Compliance

Can apprentices replace contract workers?

No — apprentices are trainees on a registered contract, capped at 15% of staff. But a site with 30 or more workers, contract staff counted, owes some.

A steel bench vise bolted to a metal workbench, with a wooden-handled file beside it and workshop tools out of focus behind.

Not as a substitute. An apprentice under the Apprentices Act 1961 is a trainee on a registered contract, learning a trade to an approved programme, paid a stipend rather than a wage, and capped at 15% of the workforce. The same rules cut the other way: a site with 30 or more workers, counting its contract staff, is required to engage apprentices, so a contract-heavy floor may already be short of them.

What an apprentice is, in law

A trainee, and deliberately not a worker. Section 18 of the Act says it in two lines:

Save as otherwise provided in this Act, (a) every apprentice undergoing apprenticeship training in a designated trade in an establishment shall be trainee and not a worker; and (b) the provisions of any law with respect to labour shall not apply to or in relation to such apprentice.

Apprentices Act 1961, section 18

The Labour Codes carry the same exclusion into their own definitions. The Code on Social Security 2020 defines an employee in section 2(26) as a person employed on wages "other than an apprentice engaged under the Apprentices Act, 1961", which takes an apprentice outside the provident fund, ESI, gratuity and maternity chapters. The OSH Code 2020 uses the same words in its definition of employee at section 2(t).

What the Act does not do is leave an apprentice unprotected. It sets its own terms, and several of them are stricter than the rules for a contract crew.

ApprenticeContract worker
StatusTrainee, not a worker; labour law does not apply (s.18)Employee of the contractor, working in the establishment
PaidA stipend at not less than the prescribed minimum (s.13)Wages under the Code on Wages 2019
PF, ESI, gratuity, maternityOutside them: excluded from "employee" (Social Security Code s.2(26))Inside them, through the contractor
HoursAs the employer determines, subject to the training duration (s.15(1))Eight a day under the OSH Code, overtime at twice the rate
OvertimeNot allowed without the Apprenticeship Adviser's approval, given only in the interest of training or the public interest (s.15(2))Allowed with consent, inside the quarterly cap
Leave and holidaysThose observed in the establishment (s.15(3))Annual leave under OSH Code s.32
InjuryThe employer is liable to pay compensation (s.16)ESI, or the employee's compensation chapter
Conduct and disciplineThe rules for employees of the corresponding category (s.17)The contractor's standing orders or service rules
After the programmeNo obligation to offer a job unless the contract says so (s.22)Continues for as long as the engagement runs

How many apprentices, and who counts in the base

A band of 2.5% to 15% of the establishment's total strength, and the total includes contract staff. Section 8(1) leaves the number to the Central Government, and the Apprenticeship Rules 1992 as amended on 25 September 2019 set it as a band "of 2.5% to 15% of the total manpower strength of the establishment including contractual staff", within which 5% is reserved for fresher apprentices and skill-certificate holders. The same 2019 amendment made engagement mandatory for establishments with 30 or more workers, down from 40; it is optional between 4 and 29, and not permitted at 3 or fewer [VERIFY: the band as stated in the Ministry of Skill Development's FAQ; the amended Rules were not opened, and whether the 2025 amendment changed the band was not established].

Total strength, contract staff includedMinimum apprentices (2.5%)Maximum apprentices (15%)
100 (the Ministry's own example)315
200 (for instance 60 direct and 140 contract)530

The second row is the point for a contract-heavy site. Sixty direct employees, looked at alone, would put the minimum at two. Counting the 140 contract workers the base requires puts it at five. A seasonal ramp that lifts total strength lifts the floor with it.

The shortfall is enforceable. Under section 30(1) and (1A), an employer that engages fewer apprentices than it must is given a month's written notice to explain; if the reply does not satisfy the authorised officer, the fine is ₹500 for each shortfall apprenticeship-month for the first three months and ₹1,000 a month after that until the seats are filled.

What an apprentice costs

A stipend at the prescribed minimum, which was raised in September 2025. The Apprenticeship (Amendment) Rules 2025, notified as G.S.R. 610(E) dated 3 September 2025 and published on 11 September 2025, replaced the 2019 rates with these monthly minimums:

Apprentice's qualificationMinimum before 11 Sept 2025Minimum from 11 Sept 2025
School pass-out, class 5 to 9₹5,000₹6,800
School pass-out, class 10₹6,000₹8,200
School pass-out, class 12₹7,000₹9,600
National or State certificate holder₹7,000₹9,600
Technician (vocational), vocational certificate, or sandwich course from a diploma institution₹7,000₹9,600
Diploma holder, or sandwich course from a degree institution₹8,000₹10,900
Graduate or degree apprentice₹9,000₹12,300

Three details from the Ministry's office memorandum of 15 September 2025 and its clarification of 15 October 2025 matter to payroll. The new rates apply from 11 September 2025 to apprentices already in training on that date, not only to new contracts. The stipend for a month is due by the tenth day of the following month, into the apprentice's bank account. And an employer may pay above the minimum, which the Ministry encourages [VERIFY: whether any revision after G.S.R. 610(E) has been notified].

