We are a 40 team size IT product company based in Pune. I had questions regarding internships and stipends.
1) Is there a limit (from compliance standpoint) of how many interns I can hire?
2) As per compliance, is there a cap on how much stipend one can earn annually from the same company?
From India, Pune
1) Is there a limit (from compliance standpoint) of how many interns I can hire?
2) As per compliance, is there a cap on how much stipend one can earn annually from the same company?
From India, Pune
Hi You refer the following link for article on on the same. https://www.linkedin.com/pulse/misconception-engaging-internship-jeevarathnam-p-czo8f/?trackingId=2QX%2FSsmUSO6CHvMfnN2V%2BA%3D%3D
From India, Bangalore
639From India, Bangalore
Hi Avani-Shroff,
As an IT product company, managing your internship program and ensuring compliance with relevant regulations is an important consideration.
Regarding the first point about the number of interns you can hire, there is generally no strict limit from a compliance standpoint. However, it is crucial to ensure that you have the capacity to provide a meaningful and enriching internship experience for each individual. Factors such as available mentorship, project opportunities, and resources should guide the appropriate scale of your internship program. Many companies find success by aligning the number of interns with their business needs and growth projections.
On the second point about stipend caps, there is typically no legal limit on the annual stipend an intern can earn from a single company. That said, it is advisable to research regional best practices and benchmarks to ensure your stipend levels are competitive and justifiable. Additionally, you may want to consider any potential tax or labor law implications, as well as parity with your full-time employee compensation structure.
Thanks
From India, Bangalore
As an IT product company, managing your internship program and ensuring compliance with relevant regulations is an important consideration.
Regarding the first point about the number of interns you can hire, there is generally no strict limit from a compliance standpoint. However, it is crucial to ensure that you have the capacity to provide a meaningful and enriching internship experience for each individual. Factors such as available mentorship, project opportunities, and resources should guide the appropriate scale of your internship program. Many companies find success by aligning the number of interns with their business needs and growth projections.
On the second point about stipend caps, there is typically no legal limit on the annual stipend an intern can earn from a single company. That said, it is advisable to research regional best practices and benchmarks to ensure your stipend levels are competitive and justifiable. Additionally, you may want to consider any potential tax or labor law implications, as well as parity with your full-time employee compensation structure.
Thanks
From India, Bangalore
The answers given above are correct, if you are talking of interns (and strictly applying the term correctly).
If you are talking of apprentices, the answers would be different.
Please clarify that they are pure interns, that you do not have anything in your standing orders regarding interns.
From India, Mumbai
If you are talking of apprentices, the answers would be different.
Please clarify that they are pure interns, that you do not have anything in your standing orders regarding interns.
From India, Mumbai
If at all those interns are part of academic (Mid of the course they are perusing) then no restrictions & if engaging any person as intern post completion of their studies then I am in agreement with Saswatabanerjee on following point
If at all you have definition of intern in Standing Orders then you can
I am in agreement with Dr. Raghunath on 2nd point
From India, Bangalore
If at all you have definition of intern in Standing Orders then you can
I am in agreement with Dr. Raghunath on 2nd point
From India, Bangalore
Just a line of warning, Anvi, to add to all that is said above...
Minimum wages applies to interns as it applies to any other employee.
Only if they are apprentices, then the act does not apply.
So do ensure you do not violate the act
From India, Mumbai
Minimum wages applies to interns as it applies to any other employee.
Only if they are apprentices, then the act does not apply.
So do ensure you do not violate the act
From India, Mumbai
@Saswata Banerjee
Dear Sir..as per link below, does Interns...will be employees?
-if yes then only Minimum Wages applicable. And if this act applicable then deduction of PF, ESIC will be ?
-How employer employees relation established?
-before employing / deputing intern which document to be sign to avoid legal complication or any unforeseen incident happens(ex accident ) then which law will be applicable..
Please guide
Thanks
------------------------------------------------
https://indiankanoon.org/doc/28742/
"employee" means any person who is employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in a scheduled employment in respect of which minimum rates of wages have been fixed; and includes an out-worker to whom any articles or materials are given out by another person to be made up, cleaned, washed, altered, ornamented, finished, repaired, adapted or otherwise processed for sale for the purposes of the trade or business of that other person where the process is to be carried out either in the home of the out-worker or in some other premises not being premises under the control and management of that other person; and also includes an employee declared to be an employee by the appropriate Government; but does not include any member of the Armed Forces of the Union."
