Statutory compliance in HR refers to the legal framework which
organizations must abide by with respect to the treatment of their
employees. Most of the companyâ€™s time and money goes into ensuring
compliance to these laws. Everything to being compliant to the
payment of minimum wages to provident fund, ESI or maternity
benefits needs not just whole lot of time but also experts who can
guide on all of these statutory compliance measures.
Therefore, dealing with statutory compliance requires for
companies to be well-versed with the various labour regulations in
The Xperts Tax Team works with 150+ Indian businesses all
across India helping with everything from payroll to attendance to
compliance management. Thus we decided to create a checklist to
help you easily analyses if your Payroll is statutory compliant.
Minimum Wages are fixed under the Minimum Wages Act, 1948. The
minimum wage rates are determined by both the Central Government & State
Government. The rates are also determined on occupation, sector and type of
According to the Minimum Wage Act, the employer is obliged to pay wages on
timely basis at least once a month. Wage period may be fixed on daily, weekly
or monthly basis.
The Provident Fund is a saving tool that helps employees save a part of their
income. The PF is a corpus of funds built through regular, monthly
contributions made by an employee and his/her employer.
To stay compliant to the EPFOâ€™s rules and regulations, any company that has
grown to a number of 20 or more employees is required to be registered for Provident Fund. Failure to comply with EPFOâ€™s norms, the company will be
charged with heavy penalties.
The ESIC social security scheme brings affordable healthcare to not just
employees but also their dependent family members. As per the Employeesâ€™
State Insurance Corporation Act, all companies with more than 20 employees
whose monthly gross salary falls under Rs, 21000 must be registered under the
Thus, if your company falls under the ESIC Actâ€™s eligibility then the
Employeesâ€™ CTC needs to be restructured including the ESIC employee and
As per the Payment of the Gratuity Act, 1972, Gratuity is applicable to all
establishments including NGOs, educational institutes and hospitals with an
employee size of 10 or more. Since gratuity is a fixed contribution from the
companyâ€™s side, it is shown as part of the CTC. Thus making Gratuity part of
the employeesâ€™ CTC is necessary.
TDS (Tax Deducted at Source) is deducted is a means of indirect tax collection
according to the Income Tax Act, 1961. This TDS rule directs employers to
deduct a certain amount of tax before full payment to the receiver. TDS rule is
applicable only if employee falls under the Income Tax Slab.
Thus these necessary TDS deductions have to be made before payroll is run.
Similar to TDS deductions, Professional Tax is collected by the employers from
the monthly salaries of the employees. Penalties are charged if there is failure in
collecting or failing to pay professional taxes. Professional Tax amount is
different for all states.