Dear Seniors,
I have recently joined a company in the money marketing sector. The company has been in business for the past four years but has not registered under the PF or ESIC Act. Employees receive their salaries in cash, and as a result, no payslips are provided, and no statutory deductions are made.
In my role as an HR professional, I have been tasked with preparing offer letters for all employees and initiating PF & ESI deductions for the staff. I kindly request guidance from my seniors on how to commence the PF & ESI deduction procedures to ensure compliance with statutory requirements.
Regards,
Prachi Desai
From India, Kolkata
Acknowledge(0)
Amend(0)
3I have recently joined a company in the money marketing sector. The company has been in business for the past four years but has not registered under the PF or ESIC Act. Employees receive their salaries in cash, and as a result, no payslips are provided, and no statutory deductions are made.
In my role as an HR professional, I have been tasked with preparing offer letters for all employees and initiating PF & ESI deductions for the staff. I kindly request guidance from my seniors on how to commence the PF & ESI deduction procedures to ensure compliance with statutory requirements.
Regards,
Prachi Desai
From India, Kolkata
Acknowledge(0)Amend(0)
Hi,
If your company/factory comprises more than 20 employees, then the PF Act becomes applicable. For the registration of PF and ESI, it's better to contact your local ESI office and PF authority to get the complete details. Offer letters are issued to candidates who are about to join the organization. Instead, you can proceed with appointment letters for the employees who have not received the same.
Regards,
Rajeev Dixit
From India, Bangalore
Acknowledge(0)Amend(0)
If your company/factory comprises more than 20 employees, then the PF Act becomes applicable. For the registration of PF and ESI, it's better to contact your local ESI office and PF authority to get the complete details. Offer letters are issued to candidates who are about to join the organization. Instead, you can proceed with appointment letters for the employees who have not received the same.
Regards,
Rajeev Dixit
From India, Bangalore
Acknowledge(0)Amend(0)
Dear Sir,
Thank you for your reply. Could you please inform me that until today, the employees have been receiving their salaries in cash, so no PF & ESI deductions have been made. If I register the company with PF & ESI, what should be my next step to regularize the statutory procedures?
Regards,
Prachi Desai
From India, Kolkata
Acknowledge(0)Amend(0)
Thank you for your reply. Could you please inform me that until today, the employees have been receiving their salaries in cash, so no PF & ESI deductions have been made. If I register the company with PF & ESI, what should be my next step to regularize the statutory procedures?
Regards,
Prachi Desai
From India, Kolkata
Acknowledge(0)Amend(0)
Dear Team,
If you don't have PF, ESIC, or PT numbers, then there is no issue. We will process your payroll and provide you with all the benefits of statutory compliance. You do not need to invest Rs. 70,000 or Rs. 80,000 for registration.
Just call Induslink Services at 23060101.
Regards,
Induslink Services
23060101
From India, Mumbai
Acknowledge(0)Amend(0)
If you don't have PF, ESIC, or PT numbers, then there is no issue. We will process your payroll and provide you with all the benefits of statutory compliance. You do not need to invest Rs. 70,000 or Rs. 80,000 for registration.
Just call Induslink Services at 23060101.
Regards,
Induslink Services
23060101
From India, Mumbai
Acknowledge(0)Amend(0)
You have to get it registered even if your strength is 10. It's a good sign you started regularizing some legal issues. Somewhere you have to start. When you file your registration papers, they may ask you for some documents, including the balance sheet/ACS, IT return, etc. These can all be managed nicely. The best thing is to contact the officer in charge of your office area/business for EPF/ESIC (are you in Kolkata? I am told in Kolkata and Mumbai anything is possible, am I correct?) and ask them what to do; they will guide you with everything. You have to spend some money also. Are you prepared to spend? There is no option; one day or another, all of these have to be faced. Don't panic; like you, there are lakhs and lakhs of firms in India. You will get it done.
Kumar.S.
From India, Bangalore
Acknowledge(0)Amend(0)
Kumar.S.
From India, Bangalore
Acknowledge(0)Amend(0)
Hi Prachi,
It's good that your company has started regularizing its affairs. As an HR professional, you have a lot of activities to undertake. Ensure that the offer letter/appointment letter you issue is appropriate so that registration and other activities under the EPF & MP Act 1952 are complied with.
