Dear all, We are hiring graduate engineer trainees, we are giving a stipend to the trainees for one year.
Let me know the trainees are eligible for PF, ESI, bonus, and gratuity during the training period.
If trainees are eligible for PF & ESI contribution what are the procedures that will be followed
kindly provide the information to me.
From India, Salem
1Let me know the trainees are eligible for PF, ESI, bonus, and gratuity during the training period.
If trainees are eligible for PF & ESI contribution what are the procedures that will be followed
kindly provide the information to me.
From India, Salem
Dear Colleague,
When we read the definition of " Employee" under the provisions of PF, ESI, Gratuity and Bonus Acts it excludes "Apprentices" generally who are engaged under the provisions of the Apprentices Act 1961 which is a program run by the Government for Skill Building with Related Instructions , Contract Registration and so on which is a scheme under Government.
In case of GETs they are paid Stipend during their Training Period and not Wages. In general the period of Training is 1 year. Based on practical and Legal experience, we suggest the following:
PF & ESI: In case of Graduate Engineer Trainees it is suggested to cover them under PF & ESI for which you need to enroll then under the relevant Acts in the Portal through on line and they will be given PF Number / Universal Account Number and ESI Number. Then you start contributing every month the PF contribution and ESI Contribution at the rate of % of deduction ( PF is 12 % by Employer plus administrative charges and 12% Employee for those whos wages is Rs.15000/- or less and ESI is 3.25 % by employer and 0.75% by employee provided their wages is Rs.21,000 or less). It is leaglly correct that you cover the GETs under both PF & ESI.
Gratuity : In case of Gratuity generally the Training Period of 1 year as GET is excluded and their service of 5 years starts from their Probation Period post GET period. As and when they complete 5 years ( except death or disablement) they automatically become eligible for gratuity starting from their Probation Period post GET time of 1 Year. Mention in the GET order that the first year is purely a Training Period and similar to Apprentice and hence they will be eligible for Gratuity only after completing the training and once they are appointed as " Probationer" / or confirmed Engineer etc. This is a practical suggestion.
In case of Bonus, if the GETs are started involving in the Operations / Business activities during their GET period, then it is advisable to include them in the Bonus list and pay them Bonus as the Law only excludes " Apprentices" However you need not pay bonus if their 'wages ( stipend)" is more than 21,000/- per month during training period.
Relevant provisions:
Employees Provident Fund & MP Act 1952 :
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;]
Employees' State Insurance Act 1948
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 10[or any person engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), or 11[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 12[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] a month
Provided that an employee whose wages (excluding remuneration for overtime work) exceed 14[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;]
Payment of Bonus Act 1965 :
(13) "employee" means any person (other than an apprentice) employed on a salary or wage not exceeding [21,000] per mensem in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms of employment be express or implied
Payment of Gratuity Act 1972 :
(e) "employee" means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, [4] [and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity].
All the Best and God Bless,
Dr.P.SIVAKUMAR
Doctor Siva Global HR
Tamil Nadu
From India, Chennai
When we read the definition of " Employee" under the provisions of PF, ESI, Gratuity and Bonus Acts it excludes "Apprentices" generally who are engaged under the provisions of the Apprentices Act 1961 which is a program run by the Government for Skill Building with Related Instructions , Contract Registration and so on which is a scheme under Government.
In case of GETs they are paid Stipend during their Training Period and not Wages. In general the period of Training is 1 year. Based on practical and Legal experience, we suggest the following:
PF & ESI: In case of Graduate Engineer Trainees it is suggested to cover them under PF & ESI for which you need to enroll then under the relevant Acts in the Portal through on line and they will be given PF Number / Universal Account Number and ESI Number. Then you start contributing every month the PF contribution and ESI Contribution at the rate of % of deduction ( PF is 12 % by Employer plus administrative charges and 12% Employee for those whos wages is Rs.15000/- or less and ESI is 3.25 % by employer and 0.75% by employee provided their wages is Rs.21,000 or less). It is leaglly correct that you cover the GETs under both PF & ESI.
Gratuity : In case of Gratuity generally the Training Period of 1 year as GET is excluded and their service of 5 years starts from their Probation Period post GET period. As and when they complete 5 years ( except death or disablement) they automatically become eligible for gratuity starting from their Probation Period post GET time of 1 Year. Mention in the GET order that the first year is purely a Training Period and similar to Apprentice and hence they will be eligible for Gratuity only after completing the training and once they are appointed as " Probationer" / or confirmed Engineer etc. This is a practical suggestion.
In case of Bonus, if the GETs are started involving in the Operations / Business activities during their GET period, then it is advisable to include them in the Bonus list and pay them Bonus as the Law only excludes " Apprentices" However you need not pay bonus if their 'wages ( stipend)" is more than 21,000/- per month during training period.
Relevant provisions:
Employees Provident Fund & MP Act 1952 :
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;]
Employees' State Insurance Act 1948
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 10[or any person engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), or 11[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 12[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] a month
Provided that an employee whose wages (excluding remuneration for overtime work) exceed 14[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;]
Payment of Bonus Act 1965 :
(13) "employee" means any person (other than an apprentice) employed on a salary or wage not exceeding [21,000] per mensem in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms of employment be express or implied
Payment of Gratuity Act 1972 :
(e) "employee" means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, [4] [and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity].
