Statutory compliance encompasses the legal standards and regulations established by either the central or state government to oversee business activities. Each nation establishes its specific payroll laws, rules, and regulations, mandating compliance for business operators within its jurisdiction. Similarly, this article focuses on the legal frameworks in India. Therefore, failure to adhere to these requirements may result in financial penalties and harm to the brand's reputation. 

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INDIAN FRAMEWORK 

Some of the important laws applicable are as follows:

1.Social Security & Industrial Labour Laws: 

• Employees Provident Fund Act, 1952 
• Labour Welfare Fund Act, 1965 
• Employee State Insurance Act, 1948 
• Payment of Gratuity Act, 1972 

2.Employee Salaries and Benefits: 

Payment of Wages Act, 1936 

• Minimum Wages Act, 1948 
• Payment of Bonus Act, 1965 
• Maternity Benefits Act, 1961 

3.Tax Liabilities

EMPLOYEES PROVIDENT FUND ACT, 1952 

Both the employer and the employee contribute 12% each of basic pay and Dearness Allowance (DA) to the employee's retirement chest. 

• Organizations that have 20 employees minimum. 
• Employers who are not adhering to this compliance regulation face severe fines or, in extreme scenarios, imprisonment. 

Read more: ContributionRate.pdf (epfindia.gov.in) 

Read more: EPFO || Downloads (epfindia.gov.in) 

Gratuity = (15* Last drawn salary * years of service) / 26 

Last drawn salary includes basic pay, dearness allowance, and sales commissions. 

Not Covered - Paid Before 5 Years of Service 

Gratuity = (15* Last drawn salary * tenure of working) /30 

PAYMENT OF WAGES AСТ, 1936 

•  The Payment of Wages Act ensures that employees from various industries are paid on time. 
•  According to this rule, employees should be paid before the 7th of every month for organizations with less than 1,000 employees. If the organization has more than 1,000 employees, they need to be paid by the 10th of every month. 
• This is not applicable for people earning salaries of more than 10,000 every month. 

MINIMUM WAGES ACT, 1948 

• Here the minimum wage rate is fixed. 
• Some of the most common factors considered before fixing minimum wages include the cost of living, wage period (hourly, weekly, or monthly), and job type. 

PAYMENT OF BONUS ACT, 1965 

• Under this there is a provision for an annual bonus to employees in certain establishments, including factories and organizations that employ more than 20 people. 
• Under the act, a bonus is calculated based on an employee's salary and the profits of the organization. 
•  Employees who have completed 30 working days and have earned ₹21,000 per month or less (basic + DA, excluding other allowances) are eligible for receiving the bonus from their respective organization.

MATERNITY BENEFITS ACT, 1961 

• This act protects the employment of women during the time of her maternity and grants her full paid absence from work. 
• This act is applicable for all organizations that have more than 10 employees.
• For a female employee to be eligible for the benefit, they must have been working as an employee in an establishment for a period of at least 80 days within the past 12 months.

Maternity benefits according to amendment include the following:  

• Duration of maternity leave has been increased from 12 weeks to 26 weeks. 
•  Prenatal leaves can be applied up to a period of 8 weeks.
• The Maternity Benefit Amendment Act has also introduced an enabling provision relating to "work from home" for women, which may be exercised after the end of the 26-week leave period. This is dependent on the nature of work.

LABOUR LAWS 

The various labour legislation enacted by the Central Government can be classified into the following different broad categories: 

Laws relating to Industrial Relations: 

• Industrial Disputes Act, 1947 
• Trade Unions Act, 1926 

Laws relating to Wages 

• Minimum Wages Act, 1948 
• Payment of Wages Act, 1936 
• Payment of Bonus Act, 1965 

Laws relating to Social Security 

• Employees' Provident Funds and Miscellaneous Provisions Act, 1952 
• Employees' State Insurance Act, 1948 
• Labour Welfare Fund Act (of respective States 
• Payment of Gratuity Act, 1972 
• Employee's Compensation Act, 1923 

Laws relating to Working Hours, Conditions of Services and Employment 

• Factories Act, 1948 
• Industrial Employment (Standing Orders) Act, 1946 
• Shops and Commercial Establishments Act (of respective States) 
• Contract Labour (Regulation and Abolition) Act, 1970 
• Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 
• Weekly Holiday Act, 1942 
• National and Festival Holidays Act (of respective States) 1963 
• The Plantation Labour Act, 1951 
• The Mines Act, 1952 
• The Dock Workers (Safety, Health & Welfare) Act, 1986 

Laws relating to Equality and Empowerment of Women 

• Equal Remuneration Act, 1976 
• Maternity Benefits Act, 1961 

Prohibitive Labour Laws 

• Bonded Labour System (Abolition), Act, 1976 
• Child Labour (Prohibition & Regulation) Act, 1986 
• The Beedi and Cigar Workers (Conditions of Employment) Act, 1966 
• The Sexual Harassment at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 

Laws relating to Employment and Training 

• Apprentices Act, 1961 
• Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 

INDUSTRIAL RELATIONS 

Industrial Relations is concerned with the management and the worker's relations i.e. employer-employee relations. But its scope is not limited only to this aspect. It also includes labour relations and public or community relations.

