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Can director be on company's employee
Human Resources » Industrial Law & Discipline

Chrm Message From: hopegovind Total Posts: 14 Join Date: 06/04/2010
Rank: Executive Post Date: 19/05/2010 13:18:51 Points: 70 Location: India

Dear All,

My Managing Director recently called me and told that all people in the company, including him and other director to be taken on payroll of the company and he should be also given PF professional tax and other benefits exactly in same manner given to a regular employee.

We are a Pvt. Ltd. Company.

Now my question is can a Director or Directors be treated as an employee of the company and can we keep them on payroll of the company?

Can we allow them to have Provident Fund and other benefit? Kindly provide reference of the Act or judgement



Chrm Message From: KAUSHIK DESAI Total Posts: 8 Join Date: 06/04/2010  
Rank: Beginner Post Date: 20/05/2010 05:56:37 Points: 40 Location: India

Dear Govind,

MD and Director are the executive of the company, so they can be on board of the company. Non Executive Directors are excluded.


Kaushik Desai

Chrm Message From: kprasoon Total Posts: 34 Join Date: 06/04/2010  
Rank: Executive Post Date: 20/05/2010 11:00:23 Points: 170 Location: India

Dear Govind,

Directors of a company including managing director or chairman can be on the payroll of the company. They can also be entitled for PF/gratuity/ etc. Professional tax is deducted from the salary and not given to the employee.

Compensation arrangements to the directors are company specific and are guided by the company law in general. You dont need any judgment reference for that.

Just get a resolution passed by the board of directors regarding the change in compensation arrangement for directors and implement it.

Kamal Prasoon

Chrm Message From: sandipb8 Total Posts: 3 Join Date: 06/04/2010  
Rank: Beginner Post Date: 01/07/2010 02:04:55 Points: 15 Location: India
Hi, Yes, you can keep them in the payroll as employee of your company.
Chrm Message From: vriddhi99 Total Posts: 3 Join Date: 06/04/2010  
Rank: Beginner Post Date: 02/07/2010 10:15:38 Points: 15 Location: India

The Director can be an employee provided his job specification and compensatory terms are drafted by the Board of Directors and approved by them.

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