The company that I am presently working with is a licensed electrical contractor and consultant based in central India. Management is looking into the aspect of converting the regular employees (technical and non-technical) to consultants. The roles and duties are going to be the same. The decision would affect me and other employees.
Queries Regarding Conversion to Consultant
Please answer the following queries:
1) Will the salary be consolidated and subject to yearly appraisal?
2) What allowances (HRA, vehicle allowance, etc.) am I entitled to?
3) Would I get a bonus?
4) Is PF or ESIC applicable to them?
5) What obligations do they have for the company and vice versa?
6) Most Important: Impact on Future Job Prospects
Would it hamper my future job searching prospects (Is experience as a consultant counted for government and private job profiles)?
7) Can I have a flexible work schedule?
8) Leave entitlements?
From India, Pune
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Queries Regarding Conversion to Consultant
Please answer the following queries:
1) Will the salary be consolidated and subject to yearly appraisal?
2) What allowances (HRA, vehicle allowance, etc.) am I entitled to?
3) Would I get a bonus?
4) Is PF or ESIC applicable to them?
5) What obligations do they have for the company and vice versa?
6) Most Important: Impact on Future Job Prospects
Would it hamper my future job searching prospects (Is experience as a consultant counted for government and private job profiles)?
7) Can I have a flexible work schedule?
8) Leave entitlements?
From India, Pune
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Converting employees into consultants: A critical analysis
Converting employees into consultants is a misguided strategy by employers to avoid statutory payments and benefits that are exclusive to employees and workers. If you, as consultants, are required to adhere to company policies regarding office timing, holidays, reporting structure, etc., you will not be considered a consultant; instead, you will fall under the definition of an employee. You cannot have an establishment operating solely with consultants, nor can you expect to consult with professionals only, and you cannot have an excessive number of consultants simultaneously.
Now let me answer your queries one by one.
1. Consultant fees versus salary
A consultant will be paid a fee, not a salary. This fee is determined by the consultant, not the employer. When you demand that your services are available at a certain cost, that should be the remuneration amount. If the consulting term is one year, you can send a quotation and demand a higher fee after one year. However, in practice, the employer often decides the remuneration, which can establish a master-servant relationship.
2. Allowances for consultants
You will not receive any allowances unless specified in your contract. The consultant's fee will always be a consolidated amount. If the contract specifies, you may receive travel reimbursements for each day you visit the office.
3. Bonus eligibility for consultants
Consultants do not receive bonuses. However, if you work similarly to an employee, being controlled and supervised by another employee, reporting to someone like any other employee, attending work on time, and taking leave with permission, you may be eligible for a bonus. You need to prove to the authority under the Payment of Bonus Act that you have been working like any other employee but are only designated as a consultant to receive the bonus.
4. PF and ESI applicability
If your contract is genuine, you will not be covered by PF or ESI. However, since it is only an arrangement, the EPF and ESI authorities may demand contributions. It is easy to establish a master-servant relationship, and once established, you should be covered by PF and ESI.
5. Roles and responsibilities of consultants
Consultants have roles and responsibilities as described in the contract. The company's responsibility is to pay the fee once the consultant provides satisfactory advice on various matters. The scope of obligations will be outlined in the contract. Without a genuine contract, you will have the same roles and responsibilities as other workers, and the company will pay you a salary or fees every month.
6. Consultancy role and career prospects
The role of a consultant is not ideal for an entry-level person. A consultant is expected to be an advisor and may not face practical issues. When seeking career advancement or interviewing for a higher position, you will need to explain that you were handling real issues and problem-solving, not just advising. Experience gained from a private establishment may not hold the same value in a government job.
7. Flexible work schedule for consultants
A consultant is expected to have flexible timing, but without a genuine consultancy, you may have to follow the same timing as others. This could establish a master-servant relationship between you and your employer.
8. Leave entitlements for consultants
A consultant is not entitled to leave, nor is their absence marked as leave without pay. If your absence results in a fee reduction, this could establish a master-servant relationship.
In summary, this approach will not work. Regardless of the title given to a person working for an employer, they are essentially a servant and should be entitled to benefits as per the law.
From India, Kannur
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4526Converting employees into consultants is a misguided strategy by employers to avoid statutory payments and benefits that are exclusive to employees and workers. If you, as consultants, are required to adhere to company policies regarding office timing, holidays, reporting structure, etc., you will not be considered a consultant; instead, you will fall under the definition of an employee. You cannot have an establishment operating solely with consultants, nor can you expect to consult with professionals only, and you cannot have an excessive number of consultants simultaneously.
Now let me answer your queries one by one.
1. Consultant fees versus salary
A consultant will be paid a fee, not a salary. This fee is determined by the consultant, not the employer. When you demand that your services are available at a certain cost, that should be the remuneration amount. If the consulting term is one year, you can send a quotation and demand a higher fee after one year. However, in practice, the employer often decides the remuneration, which can establish a master-servant relationship.
2. Allowances for consultants
You will not receive any allowances unless specified in your contract. The consultant's fee will always be a consolidated amount. If the contract specifies, you may receive travel reimbursements for each day you visit the office.
3. Bonus eligibility for consultants
Consultants do not receive bonuses. However, if you work similarly to an employee, being controlled and supervised by another employee, reporting to someone like any other employee, attending work on time, and taking leave with permission, you may be eligible for a bonus. You need to prove to the authority under the Payment of Bonus Act that you have been working like any other employee but are only designated as a consultant to receive the bonus.
4. PF and ESI applicability
If your contract is genuine, you will not be covered by PF or ESI. However, since it is only an arrangement, the EPF and ESI authorities may demand contributions. It is easy to establish a master-servant relationship, and once established, you should be covered by PF and ESI.
5. Roles and responsibilities of consultants
Consultants have roles and responsibilities as described in the contract. The company's responsibility is to pay the fee once the consultant provides satisfactory advice on various matters. The scope of obligations will be outlined in the contract. Without a genuine contract, you will have the same roles and responsibilities as other workers, and the company will pay you a salary or fees every month.
6. Consultancy role and career prospects
The role of a consultant is not ideal for an entry-level person. A consultant is expected to be an advisor and may not face practical issues. When seeking career advancement or interviewing for a higher position, you will need to explain that you were handling real issues and problem-solving, not just advising. Experience gained from a private establishment may not hold the same value in a government job.
7. Flexible work schedule for consultants
A consultant is expected to have flexible timing, but without a genuine consultancy, you may have to follow the same timing as others. This could establish a master-servant relationship between you and your employer.
8. Leave entitlements for consultants
A consultant is not entitled to leave, nor is their absence marked as leave without pay. If your absence results in a fee reduction, this could establish a master-servant relationship.
In summary, this approach will not work. Regardless of the title given to a person working for an employer, they are essentially a servant and should be entitled to benefits as per the law.
From India, Kannur
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