Dear Seniors,
Seek your help to understand the features of "Contract Employment".
I am in the HR department of an electrical trade company engaged in the marketing of fans and water lifting pumps.
As every candidate is interested in more cash in hand during salary negotiation, I wish to propose to my management to start with contract employment. To my limited knowledge on the subject, I know that under contract employment, there are no annual benefits or statutory benefits applicable, and whatever monthly fee/salary is agreed upon is all cash in hand to the employee.
Before I propose, I wish to understand the subject of contractual employment better and would appreciate it if any of you could aid my learning on the following points:
1) Is there any upper limit to the duration of employment on a contractual basis? Like 12 or 11 months, etc.
2) Can a contract of an employee be renewed immediately for another term (of the same number of months) upon expiry? For example, if a contract of 12 months expires on 31 Jan '11, can it be renewed effective from 1 Feb '11 for another 12 months?
3) How many times can a contract be extended or renewed?
4) Are there any clauses suggested to be included in the contract letter to safeguard the interests of the company? (Attached is a sample of a contract letter taken from CiteHR).
If you can suggest a site that can help me enhance my knowledge on contractual employment, please do so.
Warm regards,
Shruti
From India, Delhi
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7Seek your help to understand the features of "Contract Employment".
I am in the HR department of an electrical trade company engaged in the marketing of fans and water lifting pumps.
As every candidate is interested in more cash in hand during salary negotiation, I wish to propose to my management to start with contract employment. To my limited knowledge on the subject, I know that under contract employment, there are no annual benefits or statutory benefits applicable, and whatever monthly fee/salary is agreed upon is all cash in hand to the employee.
Before I propose, I wish to understand the subject of contractual employment better and would appreciate it if any of you could aid my learning on the following points:
1) Is there any upper limit to the duration of employment on a contractual basis? Like 12 or 11 months, etc.
2) Can a contract of an employee be renewed immediately for another term (of the same number of months) upon expiry? For example, if a contract of 12 months expires on 31 Jan '11, can it be renewed effective from 1 Feb '11 for another 12 months?
3) How many times can a contract be extended or renewed?
4) Are there any clauses suggested to be included in the contract letter to safeguard the interests of the company? (Attached is a sample of a contract letter taken from CiteHR).
If you can suggest a site that can help me enhance my knowledge on contractual employment, please do so.
Warm regards,
Shruti
From India, Delhi
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There are advantages as well as disadvantages in contract employment.
Advantages: Engaged for a fixed period. No liabilities beyond the specified period. No benefits like gratuity, PF, etc.
Disadvantages: Less responsibility/accountability of the contract employee. No loyalty to the company during the contract period. As the performance is not linked to his contractual period, the output from him may be limited.
Regards,
R. Ponraj
From India, Lucknow
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Advantages: Engaged for a fixed period. No liabilities beyond the specified period. No benefits like gratuity, PF, etc.
Disadvantages: Less responsibility/accountability of the contract employee. No loyalty to the company during the contract period. As the performance is not linked to his contractual period, the output from him may be limited.
Regards,
R. Ponraj
From India, Lucknow
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Dear Friend,
My views on your queries are as follows:
1) Is there any upper limit to the duration of employment on a contractual basis? Like 12 or 11 months, etc.: NO
2) Can a contract of an employee be renewed immediately for another term (of the same number of months) upon expiry? i.e. if a contract of 12 months expires on 31 Jan '11, then can it be renewed effective from 1 Feb '11 for another 12 months? YES
3) How many times can a contract be extended or renewed? As many times as you require
It is further noted that the PF and ESI Acts are applicable to Contract Employees. The Factories Act or the Shops & Establishments Act, as the case may be, is applicable to Contract Employees. If the contract is continuously renewed for 5 years, then the Gratuity Act is applicable.
Hope this may help!
Regards
More at https://www.citehr.com/310925-all-ab...#ixzz1BNYLUKwh
From India, Vadodara
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My views on your queries are as follows:
1) Is there any upper limit to the duration of employment on a contractual basis? Like 12 or 11 months, etc.: NO
2) Can a contract of an employee be renewed immediately for another term (of the same number of months) upon expiry? i.e. if a contract of 12 months expires on 31 Jan '11, then can it be renewed effective from 1 Feb '11 for another 12 months? YES
3) How many times can a contract be extended or renewed? As many times as you require
It is further noted that the PF and ESI Acts are applicable to Contract Employees. The Factories Act or the Shops & Establishments Act, as the case may be, is applicable to Contract Employees. If the contract is continuously renewed for 5 years, then the Gratuity Act is applicable.
