Dear All,
I am working in a start-up based in Mumbai. I would like to know what the legal implications are when we convert employees from professional fees to payroll. Is it wise to convert them into payroll, or is it wise to keep them on professional fees? The total employee strength is 200.
From India, Mumbai
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2I am working in a start-up based in Mumbai. I would like to know what the legal implications are when we convert employees from professional fees to payroll. Is it wise to convert them into payroll, or is it wise to keep them on professional fees? The total employee strength is 200.
From India, Mumbai
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Dear Kena Shah,
It depends on the volume and continuous extent of the works/services for which such professionals are engaged on a fee or retainer basis. It is basically a "contract for service" only. When such people are brought on the rolls, they become the regular employees of the establishment. As such, they can be pulled up for lapses, if any, in their work under the "contract of service". Moreover, they are entitled to all the benefits of employment and security of tenure under the contract of employment. On the other hand, if they are merely engaged on an assignment basis, at most you can terminate the contract.
Therefore, it is for the management to decide depending on the requirements of such works.
From India, Salem
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It depends on the volume and continuous extent of the works/services for which such professionals are engaged on a fee or retainer basis. It is basically a "contract for service" only. When such people are brought on the rolls, they become the regular employees of the establishment. As such, they can be pulled up for lapses, if any, in their work under the "contract of service". Moreover, they are entitled to all the benefits of employment and security of tenure under the contract of employment. On the other hand, if they are merely engaged on an assignment basis, at most you can terminate the contract.
Therefore, it is for the management to decide depending on the requirements of such works.
From India, Salem
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Dear Madam,
In my view, it is far more advantageous to engage a professional specialist on fixed monthly fees or on a retainer basis rather than on payroll. In this arrangement, you do not have to incur any additional or consequential costs like PF, Bonus, Gratuity, Leave, LTA, etc. Moreover, their services are liable to be terminated at any time with notice.
Regards,
Vinayak Nagarkar
HR Consultant
From India, Mumbai
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In my view, it is far more advantageous to engage a professional specialist on fixed monthly fees or on a retainer basis rather than on payroll. In this arrangement, you do not have to incur any additional or consequential costs like PF, Bonus, Gratuity, Leave, LTA, etc. Moreover, their services are liable to be terminated at any time with notice.
Regards,
Vinayak Nagarkar
HR Consultant
From India, Mumbai
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Thanks!! Let's say if we put them in Payroll, then apart from ESIC, PF, Gratuity, which other laws are applicable. As our finance head mentioned that it reduces the company's cost, which I am unable to understand.
From India, Mumbai
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From India, Mumbai
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Cost reduction will depend on salary offered vis-a-vis fee which was being paid. Both systems have their pro and cons . Tabulate them and decide. Col.Suresh Rathi
From India, Delhi
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From India, Delhi
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Dear Suresh,
Can you help me with where I can find the details? When I tried to search, I couldn't find the exact pros and cons. If there are any links on this forum, it would be really helpful.
Thank you.
From India, Mumbai
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Can you help me with where I can find the details? When I tried to search, I couldn't find the exact pros and cons. If there are any links on this forum, it would be really helpful.
Thank you.
From India, Mumbai
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Pros:
1. He will be your employee - you may give him specific targets for completion, supervision, and query resolution, which will be faster.
2. As an employee, his dedication will be much higher.
3. Easier communication, saving time.
4. Salary will/should be less than what was being paid when he was a consultant, but from his side, regular income and job security.
5. May be useful to train other staff.
Cons:
1. Will have to monitor performance on a regular basis.
2. Will be entitled to Bonus, Gratuity, leave, leave encashment.
3. May turn out to be a costly proposition if the regular requirement dries up.
These are a few points to consider.
Regards,
Col. Suresh Rathi
From India, Delhi
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1. He will be your employee - you may give him specific targets for completion, supervision, and query resolution, which will be faster.
2. As an employee, his dedication will be much higher.
3. Easier communication, saving time.
4. Salary will/should be less than what was being paid when he was a consultant, but from his side, regular income and job security.
5. May be useful to train other staff.
Cons:
1. Will have to monitor performance on a regular basis.
2. Will be entitled to Bonus, Gratuity, leave, leave encashment.
3. May turn out to be a costly proposition if the regular requirement dries up.
These are a few points to consider.
Regards,
Col. Suresh Rathi
From India, Delhi
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