Esic - Vocational Training

Dear all seniors,

I'm Dinesh, working in a 5-star company. I have a few questions for you.

Here, students come for vocational training for a period of fewer than six months as part of their curriculum. Once they complete their training, they go back to work. Is it compulsory to deduct ESI contribution at 1.75% and will they be covered under the Apprentice Act?

What is the maximum percentage of H.R.A. and how is it calculated? Is there any problem if HRA exceeds the Basic salary?

It would be greatly appreciated if someone could answer these queries.

Dear Dinesh,

Your company does not have any statutory liability to provide them with such facilities. If your company wishes to give such welfare facilities to those students, then it is acceptable. The Apprentice Act covers vocational trainees; you can include them under the group medical policy under WC that already exists in your company, instead of ESIC.

Ref: ESIC Corp. Mumbai v/s Indian Hume Pipes Co. Ltd. (1963) 2 LLJ. 104 (Bom)

An apprentice is a trainee, not an employee/worker, and any provision of labor law does not apply to him unless it is specifically made applicable to him.

Regards,
Shahu

"Vocational Certificate Holder" means a person who holds a certificate in a Vocational Course, involving two years of study after the completion of secondary stage of school education, recognized by the All India Council for Technical Education.

Engineering Graduate or Diploma Holder or Vocational Certificate holder who had training or job experience for a period of one year or more, after the attainment of these qualifications shall be eligible for being engaged as an apprentice under the Act.

HRA is calculated based on PF Base. 50% of the salary is provided in the case of residential accommodation taken on rent in Bombay, Calcutta, Delhi, or Madras (Chennai), and 40% of the salary in any other case.

Boss, they are catering to students, and we are providing a stipend of 1000/- per month. Every month, we disburse 20,000-25,000 as a stipend without deducting the ESI from it. One ESI inspector mentioned that ESI contribution is mandatory for the trainees as per the new ESI amendment. I shared this information with my manager, but he denied it. I just want to know if it is mandatory to deduct ESI from the stipend for the trainees (students).

Ask that inspector for a new amendment. Statutory deductions such as PF, Gratuity, and PT are calculated on the PF base, i.e., Basic+D.A., and ESIC on Gross.

Please let me know if you need any further assistance.