The industrial relations include four types of relations: 

• Labour relations 
• Group relations 
• Employer-Employee Relations 
• Community or Public Relations. 

REFORMS IN LABOUR LAWS

In 2019, the Central Government introduced four bills on labour codes to consolidate 29 central laws. These are: 

1. Code on Wages 
2. Industrial Relations Code 
3. Social Security Code 
4. Occupational Safety, Health, and Working Conditions Code 

CODE ON WAGES ACT 2019 

• The new wage code removes the multiplicity of wage definitions, which can significantly reduce litigation as well as compliance cost for employers. 
• The new Act links minimum wage across the country to the skills of the employee and the place of employment. 
•  It seeks to universalize the provisions of minimum wages and timely payment of wages to all employees irrespective of the sector and wage ceiling. 
• It seeks to ensure "Right to Sustenance" for every worker and intends to increase the legislative protection of minimum wage. 
• A National Floor Level Minimum Wage will be set by the Centre and will be revised every five years, while states will fix minimum wages for their regions, which cannot be lower than the floor wage. 
• It subsumes the following four labour laws: 
• The Payment of Wages Act, 1936 
• The Minimum Wages Act, 1948 
• The Payment of Bonus Act, 1965 
• The Equal Remuneration Act, 1976. 

TYPES OF WAGES 

Minimum Wage 

International Labour Organization defines it as "the minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract". The minimum wage includes the bare needs of life like food, shelter, and clothing. 

Living Wage 

It is the wage needed to provide the minimum income necessary to pay for basic needs based on the cost of living in a specific community. In addition to bare needs, a 'living wage' includes education, health, insurance, etc.

Fair Wage 

A fair wage' is the difference between 'living wage' and 'minimum wage'. 

Starvation Wage 

It refers to the wages which are insufficient to provide the ordinary necessities of life. 

INDUSTRIAL RELATIONS CODE BILL 2020 

• The code, among its important provisions, makes it easier for companies to hire and fire workers.  
• Companies employing up to 300 workers will not be required to frame rules of conduct for workman employed in industrial establishments. Presently, it is compulsory for firms employing up to 100 workers. 
• It proposes that workers in factories will have to give a notice at least 14 days in advance to employers if they want to go on strike. 
• Presently, only workers in public utility services are required to give notices to hold strikes. 
• Besides, every industrial establishment employing 20 or more workers will have one or more Grievance Redressal Committees for resolution of disputes arising out of employees' grievances. 
• The code also proposes setting up of a reskilling fund to help skill retrenched workers. 

OCCUPATIONAL SAFETY, HEALTH AND WORKING CONDITIONS CODE BILL, 2020 

• It spells out duties of employers and employees, Mand envisages safety standards for different sectors, focusing on the health and working condition of workers, hours of work, leaves, etc. 
• The code also recognizes the right of contractual workers. 
• The code provides employers the flexibility to employ workers on a fixed-term basis, based on requirement and without restriction in any sector. 
• More importantly, it also provides for statutory benefits like social security and wages to fixed-term employees at par with their permanent counterparts. 
• It also mandates that no worker will be allowed to work in any establishment for more than 8 hours a day or more than 6 days in a week. 
• In case of an overtime, an employee should be paid twice the rate of his/her wage. It will be applicable to even small establishments, which have up to 10 workers. 
• The code also brings in gender equality and empowers the women workforce. Women will be entitled to be employed in all establishments for all types of work and, with consent can work before 6 am and beyond 7 pm subject to such conditions relating to safety, holidays and working hours. 
• For the first time, the labour code also recognizes the rights of transgenders. It makes it mandatory for industrial establishments to provide washrooms, bathing places and locker rooms for male, female, and transgender employees. 

CODE ON SOCIAL SECURITY BILL, 2020 

• This will replace nine social security laws, including Maternity Benefit Act, Employees' Provident Fund Act, Employees' Pension Scheme, Employees' Compensation Act, among others. 
• The code universalizes social security coverage to those working in the unorganized sector, such as migrant workers, gig workers and platform workers. 
• For the first time, provisions of social security will also be extended to agricultural workers also. 
• The code also reduces the time limit for receiving gratuity payment from the continuous service of five years to one year for all kinds of employees, including fixed-term employees, contract labour, daily and monthly wage workers. 

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