Hi all,
We are into ITE services. recently we appointed 20 people in our company as trainees. As per our appointment contract, they will be named trainee for a period of Four months. Once they complete training sucessfully, they will be appointed as full time employee of our company.
Now the problem is that, our management wants to keep First months salary of those trainees on hold. Once a trainee sucessfully completes his/her training, First months salary will be released. We want to mention this point on offer letters.
Can it be possible legally. Is there anything in our labour laws against this type of provisions. Please suggest me with details.
Thanks & Regards
Debajyoti
From India, Gurgaon
We are into ITE services. recently we appointed 20 people in our company as trainees. As per our appointment contract, they will be named trainee for a period of Four months. Once they complete training sucessfully, they will be appointed as full time employee of our company.
Now the problem is that, our management wants to keep First months salary of those trainees on hold. Once a trainee sucessfully completes his/her training, First months salary will be released. We want to mention this point on offer letters.
Can it be possible legally. Is there anything in our labour laws against this type of provisions. Please suggest me with details.
Thanks & Regards
Debajyoti
From India, Gurgaon
dear Debajyoti, Trainee is not an employee hence labour laws are not applicable. P M Patel
From India, Mumbai
8From India, Mumbai
Dear Mr. P M Patel,
thanks for your valuable suggestion, but I don't agree with your remark. As per our labour laws, Trainees & part timers are treated as employees.
Please suggest me.
Thanks
Debajyoti
From India, Gurgaon
thanks for your valuable suggestion, but I don't agree with your remark. As per our labour laws, Trainees & part timers are treated as employees.
Please suggest me.
Thanks
Debajyoti
From India, Gurgaon
Dear Debajyoti,
First of all trainees are not paid salary but stipend.
Secondly - it will not be fair to hold first month's stipend. It could also invite legal complications.
Therefore I suggest a different alternative -
You reduce the monthly stipend amount by 20% and say in your engagement letter (do not use the term appointment letter as you appoint an employee whereas trainees are only engaged) that if training is successful, the trainee shall also be paid a reward equivalent to one month's stipend. This way, you will be able to satisfy your management and at the same time not indulge in any illegality.
KKT
From India, Delhi
First of all trainees are not paid salary but stipend.
Secondly - it will not be fair to hold first month's stipend. It could also invite legal complications.
Therefore I suggest a different alternative -
You reduce the monthly stipend amount by 20% and say in your engagement letter (do not use the term appointment letter as you appoint an employee whereas trainees are only engaged) that if training is successful, the trainee shall also be paid a reward equivalent to one month's stipend. This way, you will be able to satisfy your management and at the same time not indulge in any illegality.
KKT
From India, Delhi
Dear KKT,
Thanks for your suggestion. I have already discussed your points to my management.
Can you please speak little more about "legal complications" (you mentioned) we can face, if we still hold first months salary for four months.
Thanks & Regards
Debajyoti
From India, Gurgaon
Thanks for your suggestion. I have already discussed your points to my management.
Can you please speak little more about "legal complications" (you mentioned) we can face, if we still hold first months salary for four months.
Thanks & Regards
Debajyoti
From India, Gurgaon
Dear Friend,
The Appointment Contract speacks :
Designation : Trainee
Period of training : four months
Salary : Paybale holding First month amount
Condition : The withhold salary will be released on completion
View Point :
1. Plaese mention the word stipend in place of salary.
2. Define the scope of work in line with Apprentiship Act.
3. If you consider them as trainee : Statutory compliance will have to done
(i) Coverage under Employees Provident Fund
(ii) Coverage under ESIC
(iii) Other benefits extended to regualr employees
Regards
SC MAHTO
The Appointment Contract speacks :
Designation : Trainee
Period of training : four months
Salary : Paybale holding First month amount
Condition : The withhold salary will be released on completion
View Point :
1. Plaese mention the word stipend in place of salary.
2. Define the scope of work in line with Apprentiship Act.
3. If you consider them as trainee : Statutory compliance will have to done
(i) Coverage under Employees Provident Fund
(ii) Coverage under ESIC
(iii) Other benefits extended to regualr employees
Regards
SC MAHTO
Dear Debajyoti,
Law nowhere says that a trainee has to be paid. For example every Company provides the facility of Summer Training and most of the time no stipend is paid and nobody considers it as illegal. But another fact is that Company does not gain anything by providing Summer Training either today or in future as in 90% of the cases these trainees are not employed by the Company.