All the Best and God Bless,
Dr.P.SIVAKUMAR
Doctor Siva Global HR
Tamil Nadu
From India, Chennai
dear sivakumar sir,
thanks for your instruction,
sir i have one more query about PF wages sir,
PF eligibility criteria:
if a person drawn a salary less than 15,000 they are eligible to PF contribution but i have doubt on this 15,000 is their gross salary or PF wages.
sir in my company has prepare PF wages (Gross-HRA) this method is right sir?
kindly provide the information sir.
S.praveen.
From India, Salem
thanks for your instruction,
sir i have one more query about PF wages sir,
PF eligibility criteria:
if a person drawn a salary less than 15,000 they are eligible to PF contribution but i have doubt on this 15,000 is their gross salary or PF wages.
sir in my company has prepare PF wages (Gross-HRA) this method is right sir?
kindly provide the information sir.
S.praveen.
From India, Salem
Dear Colleague,
PF Contribution at the rate of 12% by Employer Plus Administrative Charges and 12% by employee is payable for Basic Wages +DA+ Retaining Allowance. PF is not applicable for HRA
Kindly read relevant provision as below.
EPF & MP ACT 1952:
(b) “basic wages” means all emoluments which are earned by an employee while on duty or 3
[ on leave or on holidays with wages in either case] in accordance with the terms of the contract of
employment and which are paid or payable in cash to him, but does not include—
(i) the cash value of any food concession;
(ii) any dearness allowance (that is to say, all cash payments by whatever name called paid to
an employee on account of a rise in the cost of living), house-rent allowance, overtime allowance,
bonus commission or any other similar allowance payable to the employee in respect of his
employment or of work done in such employment;
(iii) any presents made by the employer;
6. Contributions and matters which may be provided for in Schemes.—5
*** The contribution which shall be paid by the employer to the Fund shall be 6 [ten per cent.] of the basic wages, [dearness allowance and retaining allowance (if any)] for the time being payable to each of the employees [(whether employed by him directly or by or through a contractor)], and the employees‟ contribution shall be equal to the contribution payable by the employer in respect of him and may, [if any employee so desires, be an amount exceeding [ten per cent.]of his basic wages, dearness allowance and retaining allowance (if any), subject to the condition that the employer shall not be under an obligation to pay any contribution over and above his contribution payable under this section]:
[Provided that in its application to any establishment or class of establishments which the Central
Government, after making such inquiry as it deems fit, may, by notification in the Official Gazette
specify, this section shall be subject to the modification that for the words [...... cent.], at both the places where they occur, the words [twelve per cent.]shall be substituted:]
Provided further that where the amount of any contribution payable under this Act involves a fraction
of a rupee, the Scheme may provide for the rounding off of such fraction to the nearest rupee, half of a rupee or quarter of a rupee.
All the Best and God bless,
Dr.P.SIVAKUMAR
Doctor Siva Global HR
Tamil Nadu
From India, Chennai
PF Contribution at the rate of 12% by Employer Plus Administrative Charges and 12% by employee is payable for Basic Wages +DA+ Retaining Allowance. PF is not applicable for HRA
Kindly read relevant provision as below.
EPF & MP ACT 1952:
(b) “basic wages” means all emoluments which are earned by an employee while on duty or 3
[ on leave or on holidays with wages in either case] in accordance with the terms of the contract of
employment and which are paid or payable in cash to him, but does not include—
(i) the cash value of any food concession;
(ii) any dearness allowance (that is to say, all cash payments by whatever name called paid to
an employee on account of a rise in the cost of living), house-rent allowance, overtime allowance,
bonus commission or any other similar allowance payable to the employee in respect of his
employment or of work done in such employment;
(iii) any presents made by the employer;
6. Contributions and matters which may be provided for in Schemes.—5
*** The contribution which shall be paid by the employer to the Fund shall be 6 [ten per cent.] of the basic wages, [dearness allowance and retaining allowance (if any)] for the time being payable to each of the employees [(whether employed by him directly or by or through a contractor)], and the employees‟ contribution shall be equal to the contribution payable by the employer in respect of him and may, [if any employee so desires, be an amount exceeding [ten per cent.]of his basic wages, dearness allowance and retaining allowance (if any), subject to the condition that the employer shall not be under an obligation to pay any contribution over and above his contribution payable under this section]:
[Provided that in its application to any establishment or class of establishments which the Central
Government, after making such inquiry as it deems fit, may, by notification in the Official Gazette
specify, this section shall be subject to the modification that for the words [...... cent.], at both the places where they occur, the words [twelve per cent.]shall be substituted:]
Provided further that where the amount of any contribution payable under this Act involves a fraction
of a rupee, the Scheme may provide for the rounding off of such fraction to the nearest rupee, half of a rupee or quarter of a rupee.
All the Best and God bless,
Dr.P.SIVAKUMAR
Doctor Siva Global HR
Tamil Nadu
From India, Chennai
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