We are a private limited HR recruitment company with a plan to engage 40-50 recruiters. Can we hire all the workforce as professional consultants instead of employees? Will PF and ESIC authorities have legitimate objections? We intend to keep only directors as employees of our company. Kindly advise!
From India, New Delhi
Acknowledge(0)
Amend(0)
5From India, New Delhi
Acknowledge(0)Amend(0)
Dear Saket,
Greetings!
You can't do that for the simple reason that it's illegal. As long as you are able to evade labor officers, it's great, but the kind of revenue that you should generate with this big workforce (in terms of a recruitment company), you will sooner or later be found. If you don't want to go for compliance, have a franchise agreement with all your recruiters and make terms in a manner that will give them some minimum fee (equivalent to a salary), and the rest of the revenue sharing can be variable (equivalent to incentives for achieving targets).
From India, Delhi
Acknowledge(0)Amend(0)
Greetings!
You can't do that for the simple reason that it's illegal. As long as you are able to evade labor officers, it's great, but the kind of revenue that you should generate with this big workforce (in terms of a recruitment company), you will sooner or later be found. If you don't want to go for compliance, have a franchise agreement with all your recruiters and make terms in a manner that will give them some minimum fee (equivalent to a salary), and the rest of the revenue sharing can be variable (equivalent to incentives for achieving targets).
From India, Delhi
Acknowledge(0)Amend(0)
Hello Saket,
Shantanu/GroupHR has given you valid and realistic suggestions. But what beats me is: why do you want to adopt this model when you seem to be planning to move forward in a big way? It doesn't really jell from the general market practices perspective, leaving the legal angles. Without casting any doubts about your intent, such practices are usually the preferred mode for fly-by-night operators in other sectors, more notably multi-level marketing, to limit their legal and physical exposures.
Hope you get the point. All the best.
Regards,
TS
From India, Hyderabad
Acknowledge(0)Amend(0)
Shantanu/GroupHR has given you valid and realistic suggestions. But what beats me is: why do you want to adopt this model when you seem to be planning to move forward in a big way? It doesn't really jell from the general market practices perspective, leaving the legal angles. Without casting any doubts about your intent, such practices are usually the preferred mode for fly-by-night operators in other sectors, more notably multi-level marketing, to limit their legal and physical exposures.
Hope you get the point. All the best.
Regards,
TS
From India, Hyderabad
Acknowledge(0)Amend(0)
I think surely they can work as 'Associates' as is done in law firms or chartered accountancy firms.
Then they will not be employees but part of the company with a rule laid down how they will share the income.
This will leave them free to go off when they want and also for the company to avoid a heavy permanent workforce.
From India, Bangalore
Acknowledge(0)Amend(0)
Then they will not be employees but part of the company with a rule laid down how they will share the income.
This will leave them free to go off when they want and also for the company to avoid a heavy permanent workforce.
From India, Bangalore
Acknowledge(0)Amend(0)
Hi Shantanu, TS & Rramx
We want to adopt such a model due to the fact that the cost we will incur in maintaining compliance will amount to 32% or more of salaries (PF-12%+12%+admin ESIC-4.75%+1.75%+admin). Regardless of who is paying it, it still remains an outflow for the new company & its new employees. It will also distract our thin management from the core business.
The market scenario indicates that a new HR professional is always inclined towards a "generalist profile" over a "recruitment consulting profile," and through this model, we aim to provide some relief on their take-home pay and would like to introduce a profit-sharing concept instead of incentives.
Such a model will also provide us with the necessary flexibility to scale up or down according to market responsiveness. Once we determine how to successfully attract new talent, it will be easier to establish a success pattern for our professional HR team to follow.
Alternatively, please suggest, can we have only 9 employees and hire the rest of the team as "Apprentices" for the time being... say, for a year or so. Please advise if this is legal. This way, we will have 30 apprentices and a 9-employee company. Once we move into the 3rd or 4th year from here, we can initiate ESIC.
