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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22Thanks in advance.
From India, Bangalore
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Dear Colleague,
The objective of ESI and PF Acts is social security protection to the " employee" who's interest has to be protected in case of old age, accident, sickness and so on. Hence the definition of " employee" is extended in a wide application as much as possible. Except those who are specifically excluded, all others are to be covered.
Here you engage few employees on part time basis for 3 - 4 hours in a day and must be paying wages or salary to them for the work they do. Hence there is a contract implied established between the employer and the employees. The moment you pay for the work done, then they become your employee 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 else where. For example if an accident happens in your premises while they work for you who will pay the compensation in such case 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 some one is having Code number allotted under PF & ESI the contribution remittance can be done in the same number if it is done with clear understanding with the said employees' employers. If such employees work without the knowledge of their first employer then as per y the second part of your question it leads to double employment which is prohibited in general legally and if some one work under 2 different employment then it is actionable on them- A note of caution here to you to correct the system. Hence review the system once fully and take necessary corrective actions 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), 2[and includes such person engaged as apprentice whose training period is extended to any length of time]
but does not include] — ]
(a) any member of 3[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 5[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 to the " employee" who's interest has to be protected in case of old age, accident, sickness and so on. Hence the definition of " employee" is extended in a wide application as much as possible. Except those who are specifically excluded, all others are to be covered.
Here you engage few employees on part time basis for 3 - 4 hours in a day and must be paying wages or salary to them for the work they do. Hence there is a contract implied established between the employer and the employees. The moment you pay for the work done, then they become your employee 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 else where. For example if an accident happens in your premises while they work for you who will pay the compensation in such case 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 some one is having Code number allotted under PF & ESI the contribution remittance can be done in the same number if it is done with clear understanding with the said employees' employers. If such employees work without the knowledge of their first employer then as per y the second part of your question it leads to double employment which is prohibited in general legally and if some one work under 2 different employment then it is actionable on them- A note of caution here to you to correct the system. Hence review the system once fully and take necessary corrective actions 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), 2[and includes such person engaged as apprentice whose training period is extended to any length of time]
but does not include] — ]
(a) any member of 3[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 5[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.
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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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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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.
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.
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.
S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions +91 98310 81531 skb@usdhrs.in USD HR Solutions – To strive towards excellence with effort and integrity
From India, New Delhi
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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.
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.
S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions +91 98310 81531 skb@usdhrs.in USD HR Solutions – To strive towards excellence with effort and integrity
From India, New Delhi
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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 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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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 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