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Types of Employments in an Organization

Posted by: ericmikio on 27 March 2019 in Compliance, Finance, HR, Payroll, Talent Management

How many types of employment do you have in your establishment? Is such type is compliant under Employment Legislations?

Every establishment, whether it is a large enterprise or start-up, employers do engage people in different roles with as many classifications.

As per the Industrial Employment (Standing order) Act, 1946, the workmen shall be classified as:
1. Permanent
2. Probationers
3. Badlis (Substitute)
4. Temporary
5. Casual and
6. Apprentices

To employ workmen as ‘badlis’, casuals or temporaries and to continue them as such for the years with the object of depriving them of the status and privileges of permanent workmen, is UNFAIR LABOUR PRACTICE.

Before looking into the definition of the above and various other types of employments which are being practiced in the establishments, we shall need to know what an establishment is. As per section 2(ii) of The Payment of Wages Act, an Establishment means “where there is a need for protection of person/s employed therein and other relevant circumstances”, as notified by the appropriate Government.

Besides, as per section 2(s) of Industrial Disputes Act, a “workman” means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied…

• A Permanent workman, is one who was engaged on a permanent basis including those who completed probationary period

• A Probationer is a workman who is provisionally employed to fill permanent vacancy

• A Badli (Substitute) is a workman who is appointed in place of permanent or probationer who is temporarily absent

• A Temporary workman is a person who is engaged for work which is essentially a temporary nature

• A Casual workman, is one who is engaged for casual nature of work

• An Apprentice is a Learner who was paid Allowance during the training period

With recent initiative from Government of India, a new class of employment was introduced, which is “Fixed Term Employment”, who can be, a kind of Permanent workman, who was engaged only for a fixed period of term to undertake any Project or Process.

All the above are as per the statute and they are protected and governed by applicable employment legislations. Every employer has to comply with the appropriate provisions of the employment legislations.

Whereas, of late, there is a practice of engaging following classes of persons also in an establishment:

1. Interns – An Intern is a student who wish to do some curriculum related projects or trainings in an organization. They are neither Trainees nor Apprentices. They are not covered under any employment legislations.
2. Trainees other than Apprentice – A learner who was not engaged through Apprentice Act, 1961. Such trainees are compensated and covered under applicable employment legislations
3. Consultants – A person who was engaged through a Contractual agreement or through a Vendor, having consulting skills. Other than the individual based consulting, it can also scope based consulting – eg. Tax consulting, Auditing, Management consulting, etc.

For Consultants there is no requirement to comply with any employment legislation, as they will not be paid any wages/salary. The compensation fee does not attract any social security benefit. For the purpose of record, the employers can get signed Form 11 from such Consultants considering them as an excluded employee. But if the consultation fee is less than Rs.21,000 per month, ESI will automatically attract, irrespective of the status of the employment of such person. (As defined under s. 2(9) of the Act. It is so wide as to include even a casual employee who is employed just for a day for wages. The test being whether the person is employed for wages on any work which is connected with the work of a factory or establishment which bears the application of the Act.)


The difference between Fixed Term Employee and Consultant are stated below:

Provisions of the Legislation Fixed Term Employee Consultant
Offer letter, Appointment letter To be issued It is a Contractual agreement under Indian Contracts Act
Structured wage components Similar to other employees It is Fee or a consolidated sum depends upon the hours / days performed by the person. Or it can be a lump sum as agreed lump-sum.
Wage disbursement Monthly As agreed in the contract
Compliance under Labour legislations To be complied May not attract, unless otherwise specifically mentioned in the contractual agreement
Leave, Bonus, Gratuity Applicable, similar to other employees Not applicable, unless otherwise agreed in the contractual agreement
Separation Upon expiry of the term or earlier if agreed by both (employee and employer) As per the contractual term

Besides, few “Atypical Employment”, like Part-time, freelance workers are engaged, who are governed by the employment legislations. However, there can be a variance in the Organizations’ HR policy for such workers.


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TAGS: Apprentice Act Consultants Employment Legislation Human Capital Human Resources Industrial Disputes Act Interns Labour Law Payroll Statutory Compliance Talent Management The Payment of Wages Act Trainees Unfair Labour Practice

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