My Company is working on a rider base plan for which we will hire more than 300 promoters in various cities of India. ("Promoter" means a rider who will showcase our products on different counters). We are planning to hire them on a promoter basis and will pay a particular amount for promotion to them on monthly basis. There will not be any joining letter or appointment letter. We will just provide them in writing from our side that they are eligible to promote our products.
My question is that since they are just promoters and not a direct part of the organization or under our direct payroll do we need to pay them ESI or PF or any other Factory act remuneration?
My other question is what are the formalities we should complete in order to hire them as promoters and not an integral part of my Company?
From India, Bhopal
9My question is that since they are just promoters and not a direct part of the organization or under our direct payroll do we need to pay them ESI or PF or any other Factory act remuneration?
My other question is what are the formalities we should complete in order to hire them as promoters and not an integral part of my Company?
From India, Bhopal
@infotech
use "Sales Promotion" onwards, as the "promotor" word is related to real estate developers
if the "sales promoting" persons are engaged through any manpower contractor, then the formalities goes to contracting agency, but if company directly recruits them, then they would be part of muster roll and salary register, and all perks and benefits would be applicable at par with regular employees
it does not matter that they have no joining letter, but payment made to them individually confirms their engagement with the establishment
use "Sales Promotion" onwards, as the "promotor" word is related to real estate developers
if the "sales promoting" persons are engaged through any manpower contractor, then the formalities goes to contracting agency, but if company directly recruits them, then they would be part of muster roll and salary register, and all perks and benefits would be applicable at par with regular employees
it does not matter that they have no joining letter, but payment made to them individually confirms their engagement with the establishment
Dear Infotech.Tanaysk,
Your question is related to PF/ESI contributions and other remuneration. You have stated that you would not like to issue them the appointment letter.
I recommend giving them the designation of "Casual Event Promoter" or "Casual Sales Promoter". This will bring clarity to their role and functions.
Though you would not like to issue the appointment letter, it is important to make an agreement with each promoter. If you do not wish to issue an appointment letter then there has to be a legally valid contract. Otherwise, issue a separate PO on your company letterhead to each promoter. Therefore, you will have to issue 300 POs. It may appear cumbersome, it will be a legally valid approach.
In the PO, you may issue the terms and conditions for providing the services. Roughly, you may include the following points:
a) Who will intimate them to provide the services, where they will provide their services, how they will provide, how the records of their services will be maintained? Who will validate them?
b) Will it be a product promotion or service promotion? In the case of the former, you will have to pass on to them some amount of inventory. Who will maintain the records of that? What about the theft/damage to the product?
c) What will be the method of remuneration to the promoter? How you will ensure that the promoter is not overpaid or underpaid? What will be the frequency of payment?
d) What will be the method to claim transportation charges, if any?
e) Will the promoters just promote the product or service or will take orders from the customers also? If yes then how the orders will be routed and will there be any incentive for acquiring "X" number of orders per month or quarter etc.?
f) What will be the liability to the company in case of an accident?
g) If some promoter does not want to continue then how he/she will inform? How he/she return the inventory?
h) Will the remuneration liable for tax deduction? How it will be deducted? When the tax deducted will be deposited? How it will be communicated to the promoters?
Note: - The remuneration will be liable for TDS u/s 194J of IT Act, 1961.
i) What will be the definition of "Excellent", "Very Good", "Good" and "Average" performance?
j) What is the scope of getting promoter absorbed as a salesperson? Is there a career plan for them?
There could be a few more points also.
Thanks,
[i]Dinesh Divekar
From India, Bangalore
Your question is related to PF/ESI contributions and other remuneration. You have stated that you would not like to issue them the appointment letter.
I recommend giving them the designation of "Casual Event Promoter" or "Casual Sales Promoter". This will bring clarity to their role and functions.
Though you would not like to issue the appointment letter, it is important to make an agreement with each promoter. If you do not wish to issue an appointment letter then there has to be a legally valid contract. Otherwise, issue a separate PO on your company letterhead to each promoter. Therefore, you will have to issue 300 POs. It may appear cumbersome, it will be a legally valid approach.