From India, Mumbai
Dear Sir..as per link below, does Interns...will be employees?
-if yes then only Minimum Wages applicable. And if this act applicable then deduction of PF, ESIC will be ?
-How employer employees relation established?
-before employing / deputing intern which document to be sign to avoid legal complication or any unforeseen incident happens(ex accident ) then which law will be applicable..
Please guide
Thanks
------------------------------------------------
https://indiankanoon.org/doc/28742/
"employee" means any person who is employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in a scheduled employment in respect of which minimum rates of wages have been fixed; and includes an out-worker to whom any articles or materials are given out by another person to be made up, cleaned, washed, altered, ornamented, finished, repaired, adapted or otherwise processed for sale for the purposes of the trade or business of that other person where the process is to be carried out either in the home of the out-worker or in some other premises not being premises under the control and management of that other person; and also includes an employee declared to be an employee by the appropriate Government; but does not include any member of the Armed Forces of the Union."
From India, Mumbai
Yes, he will be an employee. I don’t see anything in the definition which says he should not be.
All labour acts will apply to the intern.
Nothing you can do will make it otherwise.
Get your interns onboarded like any other fixed term employee. Being fixed term, he can not claim permanency, obviously or retrenchment compensation
As for accidents, which act applies depends on the nature of work, nature of establishment and circumstances of the case.
From India, Mumbai
All labour acts will apply to the intern.
Nothing you can do will make it otherwise.
Get your interns onboarded like any other fixed term employee. Being fixed term, he can not claim permanency, obviously or retrenchment compensation
As for accidents, which act applies depends on the nature of work, nature of establishment and circumstances of the case.
From India, Mumbai
@Saswata Banerjee
Thanks for revert...
Just got another perspective ....
objective to understand and make healthy and purposeful relationship of academic and industry-Company engagement so to have right people/student will be attracted , trained, hired as earliest...with in statuary law...
--------
https://natlawreview.com/article/engaging-interns-and-trainees-india-legal-considerations-employers
Legal considerations for engaging interns and trainees outside of the AA
As mentioned earlier, interns and trainees are not recognised under Indian labor laws. Hence, such arrangements carry varying degrees of misclassification risk. For example, depending on the nature of arrangements, interns or trainees may be regarded as ‘employees’ thereby triggering the applicable labor law benefits, compliances, and protections.
In order to address the question of whether ‘student-trainees’ are covered under the EPF Act, the Employees' Provident Fund Organization (EPFO) issued two circulars dated October 12, 2015, and July 27, 2022. The circular dated October 12, 2015[11] clarified that the following conditions have to be met for internships/traineeships to not trigger any risk of an employment relationship between the employer and the student-trainees, namely (i) the student-trainees are imparted industrial training/practical on the job training as an integral part of a recognised course in an institution recognized by the appropriate government wherein during such training period, the student-trainees is exposed to modern technical development and hands-on-training of working on sophisticated equipment/instruments, (ii) the student-trainees return to their respective institutions for completion of their academic degrees, and (iii) the student-trainees may or may not be paid a stipend.
The EPFO followed this up with a circular dated 27 July 2022[12], whereby it listed down guidelines to test the status of a ‘student-trainee’ vis-a-vis an employee which are as follows:
(i) The student-trainee must be enrolled in an educational institute which is recognized by a competent authority.
On-the-job-training’ is an integral component of such course and shall not exceed the period as determined under the course.
(iii) The student-trainee is bound to complete the training within the stipulated time including the extension period failing which he shall cease to be student-trainee.
(iv) The employer must engage only those student-trainees who are pursuing a course relevant to the industry and they must not be engaged for any purpose other than as specified in such course or scheme.
(v) The number of student-trainees engaged should never exceed such percent of the total workforce employed in the concerned factory/branch of an establishment.
