Can Contractors Legally Hire Fresh Graduates as Trainees with Low Stipends?

Engaging Fresh ITIs/Graduates as Trainees

Can a registered contractor engage fresh ITIs/graduates as trainees on the following terms:

• Stipend: Rs. 2000 per month (obviously, this is less than minimum wages).
• Provident Fund: Not applicable.
• Canteen Facilities: Yes.
• Safety Shoes/Helmets: Yes.
• After six months of training, performance will be evaluated, and successful candidates will be recruited as semi-skilled technicians with payment of applicable minimum wages plus PF, etc.

If the contract is for the supply of trainees, then it will be permissible. If not, the contractor cannot deploy the trainees on the principal employer's premises to fulfill the contractual obligations. However, they can deploy them over and above the number of eligible persons for training.

For example, if the contract is to supply 50 laborers, the contractor can provide 50 eligible laborers and additionally deploy some trainees at their own expense. Of course, no contractor may do so!

No, he cannot engage trainees within the meaning of the Contract Labour Act for supplying to the principal employer.

Regards,
B. Saikumar
HR & Labor Law Advisor
Mumbai

Training Costs and Employment Relationship

You need not allow the contractor to train their personnel at your cost. It may affect the quality of your product or services unless you closely supervise them, which in turn will establish an employer-employee relationship. Trainees are not exempted from EPF or ESI unless they are under the Apprenticeship Act or under the Standing Orders of the establishment.

Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]

Engaging Trainees in India

Engaging trainees through a registered contractor is not permissible in any part of India. Trainees can only be engaged by the principal employer, and the stipend rate also cannot be less than the rate decided by the Board of Apprentices Trainees.