Dear All, ls let me know if we can hire an employee on regular grade for a fixed period.
I have a case where person is above 60 years old and we wanted to hire him on a contract but he is denying saying his Tax deductions will be high (10% TDS) and he has to register himself for Service Tax if his income crosses Rs.10 LPA.
We also want to hire the person so how that can he be managed in regular employment with fixed term. Our company policy for contract labor and regular employees are same only PF, Gratuity, superannuation benefit is not available to contract employee.
Pls let me know how this can be managed across industry.
From India, Pune
2I have a case where person is above 60 years old and we wanted to hire him on a contract but he is denying saying his Tax deductions will be high (10% TDS) and he has to register himself for Service Tax if his income crosses Rs.10 LPA.
We also want to hire the person so how that can he be managed in regular employment with fixed term. Our company policy for contract labor and regular employees are same only PF, Gratuity, superannuation benefit is not available to contract employee.
Pls let me know how this can be managed across industry.
From India, Pune
You can appoint employees for a fixed period. Such contract of employment are generally referred to as Fixed Term Contract (FTC) under which the employee will be serving only for the fixed period on the expiry of which the employment will be terminated automatically. The Industrial Disputes Act also recognises this kind of employment. Since this is purely an employment contract everything will be like a regular employee but the only difference is with regard to termination and that will happen automatically at the end of the period for which the employment is given.
In FTC kind of engagement which is often given to persons with proven skill and whose service would be required only for a fixed period of time, the TDS will be deducted as if he is a regular employee and is under the head ''salaries' and not u/s 194J. There is no need of service tax registration on the part of the person engaged because he is giving his labour and not any professional "service"
.
There can be different service conditions for different categories of employees. In the same way, there can be different treatment for these FTC employees with regard to service conditions. However, these employees are also covered by ESI, EPF, Bonus and Gratuity laws. As such, if an FTC employee's salary is less than 15000, he should be paid ESI and PF. If it is 21000 or less, naturally, he will come under Bonus Act also. And, if he serves the company for 5 years, he should also be paid Gratuity once he decides to leave the company.
Normally, an experienced person who is above 60 years will not be available with a salary of only 15000 or even 21000. That will leave ESI, EPF and Bonus Act out of picture. If his service is not required for such a long duration, you can restrict his employment for 4 years (and a few months, if required) and avoid payment of gratuity. Purposefully I have not said a service less than 5 years and quoted 4 years as ideal for FTC just because there will be comments from different corners that 4 years and 240 days will qualify for gratuity and the entire discussion will get deviated with Madras High Court or Kerla High Curt verdicts etc and our main objective of thread may get vitiated.
Madhu.T.K
From India, Kannur
In FTC kind of engagement which is often given to persons with proven skill and whose service would be required only for a fixed period of time, the TDS will be deducted as if he is a regular employee and is under the head ''salaries' and not u/s 194J. There is no need of service tax registration on the part of the person engaged because he is giving his labour and not any professional "service"
.
There can be different service conditions for different categories of employees. In the same way, there can be different treatment for these FTC employees with regard to service conditions. However, these employees are also covered by ESI, EPF, Bonus and Gratuity laws. As such, if an FTC employee's salary is less than 15000, he should be paid ESI and PF. If it is 21000 or less, naturally, he will come under Bonus Act also. And, if he serves the company for 5 years, he should also be paid Gratuity once he decides to leave the company.
Normally, an experienced person who is above 60 years will not be available with a salary of only 15000 or even 21000. That will leave ESI, EPF and Bonus Act out of picture. If his service is not required for such a long duration, you can restrict his employment for 4 years (and a few months, if required) and avoid payment of gratuity. Purposefully I have not said a service less than 5 years and quoted 4 years as ideal for FTC just because there will be comments from different corners that 4 years and 240 days will qualify for gratuity and the entire discussion will get deviated with Madras High Court or Kerla High Curt verdicts etc and our main objective of thread may get vitiated.
Madhu.T.K
From India, Kannur
Dear Sir,
1)As per law is there a age for retirement or it's up to the company policy. 2)If as per law 60 yrs is the age of retirement then can we appoint a FTC person below Rs.15000 and offer him normal salary with basic, DA etc and will he be then eligible for ESIC and PF.
