On Roll / Off Roll Payroll

On-roll and off-roll payroll models represent the two primary ways in which employees are paid by companies. These models determine the benefits, responsibilities, and structure of employment.

On-Roll Payroll

Employees under the on-roll payroll model are full-time employees, directly employed by the company. They:

 
• Receive regular, fixed remuneration based on company policies.
 
• Are entitled to employee benefits such as provident fund (EPF), insurance, paid leave, and performance bonuses.
 
• Are covered by the company’s policies and are eligible for statutory benefits.

Off-Roll Payroll

Employees on off-roll payroll are typically hired on a contract basis or through third-party agencies. They:

 
• Work for the company but are not direct employees.
 
• May not receive employee benefits such as provident fund, insurance, or performance bonuses.
 
• Have their salaries paid directly or through a third-party agency.
 
• Often work on projects or tasks, receiving compensation based on the terms of their contract.

Key Differences

 
• Employee Status: On-roll employees are considered part of the company, while off-roll employees are often hired as contractors.
 
• Benefits: On-roll employees enjoy company benefits, whereas off-roll employees do not typically receive such perks.
 
• Payment: Both models involve regular payments, but off-roll payroll can vary based on contract agreements.

This distinction helps businesses manage their workforce efficiently, providing flexibility through off-roll employment while ensuring core teams on the payroll receive necessary support and benefits.

Frequently Asked Questions (FAQ)

Q. How do tax obligations differ between on-roll and off-roll employees?

A. On-roll employees have taxes deducted at source, like income tax and provident fund contributions. Off-roll employees, being contractors, must handle their own taxes, including GST and income tax, based on their agreements.

Q. Can off-roll employees eventually transition to on-roll employment?

A. Yes, companies sometimes offer off-roll employees full-time positions. It depends on the company’s hiring needs and the employee’s performance, making it possible to transition to an on-roll role.

Q. What are the legal protections for off-roll employees in India?

A. Off-roll employees are protected under various labour laws like the Contract Labour Act. They are entitled to basic provisions like fair wages, safe working conditions, and timely payments, ensuring their rights are upheld even without full-time employment status.