Accordingly, you can start processing payroll as well. Up to now, you may have only worked with the net pay concept, as all payments are in cash. Going forward, you will need to consider other components too. Ideally, you should establish pay bands for all employees based on their designations/job roles, qualifications, experience, seniority in the company, and the actual salary they receive.
Feel free to seek further help as you establish a regular HR department and HR functions. It would be beneficial if you could also share your academic qualifications and experience to enable others to provide appropriate guidance to you.
Warm regards.
From India, Delhi
Acknowledge(0)Amend(0)
It's good that your company has started regularizing its affairs. As an HR professional, you have a lot of activities to undertake. Ensure that the offer letter/appointment letter you issue is appropriate so that registration and other activities under the EPF & MP Act 1952 are complied with.
Accordingly, you can start processing payroll as well. Up to now, you may have only worked with the net pay concept, as all payments are in cash. Going forward, you will need to consider other components too. Ideally, you should establish pay bands for all employees based on their designations/job roles, qualifications, experience, seniority in the company, and the actual salary they receive.
Feel free to seek further help as you establish a regular HR department and HR functions. It would be beneficial if you could also share your academic qualifications and experience to enable others to provide appropriate guidance to you.
Warm regards.
From India, Delhi
Acknowledge(0)Amend(0)
Dear Sir,
Thank you for your valuable suggestions. Please note that I am an MBA in HR from Symbiosis with five years of experience in HR. I would like to ask you about the following points. Could you please provide me with a reply?
1. What is the standard number of days for monthly salary calculation?
2. Currently, the company is providing only offer letters and not appointment letters. In this case, is the company bound by any statutory non-compliance?
3. The company's main business is selling debentures in the market and reinvesting the money in other sectors. In this scenario, is the company also liable for PF and ESI for those employees working in other sectors?
Regards,
Prachi Desai
From India, Kolkata
Acknowledge(0)Amend(0)
Thank you for your valuable suggestions. Please note that I am an MBA in HR from Symbiosis with five years of experience in HR. I would like to ask you about the following points. Could you please provide me with a reply?
1. What is the standard number of days for monthly salary calculation?
2. Currently, the company is providing only offer letters and not appointment letters. In this case, is the company bound by any statutory non-compliance?
3. The company's main business is selling debentures in the market and reinvesting the money in other sectors. In this scenario, is the company also liable for PF and ESI for those employees working in other sectors?
Regards,
Prachi Desai
From India, Kolkata
Acknowledge(0)Amend(0)
Prachi It is good at least your company started initiating steps to regularize the statutory obligations. B.Saikumar Mumbai
From India, Mumbai
Acknowledge(0)Amend(0)
From India, Mumbai
Acknowledge(0)Amend(0)
Dear Sir,
Thanks for your valuable suggestions. Please note that I am an MBA in HR from Symbiosis with 5 years of experience in HR. I would like to ask you about the following points, and I would appreciate it if you could provide me with a reply:
1. What is the standard number of days for monthly salary calculation?
2. Currently, the company only provides offer letters and not appointment letters. In this case, is the company bound by any statutory non-compliance?
3. The company's primary business is selling debentures in the market and reinvesting the money in other sectors. In this scenario, is the company also liable for PF and ESI for employees working in other sectors?
Regards,
Prachi Desai
Dear friend,
1. Average salary is calculated for 30 days (including paid holidays). If you have to pay proportionately, for example, for 10, 15 days, etc., calculate the average salary per day (divided by 30 days) and pay accordingly. Some firms consider the actual number of working days in a month (e.g., 25, 26 days) to determine per day salary. Some use total calendar days, such as 28, 29, 30, or 31 days. This practice varies among firms.
2. Yes, an offer letter should not be considered an appointment letter because an offer does not include the complete terms and conditions. An appointment letter is necessary as it outlines the specific terms of employment. Statutorily, an appointment letter is a document that forms part of statutory records. An offer letter becomes binding only when accepted by the recipient; otherwise, it holds no legal significance.