From India, Mumbai
1)As per law is there a age for retirement or it's up to the company policy. 2)If as per law 60 yrs is the age of retirement then can we appoint a FTC person below Rs.15000 and offer him normal salary with basic, DA etc and will he be then eligible for ESIC and PF.
From India, Mumbai
You can employ people on FTC even at low wages but within the salary as per Minimum Wages Act.
There is no law which says about retirement age of people in private companies. If the certified Standing Orders have put a restriction with regard to retirement age, you cannot engage people beyond that age.
If the employer is okay with payments like ESI,PF, Bonus etc, you can do that.
Madhu.T.K
From India, Kannur
There is no law which says about retirement age of people in private companies. If the certified Standing Orders have put a restriction with regard to retirement age, you cannot engage people beyond that age.
If the employer is okay with payments like ESI,PF, Bonus etc, you can do that.
Madhu.T.K
From India, Kannur
Dear Gokul,
Retirement age is 60 years or the age upon the employee is agreed to retire as per the Industrial Employment Standing Order Act. And there is no relation of employee's age with the salary. So you can appoint the person with 15000 per month wages which are normal rate of your minimum wages followed by all other labour laws like ESI, PF, Bonus etc..
From India, Pune
Retirement age is 60 years or the age upon the employee is agreed to retire as per the Industrial Employment Standing Order Act. And there is no relation of employee's age with the salary. So you can appoint the person with 15000 per month wages which are normal rate of your minimum wages followed by all other labour laws like ESI, PF, Bonus etc..
From India, Pune
Dear Madhu,
For the Fixed Termed Contract Employee , the Leave Policy should also be similar like other indefinite Termed Employee & they also have benefit like Leave Encashment or Carry Forward like other employees.
In short all benefits has to be extended to them?
From India, Pune
For the Fixed Termed Contract Employee , the Leave Policy should also be similar like other indefinite Termed Employee & they also have benefit like Leave Encashment or Carry Forward like other employees.
In short all benefits has to be extended to them?
From India, Pune
I DOWNLOAD THE STORES REGISTER IN EXCEL FORMAT PREPARED BY Mr. SIDDARTH SINGH. iT IS PASSWORD PROTECTED. HOW CAN I MAKE MY ENTRIES COULD YOU PLEASE EXPLAIN ME? IT WILL BE VERY HELPFULL FOR ME.
WITH REGARDS
HARIDAS
From Kuwait, Kuwait City
WITH REGARDS
HARIDAS
From Kuwait, Kuwait City
If somebody is appointed as a consultant, then only 105 TDS and Service Tax (if income croses Rs 10 LPA) are applicable. He can be appointed as a contract employee for fixed period to avoid all these issues.
A consultant should be a consultant by all means. He should be a professional from whom the other senior employees take advises. He will not have fixed working hours nor does there be any restrictions as to working for another organisations. I remember one case (Workhrad Hospital Vs Income Tax) in which the Doctors were given the title of Professionals but were not permitted to take private practices but were to follow the timings of the hospital etc and their remunerations were subjected to income tax deduction as if it were professional charges. The court held that there existed employee employer relationship and the remuneration should be treated as salary and the TDS should be deducted following section 192 of the IT Act and not as per section 194J.
It is very common that even unskilled workers are given extension of service and in order to avoid ESI and other statutory payments as per labour laws, they will give a fancy designation like consultants. Even the PSUs do like this. All India Radio, for example, hire people for data entry work as "professionals' and deduct tax on the meagre sum being paid to them. These poor persons then will file returns and take the money back. interesting thing is that they will pay more than what they get as refund to the person filing the returns. that is the knowledge base of these data entry workers. What professional advice do you get from these poor persons?
Madhu.T.K
From India, Kannur
It is very common that even unskilled workers are given extension of service and in order to avoid ESI and other statutory payments as per labour laws, they will give a fancy designation like consultants. Even the PSUs do like this. All India Radio, for example, hire people for data entry work as "professionals' and deduct tax on the meagre sum being paid to them. These poor persons then will file returns and take the money back. interesting thing is that they will pay more than what they get as refund to the person filing the returns. that is the knowledge base of these data entry workers. What professional advice do you get from these poor persons?
Madhu.T.K
From India, Kannur
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