Labour Law Compliance Checklist So You Know You Are Not Missing Anything

Labour law compliance refers to a set of accepted terms or conditions of employment. It refers to several regulatory compliances including minimum wages act, work men’s compensation act,contract labour act, factories act etc.

Business is tough in India. Apart from the business side, the company is also obligated to meet statutory compliance requirements. There are various Laws and Acts that the business must comply with or face punitive action. There are laws at Central level and there are State Government laws applicable to a business.

Labour law checklist

The best way to ensure compliance is to prepare a labour law compliance checklist and tick off each item on the list every month by a person assigned for the task. One can just as well use HR automation software to ensure compliance. Various types of businesses must prepare a compliance checklist under labour laws according to their sphere of operations. A representative labour law compliance checklist would look like this:

  • The Building and Other Construction Workers Act 1996, Form 1 to be submitted 30 days before commencement of work and Form 1 within sixty days from commencement of work.
  • The Building and Other Construction Workers Welfare Cess Act 1996 – a demand draft for 1% of project cost to be submitted within 30 days of completion of project.

Labour Law Compliance Checklist

The Factories Act 1948

  • Form 1 with annexures to be completed on completion of construction project
  • Form 2 to be submitted on approval of factory building plans
  • Form 1 on commencement of work
  • Form VI B after work has started
  • Form A & B to be submitted when construction starts
  • The Employees’ Provident Fund & Miscellaneous Provisions Act 1952–Coverage proforma on commencement of work besides monthly deductions and form filing.
  • The Employees State Insurance Corporation Act 1948 – Form 01 at time of commencement of work

There are other laws as well that necessitate preparation of Labour Law Compliance Checklist. Some of these are:

  • Shops & Commercial Establishment Act
  • The Professional tax Act
  • The Labour Welfare Fund Act
  • The Minimum Wages Act 1948
  • The Payment of Bonus Act 1965
  • The Payment of Gratuity Act 1972
  • The Equal Remuneration Act 1976

HR employees would need to prepare a calendar type checklist to ensure compliance. For instance, TDS must be deducted and deposited by 7th of the following month with form ITNS 281. As for Factories Act, each State may have its own rule but returns must be filed by 15th of the month. EPF must be deposited by 21st of the month. ESI deductions and forms must be done by 21st of the following month. Quarterly income tax returns in form 24Q and form 27! Need to be filed by 31st of applicable month for the quarter.

As can be seen, it is no easy task to keep track of all necessary compliances because certain Acts and Laws are applicable in certain conditions such as number of employees or a certain pay limit. HR staff will need to ensure that their compliance checklist under labour laws also reflects the latest amendments and incorporate such changes in their filings and returns. Then there are specified dates by which deposits should be made and forms filed with appropriate authorities. There may be monthly returns, quarterly returns or annual returns that must be filed in time according to stipulations of various acts and Rules. Errors are bound to creep in and there may be errors of omission or commission that could result in penalties. The best solution is to outsource compliance to experts or use the right HR automation software. Not all laws and Acts apply to all types of businesses so one must know precisely which Acts apply and which rules so as to prepare a calendar of checklist and follow them rigorously for full compliance.

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March 2019