking any 'Trainees' (as Mr. Mallik Sir has quoted), you have to register under the 'Apprentice Act - 1961' and take consent from the Apprentice Advisor. Otherwise, paying money in the name of stipend will raise questions from the Labour department.
As you have detailed in your case - when you are paying a stipend, it is a 'Stipend' and not a regular 'Salary'. Hence, the question of paying a PF/ESI amount during their training period doesn't arise. However, the PF & ESI come into place as soon as they are absorbed (if) into the company's regular rolls, right from day one. (I agree with Mr. Katri regarding this matter)
Even if ESI doesn't apply, the 'Workman Compensation Act' will be applicable to the trainees from their day of joining.
I hope I will rest all fears in this matter.
With regards,
Jayesh Yohannan
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I will not take a different view, but I would like to streamline the discussion:
Before taking any 'Trainees' (as Mr. Mallik Sir has quoted), you have to register under the 'Apprentice Act - 1961' and take consent from the Apprentice Advisor. Otherwise, paying money in the name of stipend will raise questions from the Labour department.
As you have detailed in your case - when you are paying a stipend, it is a 'Stipend' and not a regular 'Salary'. Hence, the question of paying a PF/ESI amount during their training period doesn't arise. However, the PF & ESI come into place as soon as they are absorbed (if) into the company's regular rolls, right from day one. (I agree with Mr. Katri regarding this matter)
Even if ESI doesn't apply, the 'Workman Compensation Act' will be applicable to the trainees from their day of joining.
I hope I will rest all fears in this matter.
With regards,
Jayesh Yohannan
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Dear Neha,
Mr. Malik is very senior and has a lot of experience. He has rich experience in IR matters. So, no doubt, his advice is absolutely right. I am confident in him and also agree.
From India, Delhi
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Mr. Malik is very senior and has a lot of experience. He has rich experience in IR matters. So, no doubt, his advice is absolutely right. I am confident in him and also agree.
From India, Delhi
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For ESI deduction on stipend, a model standing order can be displayed and approved by the ESI department, which is sufficient to avoid ESI. The standing order can be created with a minimum of 100 employees/trainees.
sudarshan
From India, Madras
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sudarshan
From India, Madras
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Hi Mr. Ramakrishna,
Employees whose basic salary is less than Rs. 6500/- are eligible for PF deduction under the act. Ask your HR team for your breakup. If the basic is less than Rs. 6500/-, then you are eligible for PF.
From India, Visakhapatnam
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Employees whose basic salary is less than Rs. 6500/- are eligible for PF deduction under the act. Ask your HR team for your breakup. If the basic is less than Rs. 6500/-, then you are eligible for PF.
From India, Visakhapatnam
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Trainees are also part of the employee. Now it depends on how you divide your salary structure. If his/her basic + DA is less than Rs. 6500/-, then you are obliged to deduct their P.F. If the Basic + D.A is more than the prescribed limit of Rs. 6500/-, then there is no requirement to deduct the P.F.
From India
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From India
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We have appointed a trainee for a stipend of Rs 15,000/- per month, and after 6 months, depending upon his performance, we might absorb him into our company. Please advise if his stipend is applicable for PF deduction or not?
From India, Ludhiana
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From India, Ludhiana
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Dear Neha,
It seems the way your company is appointing the trainees is not transparent. Trainees, if absorbed after a year, should attract PF as per the Supreme Court judgement. However, if the basic plus DA is more than 6500, they will be treated as "Excluded" employees and will not come under the purview of PF.
From India, Calcutta
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It seems the way your company is appointing the trainees is not transparent. Trainees, if absorbed after a year, should attract PF as per the Supreme Court judgement. However, if the basic plus DA is more than 6500, they will be treated as "Excluded" employees and will not come under the purview of PF.
From India, Calcutta
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PF Judgement - SC - Trainee - 2006.doc
SALARY with out PF Deduction.xls