In the PO, you may issue the terms and conditions for providing the services. Roughly, you may include the following points:
a) Who will intimate them to provide the services, where they will provide their services, how they will provide, how the records of their services will be maintained? Who will validate them?
b) Will it be a product promotion or service promotion? In the case of the former, you will have to pass on to them some amount of inventory. Who will maintain the records of that? What about the theft/damage to the product?
c) What will be the method of remuneration to the promoter? How you will ensure that the promoter is not overpaid or underpaid? What will be the frequency of payment?
d) What will be the method to claim transportation charges, if any?
e) Will the promoters just promote the product or service or will take orders from the customers also? If yes then how the orders will be routed and will there be any incentive for acquiring "X" number of orders per month or quarter etc.?
f) What will be the liability to the company in case of an accident?
g) If some promoter does not want to continue then how he/she will inform? How he/she return the inventory?
h) Will the remuneration liable for tax deduction? How it will be deducted? When the tax deducted will be deposited? How it will be communicated to the promoters?
Note: - The remuneration will be liable for TDS u/s 194J of IT Act, 1961.
i) What will be the definition of "Excellent", "Very Good", "Good" and "Average" performance?
j) What is the scope of getting promoter absorbed as a salesperson? Is there a career plan for them?
There could be a few more points also.
Thanks,
[i]Dinesh Divekar
From India, Bangalore
@Infotech
The cost of engagement 300 Sales Promotion staff will be booked in your accounts as employee cost. Any statutory authority in future may raise question about compliance status - PF, ESIC, Bonus etc. It will be better to recruit them through any contractor and to comply everything as applicable. Otherwise, there will be possibility to face problems in future.
S K Bandyopadhyay ( WB, Howrah)
From India, New Delhi
The cost of engagement 300 Sales Promotion staff will be booked in your accounts as employee cost. Any statutory authority in future may raise question about compliance status - PF, ESIC, Bonus etc. It will be better to recruit them through any contractor and to comply everything as applicable. Otherwise, there will be possibility to face problems in future.
S K Bandyopadhyay ( WB, Howrah)
From India, New Delhi
@Dinesh Divekar Sir,
Thank you for resolution. Your provided solution will help me a lot in making the policy for the rider plan. Your point to point solution in highly appreciable.
Although I am still stuck about the solution. Hiring all 300 Members will increase all sort of expenses on me.
Please provide if there is any alternative to this approach.
From India, Bhopal
Thank you for resolution. Your provided solution will help me a lot in making the policy for the rider plan. Your point to point solution in highly appreciable.
Although I am still stuck about the solution. Hiring all 300 Members will increase all sort of expenses on me.
Please provide if there is any alternative to this approach.
From India, Bhopal
@S K Bandyopadhyay.
Thank You for your reply sir. I know that they will be booked in my accounts. but that will increase my cost and expenses. That's why I am looking for any alternative. If you have any kindly provide. Thanks in advance.
Regards
From India, Bhopal
Thank You for your reply sir. I know that they will be booked in my accounts. but that will increase my cost and expenses. That's why I am looking for any alternative. If you have any kindly provide. Thanks in advance.
Regards
From India, Bhopal
@ Infotech.Tanaysk
My purpose of saying the cost will be booked in your accounts was different. When any authority - PF, ESIC etc. will visit your organization for compliance check, they will start with your accounts ledger book where each cost will be booked with explanation. It may appear that the sales promotion cost is reasonably high but no compliance cost - PF & ESIC with 300 manpower. Even if you show all 300 as consultant and deduct TDS - that will also not be accepted by the authority. Had it been so, every organization in India will follow that path ( not recruiting any permanent employee or engagement through any contractor) to avoid PF , ESIC, Bonus etc. compliance. It may be possible for less number of employees ( to my opinion maxm. 5 or 10 ).
Even there are cases where PF authority instructed organization to deduct PF for consultant as designation has nothing to do with PF coverage rather depend on Basic & DA amount ( in case of consolidated amount entire amount will be considered as Basic ).
S K Bandyopadhyay ( Howrah, WB)
CEO- USD HR Solutions
From India, New Delhi
My purpose of saying the cost will be booked in your accounts was different. When any authority - PF, ESIC etc. will visit your organization for compliance check, they will start with your accounts ledger book where each cost will be booked with explanation. It may appear that the sales promotion cost is reasonably high but no compliance cost - PF & ESIC with 300 manpower. Even if you show all 300 as consultant and deduct TDS - that will also not be accepted by the authority. Had it been so, every organization in India will follow that path ( not recruiting any permanent employee or engagement through any contractor) to avoid PF , ESIC, Bonus etc. compliance. It may be possible for less number of employees ( to my opinion maxm. 5 or 10 ).