The Government has also shared part of the cost. Under the NAPS-2 guidelines of 25 August 2023, it paid 25% of the stipend, up to ₹1,500 a month per apprentice, directly into the apprentice's account, with the establishment paying the rest. At the 2025 rates, 25% is above ₹1,500 in every category, so the cap is the figure that applies. The guidelines frame the scheme for financial years 2022-23 to 2025-26, which ended on 31 March 2026 [VERIFY: whether NAPS-2 has been extended or replaced for 2026-27 — do not budget on the ₹1,500 until confirmed].

Why apprentices cannot be your contract crew

Because the law is built around training, not output, and every rule that makes an apprentice cheaper also makes one less flexible.

  • They are capped. At 15% of total strength, apprentices can never be most of a crew.
  • They cannot absorb a peak. No overtime without the Apprenticeship Adviser's approval (s.15(2)), which is the opposite of what a contingent bench is for.
  • They come with a programme. The employer must arrange practical training in the workplace and give the Apprenticeship Adviser access to test the apprentice's work against the approved programme (s.9). The contract of apprenticeship has to be registered online on the apprenticeship portal.
  • They are time-limited. A programme runs 6 to 36 months, including basic training, under the 2019 rules.
  • They leave at the end. Section 22(1) lets each employer set its own policy on recruiting apprentices who finish, and there is no duty to offer a job unless the contract of apprenticeship includes a service condition (s.22(2)).

Where apprentices and a contract crew fit together

As a pipeline alongside the crew, not a cheaper version of it. The contract workforce carries the flex: the seasonal peak, the second shift, the headcount that has to rise and fall. Apprentices carry the skill that the site will want in two years' time, and the ones who finish well are the obvious first hires when a contract role becomes permanent.

The Act anticipates that smaller employers will not run programmes alone. Section 8(2) lets several employers join together, either themselves or through an agency approved by the Apprenticeship Adviser, to provide apprenticeship training. The obligation stays with each establishment either way, so the practical sequence is the same for everyone: count total strength including the contract crew, work out the 2.5% floor, check what is actually registered on the portal, and recheck after every ramp.

How Velura Services helps

We help sites work out which roles suit apprentices, which suit a contract crew, and which belong on the payroll, then staff the contract share with screened, statutorily enrolled workers. That keeps apprenticeship training separate from production headcount, the way the Act expects.

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Sources

Frequently asked questions

Are apprentices covered by PF and ESI?

No, if they are engaged under the Apprentices Act 1961. The Code on Social Security 2020 defines an employee in section 2(26) as a person employed on wages other than an apprentice engaged under that Act, which takes apprentices outside the provident fund, ESI, gratuity and maternity chapters. Section 18 of the Apprentices Act also says labour law does not apply to them. They are paid a stipend, not a wage.

How many apprentices must a factory engage?

Establishments with 30 or more workers must engage apprentices in a band of 2.5% to 15% of total strength, and the total includes contractual staff, under the Apprenticeship Rules 1992 as amended in 2019. A site of 100 must engage at least three. Between 4 and 29 workers it is optional. A shortfall draws a fine of ₹500 per apprentice-month for three months, then ₹1,000 a month.

What is the minimum stipend for an apprentice?

From 11 September 2025, under the Apprenticeship (Amendment) Rules 2025 notified as G.S.R. 610(E), the monthly minimum runs from ₹6,800 for a class 5 to 9 school pass-out to ₹12,300 for a graduate apprentice, with ₹8,200 for class 10, ₹9,600 for class 12 and certificate holders, and ₹10,900 for diploma holders. The rates apply to apprentices already in training on that date.

Does a company have to hire its apprentices after training?

Not unless the contract of apprenticeship says so. Section 22 of the Apprentices Act 1961 lets each employer set its own policy for recruiting apprentices who complete training. Only where the contract includes a condition that the apprentice will serve the employer afterwards is the employer bound to offer suitable employment, and the apprentice bound to take it, on the terms the contract sets.