Hope this may help!
Regards
More at https://www.citehr.com/310925-all-ab...#ixzz1BNYLUKwh
From India, Vadodara
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Dear Kuljit & Ponraj,
Thank you for the response; your inputs are much appreciated.
As I mentioned, the motive behind opting for contract employment is purely to provide candidates with the benefit of more cash in hand. Is there any way we can avoid the application of statutory benefits to contractual employees?
Currently, we have a few employees on a retainership basis, and for them, no statutory benefits apply. It is a lump sum figure, let's say Rs 40,000/- payable to the concerned on a monthly basis. The only deduction is on the head of leave if taken, as on retainership, no paid leaves are allowed except for weekly offs and company holidays. Retainers raise their bill, and they are paid against that bill. Only service tax is applicable.
In my first company, we had a good number of employees working on a contract basis (generally site engineering, etc.) who were paid a fixed amount monthly under the heads of Basic, HRA, and Conveyance. For example:
Monthly salary - 20,000/-
So payable as follows:
Basic - 8000
HRA - 4800
Conv. - 7200
No statutory benefits were applicable to them. They had the same leave rules as permanent employees. The contract was made for 12 months and was renewed with a gap of 4-5 days. For these 4-5 days, employees were compensated via a voucher.
Please explain if this practice is okay and legal. Can I propose this to my management?
I would truly appreciate a quick response.
From India, Delhi
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Thank you for the response; your inputs are much appreciated.
As I mentioned, the motive behind opting for contract employment is purely to provide candidates with the benefit of more cash in hand. Is there any way we can avoid the application of statutory benefits to contractual employees?
Currently, we have a few employees on a retainership basis, and for them, no statutory benefits apply. It is a lump sum figure, let's say Rs 40,000/- payable to the concerned on a monthly basis. The only deduction is on the head of leave if taken, as on retainership, no paid leaves are allowed except for weekly offs and company holidays. Retainers raise their bill, and they are paid against that bill. Only service tax is applicable.
In my first company, we had a good number of employees working on a contract basis (generally site engineering, etc.) who were paid a fixed amount monthly under the heads of Basic, HRA, and Conveyance. For example:
Monthly salary - 20,000/-
So payable as follows:
Basic - 8000
HRA - 4800
Conv. - 7200
No statutory benefits were applicable to them. They had the same leave rules as permanent employees. The contract was made for 12 months and was renewed with a gap of 4-5 days. For these 4-5 days, employees were compensated via a voucher.
Please explain if this practice is okay and legal. Can I propose this to my management?
I would truly appreciate a quick response.
From India, Delhi
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Dear all,
Good day!
I am Elizabeth Antony. I need to issue a contract letter to a designer whose education costs we are covering. Therefore, we require the designer to stay with us for three years to share their knowledge in our business. I need to prepare an employment contract for this duration. Your assistance in this matter would be greatly appreciated.
Our company, IT Pvt Ltd, does not provide ESI and PF.
Thanks and regards,
Elizabeth Antony
From India, Madras
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Good day!
I am Elizabeth Antony. I need to issue a contract letter to a designer whose education costs we are covering. Therefore, we require the designer to stay with us for three years to share their knowledge in our business. I need to prepare an employment contract for this duration. Your assistance in this matter would be greatly appreciated.
Our company, IT Pvt Ltd, does not provide ESI and PF.
Thanks and regards,
Elizabeth Antony
From India, Madras
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Hi, First, you have to understand the difference between GET & FTE (graduate engineer trainee & fixed-term employment) and then try to outline the objectives for this (why it is required, what problem it solves, what benefits we are getting from it). Try to establish some SOPs for this, like starting with what is FTE, who is eligible for this (diploma holders come under GET, where you have to follow the laws, and BE graduates come under FTE), fixing the tenure, terms, and conditions. When they reach the end of the period, we can take them as trainees, and with that, we can run the show for some time. Then, based on their performance, we can put them on the rolls. It's all about cost-cutting efforts that an organization undertakes. During the evaluation period, we have to keenly observe their performance and attendance details.
Regards,
Gengaraj.P
From India, Madras
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Regards,
Gengaraj.P
From India, Madras
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Kami Export - Negative Covenant in Contract of Employment.pdf (1).pdf