Statutory Compliances For HR

Meaning-: Statutory means "of or related to statutes," or what we normally call laws or regulations. Compliance just means to comply with or adhere to. So statutory compliance means you are following the laws on a given issue. The term is most often used with organizations, who must follow lots of regulations. When they forget or refuse to follow some of those regulations, they are out of statutory compliance. A company that follows all the rules, is in statutory compliance.

Purpose-: Safeguarding the employees and the enterprise from untoward risks by managing and consulting on issues such as retirement benefits and Taxation

ESI Provident Fund Profession Tax Gratuity The Minimum Wages Act The Maternity Benefit Act The Payment Of Bonus Act The Payment Of Wages Act

Was originally applicable to non-seasonal factories using power and employing 20 or more persons; but it is now applicable to non-seasonal power using factories employing 10 or more persons and non-power using factories employing 20 or more persons All the employees in the factories or establishments to which the Act applies shall be insured under this Act The contribution comprise of employer’s contribution and employee’s contribution at a specified rate Contribution rate : 1.75% - employees 4.75% -employers

The ceiling 10,000/- gross salary. After reaching the ceiling one will be exempted. (with effect from 1.10.2006) Employer is liable to contribute & deduct specified rate of amount and submit it to the Corporation within 21 days. Two contribution periods each of six months: 1st April to 30th Sept 1st Oct. to 31st March Two corresponding benefit periods of six months : 1st January to 30th June 1st July to 31st December

PF and Miscellaneous Provisions Act, provides for compulsory contributory fund for the future of an employee after his retirement or for his dependents in case of his early death It extends to the whole of India except the State of J&K Every factory engaged in any industry specified in Schedule 1 in which 20 or more persons are employed Every other establishment employing 20 or more persons or class of such establishments which the Central Govt. may notify and any other establishment so notified by the Central Government even if employing less than 20 persons PF is contributed from both the sides @12% of the basic salary. Contribution for the purpose of Employees' pension Scheme is 8.33% of (12% of employers contribution towards PF) or Rs.540/- which ever is less, will be transferred to Employees’ pension scheme and the balance amount will go towards Employee PF.

Professional tax or employment tax is a state-based tax. It is allowed as a deduction from the gross income before computing the tax. Duration of deduction is half year1st day of April to 30th September 1st day of October to the 31stMarch of a year. PT is deducted slab wise1 to 2500-nil 2500 to 3500 -Rs 60 3501 to 5000 - Rs 120 5001 to 10000- Rs 175 and above 10000 Rs 200 per month except Rs 300 in the month of february Each and every employee receiving pay from the revenue of the Central Government or any State Government is entitled to pay profession tax Any organization whether incorporated or not, which is owned or controlled by the Central Government or any State Government is eligible to pay PT

Gratuity is an amount given to employees by employer when they leave the job after completing five years or minimum 240 days per year or after retirement. The number of year may differ from company to company Gratuity is payable under the payment of wages act. Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years. (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease Gratuity is calculated as Basic + DA divided by 26 * No of years of service *15.

This act provides for fixing minimum rates of wages. Wages shall mean all remuneration payable to an employed person on the fulfillment of the contract employment and includes HRA.  It Includes (i) a basic rate of wages and special allowance call the cost of living allowance (ii) a basic rate with or without cost of living allowance plus any concession on the supply of essential commodities.  It excludes (i) The value of rent free accommodation, supply of light, water, medical ..... (ii) Contributions paid by the employer towards the PF or any scheme of social insurance (iii) Travelling allowance / Travelling concession (iv) Gratuity The appropriate government may fix-: A minimum rate of wages for time work ("a minimum time rate"). A minimum rates of wages for piece work ("a minimum piece rate"). A minimum rate of wages on a time work basis ("a guaranteed time rate") A minimum rate of overtime work done (“a overtime rate")

Penalty:The inspectorate staff of the Labour Department takes action on complaints received from workmen/Unions. The penalty for violation of is fine of R.500/- or imprisonment upto a period of six months or both. If a worker gets less payment, he can also file a claim before the Competent Authority appointed under the Act, which are Deputy Labour Commissioners for the respective districts. The authority can impose penalty up to 10 times the difference in minimum wages that was due and paid

To regulate employment of women for certain periods before and after child birth and to provide for maternity benefit. Payment of maternity benefit shall apply to women workers to whom ESI Act does not apply. The Act applies to all establishments in which ten or more people are employed. The maternity benefit shall be at the rate of average daily wage for the period of actual absence. The maximum period of entitlement shall be 12 weeks of which not less than 6 weeks shall precede the expected date of delivery. Maternity benefit shall be payable to employee or any other persons as per the nomination. The Amount of benefit upto the period of expected delivery shall be paid in advance. The balance due for the subsequent period shall be paid within 48 hours from delivery of child.

The Payment of Bonus Act imposes statutory liability upon the employers of every establishment covered under the Act to pay bonus to their employees. It provides for payment of minimum and maximum bonus and linking the payment of bonus with the production and productivity. The Act applies to every factory where 10 or more workers are working and every other establishment in which 20 or more persons are employed, on any day during an accounting year Every employee receiving salary or wages upto RS. 3,500 p.m. and engaged in any kind of work whether skilled, unskilled, managerial, supervisory etc. is entitled to bonus for every accounting year if he has worked for at least 30 working days in that year Penalty The punishment provided for contravention of any provisions of the Act or any rule made there under is imprisonment for a term, which may extend for 6 months or with fine, which may extend to Rs. 1000/- or with both.

It is a central legislation which applies to the persons employed in the factories and to persons employed in industrial or other establishments This Act does not apply on workers whose wages payable in respect of a wage period average Rs. 1600/- a month or more. This Act has been enacted with the intention of ensuring timely payment of wages to the workers without unauthorized deductions. The salary in factories/establishments employing less than 1000 workers is required to be paid by 7th of every month and in other cases by 10th day of every month. A worker, who either has not been paid wages in time or an unauthorized deductions have been made from his/her wages, can file a Claim either directly or through a Trade Union or through an Inspector under this Act.

The present day legal climate is one of uncertainty and confusion. In most cases, a law comes to light only after its contravention, resulting in severe penalties. Statutory Compliances is a must in keeping you away from the long arm of the law!