There has been a recent major flip-flop-flip by certain regulatory authorities with respect to treating NEEM[13] trainees as ‘employees’. Originally, NEEM trainees were excluded from employment relationship despite earning monthly remuneration/stipend at a prescribed rate of minimum wages applicable for the unskilled category. This stance was changed first by including NEEM trainees within the ambit of ‘employees’ through a further clarification dated 24 February 2022[14]. This was again reversed through the notification dated 23 December 2022[15] which discontinued the NEEM Scheme with immediate effect.
Case law analysis
Several case laws have created a rich body of opinion on whether interns/trainees should be treated as ‘employees’ or not. In the case of Irel (India) Limited Vs P. N. Raghava Panicker[16], the Kerala High Court held that the employer cannot deny a so-called “trainee”, benefits under the Payment of Gratuity Act, 1965 (Gratuity Act) merely because he is designated as a “trainee” despite performing regular employee work. In the case of Chairman-Cum-Managing Director, Orissa Mining Corporation. Ltd. V. Controlling Authority, Payment of Gratuity Act & Ors.[17],it was held that the test of concluding whether a “trainee” employed under a contract of employment can qualify as an apprentice as per the AA is to check whether he is undergoing any apprenticeship training in a designated trade in pursuance of the contract of apprenticeship. This test was applied to provide benefits to the concerned trainee/employee under the Gratuity Act.
In the case of Andhra Prabha (P) Ltd. vs E.S.I. Corporation[18], the Andhra Pradesh High Court lifted the veil to check whether the trainee/employee should be the rightful recipient of benefits under the welfare legislation of the Employees’ State Insurance Act, 1948 (ESI Act). This case focused on the actual intent of the employer against any covert guise or nomenclature for the alleged circumvention. Another crucial test in determining whether an engaged resource is an employee is to check whether the employer has the absolute right to reject the final product and the right to refuse work. If yes, then this implied that the employer exercised an effective degree of supervision and control upon the workers who, therefore, fell within the definition of “person employed” under the Andhra Pradesh (Telangana Area) Shops and Establishments Act, 1956.[19]
That trainees do not amount to employees was, however, confirmed in the case of ACIT, Chennai v. M/s. Maveric Systems Limited, Chennai[20] where it was observed that the amount spent on training and stipend, can, by no stretch of imagination, be termed as scholarship. Therefore, such stipend paid to the interns who are not on the regular pay rolls of the assessee did not attract the provisions of the then applicable Fringe Benefit Tax.
From India, Mumbai
Thanks for revert...
Just got another perspective ....
objective to understand and make healthy and purposeful relationship of academic and industry-Company engagement so to have right people/student will be attracted , trained, hired as earliest...with in statuary law...
--------
https://natlawreview.com/article/engaging-interns-and-trainees-india-legal-considerations-employers
Legal considerations for engaging interns and trainees outside of the AA
As mentioned earlier, interns and trainees are not recognised under Indian labor laws. Hence, such arrangements carry varying degrees of misclassification risk. For example, depending on the nature of arrangements, interns or trainees may be regarded as ‘employees’ thereby triggering the applicable labor law benefits, compliances, and protections.
In order to address the question of whether ‘student-trainees’ are covered under the EPF Act, the Employees' Provident Fund Organization (EPFO) issued two circulars dated October 12, 2015, and July 27, 2022. The circular dated October 12, 2015[11] clarified that the following conditions have to be met for internships/traineeships to not trigger any risk of an employment relationship between the employer and the student-trainees, namely (i) the student-trainees are imparted industrial training/practical on the job training as an integral part of a recognised course in an institution recognized by the appropriate government wherein during such training period, the student-trainees is exposed to modern technical development and hands-on-training of working on sophisticated equipment/instruments, (ii) the student-trainees return to their respective institutions for completion of their academic degrees, and (iii) the student-trainees may or may not be paid a stipend.
The EPFO followed this up with a circular dated 27 July 2022[12], whereby it listed down guidelines to test the status of a ‘student-trainee’ vis-a-vis an employee which are as follows:
(i) The student-trainee must be enrolled in an educational institute which is recognized by a competent authority.
On-the-job-training’ is an integral component of such course and shall not exceed the period as determined under the course.
(iii) The student-trainee is bound to complete the training within the stipulated time including the extension period failing which he shall cease to be student-trainee.
