Part Time Resources - Service Providers Or Employees

Dear all,

We are a Noida-based BPO with a strength of 300 employees. We have a data entry process in which volume inflow fluctuates across the week. The process witnesses a two-fold increase in volume for 5-6 hours on Monday & Friday. Employing full-time employees to manage volume for 7-8 days in a month will result in underutilization and add to the cost in a low-margin process. To mitigate the situation, we are planning to manage the volume fluctuation by deploying 8-10 part-time resources on these days. We plan to hire services of such part-time resources from a third-party vendor, and they will be working between 2:00 a.m. to 9:00 a.m. from the office premises. We will be providing them midnight meals available in our office cafeteria. Please help by informing on:

1. Will these part-time resources be considered as employees or can be treated as service providers, as they will be working from office premises on only 4 days of the month?

2. Will PF, Bonus, ESIC, etc., be applicable?

3. Are we required to provide them transport by law even if the PTEs are males?

4. Are there any other compliance requirements we need to follow?

You are welcome to provide any other suggestions to manage the situation.

Thanks & regards,

Vandana

Dear Vandana,

All of those who were engaged for 4 days in a month could fall under the consultant category. Therefore, you should maintain a separate database for their records and pay them according to consultancy services. Please do not forget to sign an MOU for the engagement of their services.

Thanks

Since they are employees of some agency (service providers) who make use of your facilities like computers, cafeteria, etc., they will fall under contract labor. Even though they are engaged for 4-5 days a month, you are bound to take care of their statutory benefits and facilities as the principal employer. If these persons had been working from their own place of business and giving you the output, you could have called the arrangement a vendor arrangement. Now, since they are engaged at your office and are using your infrastructure facilities, the relationship will become that of principal employer and contract labor.

We cannot treat it as consultancy because here the employees are doing the front-line work and they are being supervised by you. If supervision is not directly visible, I would say that in your relation with these persons, there is a high element of supervision. Ultimately, you will reject the data entered by them if not found as per your specification or if there is any error in the cells entered. In a consultancy agreement, you are getting some ideas, suggestions, or something special from the consultant who is always at a higher side with regard to knowledge in the matter. Moreover, why should we have a consultant engaged at a very odd time, that is during 2 am and 9 am when others are not working?

If there is an understanding with the service providers that they will engage sufficient persons during 2 am to 9 am for completing the data entry work as and when required, that is a contract of service. In such cases, though the ESI/EP, wages, etc., payable to the persons engaged in our office are paid by the contractor, we as the principal employer have to ensure that the same are paid in time. Since the work is during the night, the contractor will have to arrange for transport also. Obviously, he will charge it to the Principal employer, and therefore, it will become a cost to the principal employer only.

In short, the arrangement you are looking for is a contract of service with a service provider which will definitely involve the issues like PF, ESI, minimum wages, arrangement of conveyance (provided you engage female). In case the number of persons so engaged is 20 or more, you will have to obtain registration for such engagement under the provisions of the Contract Labor (Regulation and Abolition) Act also.

Regards,

Madhu T.K.

Thank you, Madhu and Surendra.

For most of these resources, our work will be in addition to their full-time employment elsewhere. Please advise if there are any provisions related to dual employment, and we will be legally compliant from this point of view.

Regards,
Vandana

It is their headache and not yours. But if you make it documented, saying that you require those who can take it up along with their regular employment at a subsidized rate/ lesser wages than prevailing in the industry, then it would become a problem. It is with an understanding that you have allowed your contractor to engage those who are willing to do double employment. Therefore, if anybody is willing to work during 2 am to 9 am, let them work but your impression should be that they are exclusively engaged for you by the service provider, i.e., the contractor. But I don't think that in these odd hours anybody will be interested in taking up additional work when they have to carry out their regular work elsewhere from 9.30 or 10 am, just finishing the work at your office. Naturally, if the work is from, say, 7 pm to 2 am, sometimes, people already employed may be interested.

Madhu.T.K

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The definition of employee under the UP Shops and Establishments Act is wide -(6)'employee' means a person wholly or mainly employed on wages by an employer in, or in connection with any trade, business or manufacture carried on in a shop or commercial establishmentand includes—(a)caretaker,mali or a member of the watch and ward staff;(b)any clerical or other staff of a factory or industrial establishment, which is not covered by the provisions of the Factories Act, 1948; and(c)any apprentice or a contract or piece-rate worker.So the welfare benefits like ESIC and EPF should either be provided by you or the Service provider.if it is provided by you then you can deduct it from the Bills of the Service provider.
V.Sounder Rajan
Advocate -Labour & HR & Consumer Law Consultant -Chennai
Legal Consultant for Indian Staffing & Recruiting Industry