Even there are cases where PF authority instructed organization to deduct PF for consultant as designation has nothing to do with PF coverage rather depend on Basic & DA amount ( in case of consolidated amount entire amount will be considered as Basic ).
S K Bandyopadhyay ( Howrah, WB)
CEO- USD HR Solutions
From India, New Delhi
Dear Infotech.Tanaysk,
If you do not wish to have an individual contract with the "Casual Sales Promoter" then you may hire a manpower contractor. Have a comprehensive contract with the contractor. This will solve your problem of making an individual contract on a legally valid stamp paper. Nevertheless, you need to issue a letter on your company's letterhead even then also.
The solution that I suggested was similar to the delivery boys hired by Swiggy or Zomato. Please find out how do they make the contract with their delivery persons? You can have the same approach. The delivery boys are not on the rolls of the food aggregators.
Nevertheless, whatever method you adopt, the cost will be incurred. If the sales promotion were to be that easy then a road-side vegetable vendor was not required to strain his vocal cords to sell his vegetables and that too every day!
Your plan is to promote the sale of your product/service through 300 sales promoters! This is a big number. For the big dreams, the costs are also big! As of now, go ahead with whatever plan suits you. Better ideas will emerge over a period of time!
All the best!
Dinesh Divekar
@Dinesh Divekar Sir,
Thank you for resolution. Your provided solution will help me a lot in making the policy for the rider plan. Your point to point solution in highly appreciable.
Although I am still stuck about the solution. Hiring all 300 Members will increase all sort of expenses on me.
Please provide if there is any alternative to this approach.
From India, Bangalore
If you do not wish to have an individual contract with the "Casual Sales Promoter" then you may hire a manpower contractor. Have a comprehensive contract with the contractor. This will solve your problem of making an individual contract on a legally valid stamp paper. Nevertheless, you need to issue a letter on your company's letterhead even then also.
The solution that I suggested was similar to the delivery boys hired by Swiggy or Zomato. Please find out how do they make the contract with their delivery persons? You can have the same approach. The delivery boys are not on the rolls of the food aggregators.
Nevertheless, whatever method you adopt, the cost will be incurred. If the sales promotion were to be that easy then a road-side vegetable vendor was not required to strain his vocal cords to sell his vegetables and that too every day!
Your plan is to promote the sale of your product/service through 300 sales promoters! This is a big number. For the big dreams, the costs are also big! As of now, go ahead with whatever plan suits you. Better ideas will emerge over a period of time!
All the best!
Dinesh Divekar
@Dinesh Divekar Sir,
Thank you for resolution. Your provided solution will help me a lot in making the policy for the rider plan. Your point to point solution in highly appreciable.
Although I am still stuck about the solution. Hiring all 300 Members will increase all sort of expenses on me.
Please provide if there is any alternative to this approach.
From India, Bangalore
In the Social Security Code 2020 the type of employees under Swiggy / Zomato will be considered as "Gig Workers". In near future when Labor Codes will be implemented - all social securities will be required for those Gig Workers also.
The objective of the Government to protect all level of employees irrespective of their nature of employment and engagement.
Requesting to go through the New Social Security Codes in details and take all protections before engagement of 300 employees to avoid any future complications.
S K Bandyopadhyay ( Howrah, WB)
CEO- USD HR Solutions
From India, New Delhi
The objective of the Government to protect all level of employees irrespective of their nature of employment and engagement.
Requesting to go through the New Social Security Codes in details and take all protections before engagement of 300 employees to avoid any future complications.
S K Bandyopadhyay ( Howrah, WB)
CEO- USD HR Solutions
From India, New Delhi
@Nanu1953
Sir, I understand that in near by future I have to follow all the compliances. And I am okay with that. Just for now to get my venture started I need a push for the beginning .
And that's exactly what I was looking for. Do you have any more idea on how this "Gig Worker" format Works? If you can elaborate that would be so helpful.
Thanks in Advance.
From India, Bhopal
Sir, I understand that in near by future I have to follow all the compliances. And I am okay with that. Just for now to get my venture started I need a push for the beginning .
And that's exactly what I was looking for. Do you have any more idea on how this "Gig Worker" format Works? If you can elaborate that would be so helpful.
Thanks in Advance.
From India, Bhopal
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