Saket
From India, New Delhi
Acknowledge(0)Amend(0)
We want to adopt such a model due to the fact that the cost we will incur in maintaining compliance will amount to 32% or more of salaries (PF-12%+12%+admin ESIC-4.75%+1.75%+admin). Regardless of who is paying it, it still remains an outflow for the new company & its new employees. It will also distract our thin management from the core business.
The market scenario indicates that a new HR professional is always inclined towards a "generalist profile" over a "recruitment consulting profile," and through this model, we aim to provide some relief on their take-home pay and would like to introduce a profit-sharing concept instead of incentives.
Such a model will also provide us with the necessary flexibility to scale up or down according to market responsiveness. Once we determine how to successfully attract new talent, it will be easier to establish a success pattern for our professional HR team to follow.
Alternatively, please suggest, can we have only 9 employees and hire the rest of the team as "Apprentices" for the time being... say, for a year or so. Please advise if this is legal. This way, we will have 30 apprentices and a 9-employee company. Once we move into the 3rd or 4th year from here, we can initiate ESIC.
Saket
From India, New Delhi
Acknowledge(0)Amend(0)
Well, in case you really do not want the hassle of PF and ESI for your recruitment, then you have to totally change the model and make it just like a revenue-sharing model. In this model, you hire some freelance consultants on a contract basis for a fixed fee. Additionally, you may choose to pay incentives upon achieving targets or share some percentage of the profit with them.
From India, Lucknow
Acknowledge(0)Amend(0)
From India, Lucknow
Acknowledge(0)Amend(0)
Pl have them on roll employes and pay salary more than Rs.25,000/-p.m i.e. Rs. 25,100/-p.m. and thereby no hostile in terms EPF or ESI. Your liability is nil. Regards, V.Murali
From India, Dabhol
Acknowledge(0)Amend(0)
From India, Dabhol
Acknowledge(0)Amend(0)
Hello Saket,
As the saying goes, there are pros and cons for every choice or decision. While the economics of hiring employees to work out of the office would surely be good [less expensive], there could be operational hazards. One potential issue could be that your priorities might differ from theirs. Another concern could be the misuse of your job portal access, among others that I can think of.
Conversely, the situation could be vice versa if you hire them to work on your premises.
Based on your last post regarding a trade-off model, like you mentioned about hiring employees and apprentices/trainees, it could be a good starting point. Legally, I don't foresee any issues with this model as long as you have the necessary paperwork in place.
I have a suggestion to help reduce your costs (I am currently working on implementing this in my office) - try to select individuals who need the job rather than those who simply want it. This approach may also help address job stability issues that are likely to arise along the way.
I hope you understand the point I am trying to make.
All the best.
Regards,
TS
From India, Hyderabad
Acknowledge(0)Amend(0)
As the saying goes, there are pros and cons for every choice or decision. While the economics of hiring employees to work out of the office would surely be good [less expensive], there could be operational hazards. One potential issue could be that your priorities might differ from theirs. Another concern could be the misuse of your job portal access, among others that I can think of.
Conversely, the situation could be vice versa if you hire them to work on your premises.
Based on your last post regarding a trade-off model, like you mentioned about hiring employees and apprentices/trainees, it could be a good starting point. Legally, I don't foresee any issues with this model as long as you have the necessary paperwork in place.
I have a suggestion to help reduce your costs (I am currently working on implementing this in my office) - try to select individuals who need the job rather than those who simply want it. This approach may also help address job stability issues that are likely to arise along the way.
I hope you understand the point I am trying to make.
All the best.
Regards,
TS
From India, Hyderabad
Acknowledge(0)Amend(0)Engage with peers to discuss and resolve work and business challenges collaboratively - share and document your knowledge. Our AI-powered platform, features real-time fact-checking, peer reviews, and an extensive historical knowledge base. - Join & Be Part Of Our Community.
HR-LEGAL FORMS.zip
The Challenge of hiring and retaining women - An interview with Head HR eBay.08.pdf