Hi All, It is about the contact labour working in the manufacturing company. Can we engage them in the company as a retainer with consolidated payment with TDS for a span of one year and repeat the same?
From India, Mumbai
From India, Mumbai
To my opinion the Answer is " NO " . It is nothing but bypassing, PF, ESIC, Bonus, Gratuity etc. for good number of employees. It may be possible for one or two employees showing their nature of job as consultant, retainer etc.
It is always better to continue them as contractual employee and continue the proper compliance of PF, ESIC, Bonus, Gratuity etc. as applicable.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
skb@usdhrs.in
www.usdhrs.in
From India, New Delhi
336It is always better to continue them as contractual employee and continue the proper compliance of PF, ESIC, Bonus, Gratuity etc. as applicable.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
skb@usdhrs.in
www.usdhrs.in
From India, New Delhi
Hi,
Engaging contract labour as retainers with consolidated payment and TDS (Tax Deducted at Source) for a specific duration, such as one year, is a common practice in many industries, including manufacturing. However, there are several legal and regulatory aspects that you need to consider when structuring such arrangements.
Here are some key points to keep in mind:
Legal Compliance:
Ensure that your engagement of contract labor complies with local labor laws and regulations. Different countries and regions have specific rules regarding the employment of contract workers, and it's important to adhere to these guidelines.
Contractual Agreement:
Draft a comprehensive and legally sound contract that outlines the terms and conditions of the engagement. Specify the duration of the contract, the scope of work, the consolidated payment, and any other relevant details.
Taxation and TDS:
Adhere to tax regulations and deduct TDS as required by the tax authorities. Ensure that you have the necessary documentation, such as PAN (Permanent Account Number) details, to facilitate TDS deductions.
Renewal and Extension:
If you plan to repeat the engagement after the initial one-year period, make sure that the contract clearly outlines the terms for renewal or extension. This may involve renegotiating terms, such as payment and scope of work.
Statutory Benefits:
Be aware of statutory benefits and obligations, contract workers may be entitled to certain benefits, and you need to ensure compliance with these regulations.
Consult Legal and Tax Experts:
It's advisable to consult legal and tax professionals to ensure that your engagement model complies with all relevant laws and regulations. They can provide guidance based on the specific context of your manufacturing company and the jurisdiction in which you operate.
Record Keeping:
Maintain accurate records of payments, deductions, and other relevant information. This is crucial for audits and compliance purposes. Consulting with professionals in labour law and taxation will help you navigate the complexities and ensure a legally sound arrangement.
Thanks
From India, Bangalore
Engaging contract labour as retainers with consolidated payment and TDS (Tax Deducted at Source) for a specific duration, such as one year, is a common practice in many industries, including manufacturing. However, there are several legal and regulatory aspects that you need to consider when structuring such arrangements.
Here are some key points to keep in mind:
Legal Compliance:
Ensure that your engagement of contract labor complies with local labor laws and regulations. Different countries and regions have specific rules regarding the employment of contract workers, and it's important to adhere to these guidelines.
Contractual Agreement:
Draft a comprehensive and legally sound contract that outlines the terms and conditions of the engagement. Specify the duration of the contract, the scope of work, the consolidated payment, and any other relevant details.
Taxation and TDS:
Adhere to tax regulations and deduct TDS as required by the tax authorities. Ensure that you have the necessary documentation, such as PAN (Permanent Account Number) details, to facilitate TDS deductions.
Renewal and Extension:
If you plan to repeat the engagement after the initial one-year period, make sure that the contract clearly outlines the terms for renewal or extension. This may involve renegotiating terms, such as payment and scope of work.
Statutory Benefits:
Be aware of statutory benefits and obligations, contract workers may be entitled to certain benefits, and you need to ensure compliance with these regulations.
Consult Legal and Tax Experts:
It's advisable to consult legal and tax professionals to ensure that your engagement model complies with all relevant laws and regulations. They can provide guidance based on the specific context of your manufacturing company and the jurisdiction in which you operate.
Record Keeping:
Maintain accurate records of payments, deductions, and other relevant information. This is crucial for audits and compliance purposes. Consulting with professionals in labour law and taxation will help you navigate the complexities and ensure a legally sound arrangement.
Thanks
From India, Bangalore
As per Dr. B. V. Raghunath, it is a common practice of engaging contract labor as retainer for 1 year and deduction of TDS by the employer against the consolidated payment. I have my experience working with States like WB, Jharkhand, Telengana, AP, Odisha, Maharashtra, Karnataka, Gujrata, Haryana etc. specially engaged with Steel Plants as Manpower services but in all the cases it is engaged as contractual employees instead of retainer with consolidated remuneration and deduction of TDS by PE. Moreover, one of my client had one practice to engage retired employees as retainer/consultant after retirement against TDS by PE which was strongly objected by DLC stating retainer/consultant are assigned with specialized jobs not with routine jobs. If that the practice then all permanent employees of the organization can be engaged as retainer / consultant and no need to comply PF, ESIC, Bonus, Gratuity etc. Now the said organizations are engaging retired employees as contractual employee and comply under PF & ESIC if applicable, Bonus, Gratuity etc.
You have also mentioned statutory compliances eg PF, ESIC, Bonus, Gratuity etc. are to be taken care as well as TDS will be deducted at source for retainer. It is a conflicting situation. Most of the contractual employees are not earning taxable income.
Therefore, if we comply for PF, ESIC, Gratuity, Bonus etc. we need not consider them as retainer rather to be considered as contractual employee as employee has different treatment from retainer.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
skb@usdhrs.in
www.usdhrs.in
From India, New Delhi
You have also mentioned statutory compliances eg PF, ESIC, Bonus, Gratuity etc. are to be taken care as well as TDS will be deducted at source for retainer. It is a conflicting situation. Most of the contractual employees are not earning taxable income.
Therefore, if we comply for PF, ESIC, Gratuity, Bonus etc. we need not consider them as retainer rather to be considered as contractual employee as employee has different treatment from retainer.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
skb@usdhrs.in
www.usdhrs.in
From India, New Delhi
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