Recruiting workers on a piece rate basis - how do we have to maintain their records (especially their ESIC and PF contribution)?
If one month his/her earning Rs 30000/ hence Exempted for EPF and ESI
Next month earning Rs 14000/ how will you manage?
Anybody, please advise..
From India, Karur
If one month his/her earning Rs 30000/ hence Exempted for EPF and ESI
Next month earning Rs 14000/ how will you manage?
Anybody, please advise..
From India, Karur
Once covered by EPF he will continue to be covered irrespective of wages. Similarly, an employee covered by ESi will at least remain till the contribution period ends. When you register a worker whose wages is exclusively under a piece rate arrangement ( the statutory minimum wages do prescribe for a standard time rate even for workers under piece rate) what you have to consider is the average remuneration that he might earn per month had he worked for 26 days. Even when you appoint somebody, you will be 'offering' a wages, and that can be considered as 'notional wages' for coverage under EPF and ESI.
EPF and ESI being social security arrangements, offering them to a worker will not cost you heavily. Therefore, if the earnings in off seasons is not going to be more than Rs 15000, you can consider giving them PF. The contribution, of course, can be restricted to Rs 15000. Similarly you can give ESI also.
There are some complications associated with treatment of piece rate wages. It is true that if the notional wages, the wages that one should have earned had he worked for the entire month comprising 26 days, exceeds Rs 15000 or Rs 21000, as the case may be, he can be excluded from the coverage of ESI and PF. When you apply this rule for coverage, the authorities can ask for time rate (standard time rate) fixed for the category by the government and treat the piece rate as 'incentive wages'. Expert opinion invited.
Again, when you pay by piece there cannot be any bifurcation of wages at the time of calculation of gratuity. Now almost all employers pay gratuity based on basic pay and DA, if any. Though I do not support this view at all, this is the practice. Then in respect of workers who are paid purely on the basic of number of units manufactured, the same will be the salary for calculation of gratuity. The employer will have to take average of the wages for the period three months preceding to the date of exit of the worker.
From India, Kannur
4244EPF and ESI being social security arrangements, offering them to a worker will not cost you heavily. Therefore, if the earnings in off seasons is not going to be more than Rs 15000, you can consider giving them PF. The contribution, of course, can be restricted to Rs 15000. Similarly you can give ESI also.
There are some complications associated with treatment of piece rate wages. It is true that if the notional wages, the wages that one should have earned had he worked for the entire month comprising 26 days, exceeds Rs 15000 or Rs 21000, as the case may be, he can be excluded from the coverage of ESI and PF. When you apply this rule for coverage, the authorities can ask for time rate (standard time rate) fixed for the category by the government and treat the piece rate as 'incentive wages'. Expert opinion invited.
Again, when you pay by piece there cannot be any bifurcation of wages at the time of calculation of gratuity. Now almost all employers pay gratuity based on basic pay and DA, if any. Though I do not support this view at all, this is the practice. Then in respect of workers who are paid purely on the basic of number of units manufactured, the same will be the salary for calculation of gratuity. The employer will have to take average of the wages for the period three months preceding to the date of exit of the worker.
From India, Kannur
Dear Rakesh
Following suggestions/points to ponder
1) Whatever may be the piece rate is should not be less than Minimum wages applicable to the establishment
2) ESIC membership is to be continued for the period of 6 months (till the contribution period ends) even if the wages exceeds Rs. 21000
3) Once a PF member , membership is to be continued - min contribution on ceiling of Rs. 15000 if draws wages higher than 15000 if draws less than on actual
Hope this helps
Regards
Shailesh Parikh
99 98 97 10 65
From India, Mumbai
Following suggestions/points to ponder
1) Whatever may be the piece rate is should not be less than Minimum wages applicable to the establishment
2) ESIC membership is to be continued for the period of 6 months (till the contribution period ends) even if the wages exceeds Rs. 21000
3) Once a PF member , membership is to be continued - min contribution on ceiling of Rs. 15000 if draws wages higher than 15000 if draws less than on actual
Hope this helps
Regards
Shailesh Parikh
99 98 97 10 65
From India, Mumbai
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