Dear Seniors,
My company has a Memorandum of Understanding with another company to share knowledge through one of their employee. For this case companies have signed an undertaking and a fee also paid to them. Are they an employee and PF or any other benefits can they claim ?
Please advice me.
With Regards,
Mohan Kumar
From India, Bangalore
9My company has a Memorandum of Understanding with another company to share knowledge through one of their employee. For this case companies have signed an undertaking and a fee also paid to them. Are they an employee and PF or any other benefits can they claim ?
Please advice me.
With Regards,
Mohan Kumar
From India, Bangalore
It will depend upon the MOU between the companies. If the arrangement is for a service ( a contract for service) wherein your client will give you the required information in return for a fee, then there will not be any employer employee relationship between you and the other company. In this case the name of the employee of the other company who will work for you should not be mentioned anywhere in the contract.It should not be an arrangement that the said employee works exclusively for you but being in the rolls of the other company. On the other hand, if the arrangement is that a particular employee of the other company will work for you in return for a fee payable to the company, then the situation will change from contract for service to contract of service wherein though there would not be any employer employee relationship, you company will be in the position of principal employer and the other company will be in the position of contractor and the employee who works for you will be in the position of contract labour and accordingly, you will have to ensure that he gets the pay in time, the contractor remits the PF/ESI in respect of him in time etc. In such situation the fee will be based on the payment to be given to the employee.
Madhu.T.K
From India, Kannur
Madhu.T.K
From India, Kannur
No, a company, being an artificial juridicial person, can not be an employee in any company.
They can be a partner, shareholder or contractor, but not an employee.
So the fee they get is a consulting fee, contract fee but not a salary / wage.
Therefore there is no question of PF or ESIC on it.
From India, Mumbai
They can be a partner, shareholder or contractor, but not an employee.
So the fee they get is a consulting fee, contract fee but not a salary / wage.
Therefore there is no question of PF or ESIC on it.
From India, Mumbai
Dear Sir,
Thank you for your valuable advices.
Dear Madhu Sir,
In such cases, if in the Memorandum of Understanding specify a particular employee from whom the services will be taken, then it will be considered as a contract between companies as principal employer and contractor and the employee concerned will be eligible for all statutory benefits from his company for his additional payment and we need to ensure its compliance. In other case, If no employee's name is mentioned in MoU, and only between the companies, then such statutory compliances (ESI, PF etc...) will not arise.
Am I correct.
Mohan Kumar
From India, Bangalore
Thank you for your valuable advices.
Dear Madhu Sir,
In such cases, if in the Memorandum of Understanding specify a particular employee from whom the services will be taken, then it will be considered as a contract between companies as principal employer and contractor and the employee concerned will be eligible for all statutory benefits from his company for his additional payment and we need to ensure its compliance. In other case, If no employee's name is mentioned in MoU, and only between the companies, then such statutory compliances (ESI, PF etc...) will not arise.
Am I correct.
Mohan Kumar
From India, Bangalore
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