But where Company provides training with intention of gaining something either today or tomorrow, the problem comes. For eg. Apprentices engaged under Apprentices Act are to be paid stipend as it involves practical training and in practical training some benefit goes to the Company also.
In your case, the intention is to employ these people after training so gain to Company is implied so is the payment of stipend. Another point which generally Labour Enforcement Officers (LEOs) raise is that Trainees do work even if for some time and therefore what they are paid is actually salary in the name of stipend and for the Companies it becomes very difficult to prove that every day all 8 hours, it was only class room training and no work was taken from trainees.
What you have stated is that first month's stipend will be withheld and shall be released after successful completion of the Training. But what if the training is not completed successfully? Another point is that Apprentices Act (it is the only Act which talks about trainees ) clearly states that stipend has to be paid by 10the of the following month which means it can not be with held.
Therefore there is definitely legal complication in holding back the first month's stipend.
KKT
From India, Delhi
Law nowhere says that a trainee has to be paid. For example every Company provides the facility of Summer Training and most of the time no stipend is paid and nobody considers it as illegal. But another fact is that Company does not gain anything by providing Summer Training either today or in future as in 90% of the cases these trainees are not employed by the Company.
But where Company provides training with intention of gaining something either today or tomorrow, the problem comes. For eg. Apprentices engaged under Apprentices Act are to be paid stipend as it involves practical training and in practical training some benefit goes to the Company also.
In your case, the intention is to employ these people after training so gain to Company is implied so is the payment of stipend. Another point which generally Labour Enforcement Officers (LEOs) raise is that Trainees do work even if for some time and therefore what they are paid is actually salary in the name of stipend and for the Companies it becomes very difficult to prove that every day all 8 hours, it was only class room training and no work was taken from trainees.
What you have stated is that first month's stipend will be withheld and shall be released after successful completion of the Training. But what if the training is not completed successfully? Another point is that Apprentices Act (it is the only Act which talks about trainees ) clearly states that stipend has to be paid by 10the of the following month which means it can not be with held.
Therefore there is definitely legal complication in holding back the first month's stipend.
KKT
From India, Delhi
Mr. Tyagi,
I was looking for information regarding stipend, when I saw your comments. Please tell me - does a stipend attract PF and ESI deduction? You say that trainees are not considered employees, so can we avoid mention of their names from the muster rolls?
Please respond.
Thank you.
BHR
From India, Bangalore
I was looking for information regarding stipend, when I saw your comments. Please tell me - does a stipend attract PF and ESI deduction? You say that trainees are not considered employees, so can we avoid mention of their names from the muster rolls?
Please respond.
Thank you.
BHR
From India, Bangalore
Hi Deba,
Trainees get paid Stipend and initially you have the stipend lesser than their actual salary. So that they can meet their conveyance and other essentials for the first four months. When you take them on rolls, you can as well give a confirmation of their employment with a Hike which is also a good level of motivation.
And now its your responsibilty to convince your management.
Best regards
Vamsee
From India, Hyderabad
Trainees get paid Stipend and initially you have the stipend lesser than their actual salary. So that they can meet their conveyance and other essentials for the first four months. When you take them on rolls, you can as well give a confirmation of their employment with a Hike which is also a good level of motivation.
And now its your responsibilty to convince your management.
Best regards
Vamsee
From India, Hyderabad
Dear BHR and others,
Law is very clear on deduction of PF from the salary/stipend of trainees. It says PF is not to be deducted in case the trainee has been engaged under Apprentices Act. Otherwise in all other cases PF is to be deducted.
I will not be able to comment on ESI as I am not dealing with ESI.
KKT
From India, Delhi
Law is very clear on deduction of PF from the salary/stipend of trainees. It says PF is not to be deducted in case the trainee has been engaged under Apprentices Act. Otherwise in all other cases PF is to be deducted.
I will not be able to comment on ESI as I am not dealing with ESI.
KKT
From India, Delhi
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HC All - Trainees not covered for PF -2010.pdf
Salary-Note.doc
SALARY SHEET CALCULATION.xls