3. Is your firm registered under NBFC or operates solely as an investment company? Do you engage in lending or borrowing money, or collect deposits from the public? The classification of your operations will determine the requirements. In any case, there is no exemption from PF/ESI unless you are a banking company, in which case separate provisions apply.
Regards,
Kumar S.
From India, Bangalore
Acknowledge(0)Amend(0)
Thanks for your valuable suggestions. Please note that I am an MBA in HR from Symbiosis with 5 years of experience in HR. I would like to ask you about the following points, and I would appreciate it if you could provide me with a reply:
1. What is the standard number of days for monthly salary calculation?
2. Currently, the company only provides offer letters and not appointment letters. In this case, is the company bound by any statutory non-compliance?
3. The company's primary business is selling debentures in the market and reinvesting the money in other sectors. In this scenario, is the company also liable for PF and ESI for employees working in other sectors?
Regards,
Prachi Desai
Dear friend,
1. Average salary is calculated for 30 days (including paid holidays). If you have to pay proportionately, for example, for 10, 15 days, etc., calculate the average salary per day (divided by 30 days) and pay accordingly. Some firms consider the actual number of working days in a month (e.g., 25, 26 days) to determine per day salary. Some use total calendar days, such as 28, 29, 30, or 31 days. This practice varies among firms.
2. Yes, an offer letter should not be considered an appointment letter because an offer does not include the complete terms and conditions. An appointment letter is necessary as it outlines the specific terms of employment. Statutorily, an appointment letter is a document that forms part of statutory records. An offer letter becomes binding only when accepted by the recipient; otherwise, it holds no legal significance.
3. Is your firm registered under NBFC or operates solely as an investment company? Do you engage in lending or borrowing money, or collect deposits from the public? The classification of your operations will determine the requirements. In any case, there is no exemption from PF/ESI unless you are a banking company, in which case separate provisions apply.
Regards,
Kumar S.
From India, Bangalore
Acknowledge(0)Amend(0)
Dear Prachi
I agree with the comments posted by kumar s., on your queries; and further I would like to add the following :
1 : Standard no. of days taken is either 30 or actual days in that month (from 28 to 31); depending on the legacy practices of the company. Now, for monthly salary this includes Sundays/Weekly Off, Closed Holidays.
For per day absence in case of Leave Without Pay, the monthly salary is divided by the NUMBER of days taken in "standard no. of days in a month" to arrive at a day's salary.
2.: It is safer to start with "Öffer Letter" as its not legally binding; and the next step is the Appointment Letter, which implies a commitment for employment. The formal Date of Joining is crucial; as it signals the application and Compliance of the Statutory provisions like PF, ESI etc. In other words, once Appointment Letter is issued and the employee has "joined" on roll, there is no escape from legal compliances.
3. : Your company would be covered under the Shops and Establishment Act; as evident from your description of its activities. Accordingly all the related/applicable labour legislations like PF, ESI etc shall apply.
Thanks for informing that you are an MBA with 5 years of HR experience - it will make communication easier and unambiguous.
Warm regards.
From India, Delhi
Acknowledge(0)Amend(0)
I agree with the comments posted by kumar s., on your queries; and further I would like to add the following :
1 : Standard no. of days taken is either 30 or actual days in that month (from 28 to 31); depending on the legacy practices of the company. Now, for monthly salary this includes Sundays/Weekly Off, Closed Holidays.
For per day absence in case of Leave Without Pay, the monthly salary is divided by the NUMBER of days taken in "standard no. of days in a month" to arrive at a day's salary.
2.: It is safer to start with "Öffer Letter" as its not legally binding; and the next step is the Appointment Letter, which implies a commitment for employment. The formal Date of Joining is crucial; as it signals the application and Compliance of the Statutory provisions like PF, ESI etc. In other words, once Appointment Letter is issued and the employee has "joined" on roll, there is no escape from legal compliances.
3. : Your company would be covered under the Shops and Establishment Act; as evident from your description of its activities. Accordingly all the related/applicable labour legislations like PF, ESI etc shall apply.
Thanks for informing that you are an MBA with 5 years of HR experience - it will make communication easier and unambiguous.
Warm regards.
From India, Delhi
Acknowledge(0)Amend(0)Looking for something specific? - Join & Be Part Of Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.