Seeking some advice on legal and labor compliance for our Section 8 company registered in Himachal Pradesh (focused on scientific research, biodiversity conservation and scientific education).
We recently signed an MoU with the local district administration to act as the implementing agency for a government project.
The Project: A 2-year program providing internships to 20 B.Ed. graduates to improve education quality in local government schools.
Our Role: We monitor the interns, conduct training workshops for them, and handle the payout of their stipends.
Funding: The district administration provides the entire budget for these expenses as a quarterly advance grant.
The interns will be physically deployed to selected government schools to teach science and math.
Given this setup, I have two primary questions regarding our compliance liabilities:
Worker Classification: Since our Section 8 company handles the stipend payouts and monitoring, do these B.Ed. interns qualify as “employees” under the Code on Wages / New Labor Codes? Or do they strictly remain “trainees/interns”?
Compliance Obligations: If they are classified as employees, what specific employer compliances (EPF, ESIC, Professional Tax, etc.) are triggered for us, keeping in mind the funds are coming via a government grant? Are there any specific Section 8 exemptions we should look into?
Would love to get insights from anyone who has handled similar government-backed NGO implementation models. Thanks in advance!
Intern more appropriately called Apprentice is not an employee. Please see Section 2(k) of Code on Wages where an apprentice is excluded from the definition of employee. Since there is no employer-employee relationship, the Labour Codes do not apply.
You will need to ensure necessary compliance with provisions of Apprentices Act 1961 for engagement of apprentice (intern) i.e. sharing of contract on NA portal, stipend rates etc.
As a registered non-profit organization under Income Tax Act, please examine that this assignment/activity is a charitable purpose selected by you at the time of registration or is incidental to attainment of the main object if it is considered as a business income and will still be considered charitable for which the onus of proving is on you before the Department. This is essential since under ITA 2025, commercial activity by an RNPO is prohibited. Being a Section 8 company or any other type of charitable entity is of no consequence.
Manpower count includes regular employees and contract workers for eligibility to register on NATS. The apprentices proposed do not form part of this count. Registration is not permitted if employees and workers count is 3 or less, between 4-29 it is voluntary and 30 and more it is mandatory to have apprentices in the range of 2.5-15% of workforce.
Given that you control monitoring, deploy them for defined work, and route their stipends, the interns likely straddle the line into “employee” territory under the Wage Codes despite the training label. So it’s worth getting a labor counsel opinion rather than relying on the MoU’s “internship” framing alone. If deemed employees, EPF/ESIC thresholds (typically 20+ employees, which you’d hit) would apply regardless of the funds being a government grant, and Section 8 status doesn’t exempt you from labor law compliance. It’s a company law/tax classification, not a labor law carve-out.
As per Section 2(k) of Code on Wages 2019, apprentice under Apprentices Act 1961 is not an employee. Apprentice are out of ambit of NLCs is crystal clear, but you need to comply with necessary provisions under Apprentices Act for such engagement i.e. eligibility, registration on NATS, reporting etc.