(iv) The employer must engage only those student-trainees who are pursuing a course relevant to the industry and they must not be engaged for any purpose other than as specified in such course or scheme.
(v) The number of student-trainees engaged should never exceed such percent of the total workforce employed in the concerned factory/branch of an establishment.
There has been a recent major flip-flop-flip by certain regulatory authorities with respect to treating NEEM[13] trainees as ‘employees’. Originally, NEEM trainees were excluded from employment relationship despite earning monthly remuneration/stipend at a prescribed rate of minimum wages applicable for the unskilled category. This stance was changed first by including NEEM trainees within the ambit of ‘employees’ through a further clarification dated 24 February 2022[14]. This was again reversed through the notification dated 23 December 2022[15] which discontinued the NEEM Scheme with immediate effect.
Case law analysis
Several case laws have created a rich body of opinion on whether interns/trainees should be treated as ‘employees’ or not. In the case of Irel (India) Limited Vs P. N. Raghava Panicker[16], the Kerala High Court held that the employer cannot deny a so-called “trainee”, benefits under the Payment of Gratuity Act, 1965 (Gratuity Act) merely because he is designated as a “trainee” despite performing regular employee work. In the case of Chairman-Cum-Managing Director, Orissa Mining Corporation. Ltd. V. Controlling Authority, Payment of Gratuity Act & Ors.[17],it was held that the test of concluding whether a “trainee” employed under a contract of employment can qualify as an apprentice as per the AA is to check whether he is undergoing any apprenticeship training in a designated trade in pursuance of the contract of apprenticeship. This test was applied to provide benefits to the concerned trainee/employee under the Gratuity Act.
In the case of Andhra Prabha (P) Ltd. vs E.S.I. Corporation[18], the Andhra Pradesh High Court lifted the veil to check whether the trainee/employee should be the rightful recipient of benefits under the welfare legislation of the Employees’ State Insurance Act, 1948 (ESI Act). This case focused on the actual intent of the employer against any covert guise or nomenclature for the alleged circumvention. Another crucial test in determining whether an engaged resource is an employee is to check whether the employer has the absolute right to reject the final product and the right to refuse work. If yes, then this implied that the employer exercised an effective degree of supervision and control upon the workers who, therefore, fell within the definition of “person employed” under the Andhra Pradesh (Telangana Area) Shops and Establishments Act, 1956.[19]
That trainees do not amount to employees was, however, confirmed in the case of ACIT, Chennai v. M/s. Maveric Systems Limited, Chennai[20] where it was observed that the amount spent on training and stipend, can, by no stretch of imagination, be termed as scholarship. Therefore, such stipend paid to the interns who are not on the regular pay rolls of the assessee did not attract the provisions of the then applicable Fringe Benefit Tax.
From India, Mumbai
The last part (quoted below) is misleading as it is in specific context of FBT and not for labour law compliance. I believe interns and trainees are employees if you look at the definition under the act and trying to make them look otherwise will end up in a costly legal battle, which as you have seen above, is likely to go against the employer.
As for the others, NEEM is no longer applicable. It was badly misused and the govt withdrew the scheme. Basically only ones excluded are Apprantices under the Apprentice act and no others.
Quoted :
That trainees do not amount to employees was, however, confirmed in the case of ACIT, Chennai v. M/s. Maveric Systems Limited, Chennai[20] where it was observed that the amount spent on training and stipend, can, by no stretch of imagination, be termed as scholarship. Therefore, such stipend paid to the interns who are not on the regular pay rolls of the assessee did not attract the provisions of the then applicable Fringe Benefit Tax.
From India, Mumbai
As for the others, NEEM is no longer applicable. It was badly misused and the govt withdrew the scheme. Basically only ones excluded are Apprantices under the Apprentice act and no others.
Quoted :
That trainees do not amount to employees was, however, confirmed in the case of ACIT, Chennai v. M/s. Maveric Systems Limited, Chennai[20] where it was observed that the amount spent on training and stipend, can, by no stretch of imagination, be termed as scholarship. Therefore, such stipend paid to the interns who are not on the regular pay rolls of the assessee did not attract the provisions of the then applicable Fringe Benefit Tax.
From India, Mumbai
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