Part Time workers - Deduction of PF/ESIC - If he is working at 3 different places, are all employers liable to pay PF/ESIC?

Greetings Members,

I have a part-time helper in my organization. He works for 2 hours a day and earns INR 5000 a month with us. Do we need to deduct ESIC/PF for him? If yes, how would we decide his Basic salary in that case as his total salary altogether is under the minimum wages according to the state of Haryana?

Also, I would like to understand the situation based on two scenarios:

1. If he is working at some other place full-time and already getting PF/ESIC there.
2. If he is working at three different places, are all employers liable to pay PF/ESIC?

Regards,
Preet

PF and ESI deductions for part-time employees are mandatory. Deductions should be based on minimum wages.

If an employee works for more than one or two organizations, they should be engaged through one contractor at each place. The contractor, combining the total earnings from all places, will deposit PF and ESI under the contractor's code. If this is not feasible, the situation becomes complicated. It is uncertain whether the PF & ESIC Authority will allow other Principal Employers to deposit contributions under the same UAN No. & ESI no registered under one specific Principal Employer. I urge others to contribute ideas to address this issue.

S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions +91 98310 81531 skb@usdhrs.in www.usdhrs.in

As opined by S K, the part-time employees should be given PF and ESI provided their notional wages do not exceed the threshold limit of Rs. 15,000 and Rs. 21,000 per month respectively. If the amount you pay is Rs. 5,000, pay it on Rs. 5,000. Of course, if their wages for two hours at the hourly rate prescribed by the government are less than that, you can pay it on that amount, treating the balance as an allowance like traveling expenses reimbursements.

Coming to the second part of the question, I would like to say that if an employee is working for different employers, say four employers - A, B, C, and D, one employer, say D, can cover him under ESI or PF or both. That employer (D) will make payment on the total earnings of the worker, and all three employers - A, B, and C - will contribute to B by way of reimbursement.

But, to be more practical, it is good to follow what S K has said, that is to make the employee under a contractor. The contractor can register him under his PF and ESI portals. Depending on the hours spent in each company, the contractor can raise bills to each company. There is no need to pay directly to the workers, nor is it required to reimburse the contribution paid by some other company.

Yes, you need to deduct ESIC/PF for your part-time helper even though his total salary is under the minimum wages in Haryana. The threshold limit for PF contribution is Rs. 15,000 per month and for ESIC contribution is Rs. 21,000 per month. So, you need to deduct PF and ESIC on his entire salary of Rs. 5000.

The basic salary for PF and ESIC contribution is calculated as follows:

Basic salary = Total salary - HRA - Other allowances

In your case, the total salary is Rs. 5000 and there are no HRA or other allowances. So, the basic salary will be Rs. 5000.

Now, let's look at the two scenarios you mentioned:

Scenario 1: If he is working at some other place full-time and already getting PF/ESIC there.
In this case, you are not required to deduct PF and ESIC for him. However, you need to keep a record of his total salary from all employers and ensure that it does not exceed the threshold limits for PF and ESIC contribution.

Scenario 2: If he is working at 3 different places, are all employers liable to pay PF/ESIC?
Yes, all employers are liable to pay PF and ESIC for him, even if he is working at 3 different places. The total PF and ESIC contributions from all employers should not exceed the threshold limits.

I hope this answers your questions.

Hi Preethaluwallia,

ESIC/PF Deductions:

ESIC (Employees' State Insurance): ESIC is applicable to employees earning less than Rs. 21,000 per month. Since your part-time helper earns INR 5000 a month, ESIC deductions may apply.

PF (Provident Fund): PF is applicable to employees earning less than Rs. 15,000 per month. In this case, your part-time helper's salary is below this threshold, so PF deductions may also apply.

Basic Salary Calculation: To calculate the Basic Salary, you'll typically need to consider a certain percentage of the total salary. Different organizations have different policies, but it's common for Basic Salary to be around 40-50% of the total salary.

Scenarios:

Scenario 1 (Full-time job elsewhere): If your part-time helper is already employed full-time elsewhere and is covered under PF/ESIC there, you may not need to make additional deductions. In such cases, it's important to maintain proper documentation and ensure compliance with labor laws.

Scenario 2 (Working at 3 different places): In a scenario where an employee is working at multiple places, all employers may be liable to contribute to PF/ESIC. However, there might be a ceiling on the contribution, and this would depend on the specific laws and regulations of your jurisdiction.

It's crucial to consult with a labor law expert or the relevant authorities to ensure compliance with the specific regulations of your location. Laws can vary by state and even by industry, so it's important to get advice that is tailored to your situation. They can guide you on the exact calculations, deductions, and compliance requirements. Thanks

Dear Dr. Raghunath,

Basic salary calculation is not different from organization to organization, but it is very clearly defined in the Act itself. As such, the basic salary means the total salary and nothing else. The contribution to PF is made on basic salary and Dearness Allowance. However, the basic salary shall include all allowances that are paid universally to all the employees in the company. Therefore, all components will attract PF but subject to Rs. 15,000. For employees whose salary is around Rs. 15,000, the idea of 40-50% will not work, and the entire salary should qualify for PF.

PF will apply to employees whose salary exceeds Rs. 15,000 as well. It is excluded only for those employees who join an establishment for the first time with a PF qualifying salary of more than Rs. 15,000. It shall also be excluded if an employee joins your establishment with a salary of more than Rs. 15,000 from an organization that was not covered by EPF.

In your opinion that "However, there might be a ceiling on the contribution, and this would depend on the specific laws and regulations of your jurisdiction," do we have separate laws for ESI and PF for different jurisdictions in India? Please explain.