Statutory Compliances in India: What You Need to Know

In today’s world of legal compliance, many companies in India invest time and effort to rest assured that their payroll is compliant with the required proper laws. However, there have been cases where organizations broke no intention but still faced problems related to statutory compliances which can lead them into big trouble down the road including losing customers or even facing criminal charges! This leads us back full circle.

We need HR departments who are aware of these risks so they don’t create any violations through error during the processing of employee records

What Is Statutory Compliance And Why Does It Matter?

Statutory compliance is the legal framework within which any given organization must operate. This includes making sure employees are treated correctly and has nothing but their best interests at heart, both for themselves as well as their peers in similar situations or positions within other companies (i.e. if you’re an employer). All organizations need to make certain they comply with central/state labor laws compliance-failing which could result in strict punishment such as fines etc.

Why Is Statutory Compliance Important For Businesses?

Statutory compliances are a must for any business to avoid legal trouble. Knowing the ins and outs of these regulations is crucial in order not only to keep your company out there but also to salvage it if something goes wrong down the line!

Core Statutory Acts In India

  • The Minimum Wages Act-1948
  • The Professional Tax Act (PT) 1975
  • Shops and Commercial Establishments Act (S&E)
  • The Equal Remuneration Act-1976
  • The Factories ACT, 1948
  • The Industrial Disputes ACT 1947
  • The Employees Provident Funds and Miscellaneous Provision Act – 1952
  • The Labor Welfare Fund Act (LWF) 1965
  • The Employees Compensation ACT-1923
  • The Payment of Gratuity Act-1972
  • The Employees State Insurance Corporation Act – 1948
  • The Industrial Establishment (N&FH) ACT 1963
  • The Child Labor (Prohibition & Regulation Act), 1986
  • The Trade Unions Act, 1926
  • The Contract Labor (Regulation & Abolition) Act – 1970
  • Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) ACT, 2013
  • The Maternity Benefit Act-1961
  • The Apprentice ACT, 1961
  • The Industrial Employment (Standing Orders) ACT 1946
  • The Payment of Bonus Act-1965
  • The Payment of Wages Act-1936
  • The Interstate Migrant Workmen (Regulation of Employment and Conditions of Services) ACT, 1979
  • The Employment Exchange (Compulsory Notification of Vacancies) ACT-1959

Minimum Wages Act, 1948

The Minimum wages Act ensures that all workers, regardless of skill level or location receive a fair wage to support their livelihood. This law has created a framework for determining the minimum wages rates at both provincial/central government levels which are then declared across different sectors including occupational fields as well as state regions within India along with national standards set by either side depending on what they believe would best serve those communities being regulated. Viriksha HR solution’s pf consultants can assist organizations being compliant with labor laws.

The two most common methods for fixing or revising minimum wages are:

1. Committee Method

The government uses a method where they hold committees and subcommittees to make decisions on what changes should be made.

2. Notification method

The authorities make recommendations to those who are likely to be affected by changes in minimum wages. These proposals go through a review process before being taken into consideration at the specified date!

TDS Deduction

The employer is responsible for deducting tax from employee income. The salary components that impact the amount of TDS a person will receive are HRA, Special Allowance (which can be taken as an annual leave payment), Leave Travel Allowance, and Children’s Education Allowances among others- all dependent upon what type of regime one chooses in their retirement plans or whether they have any investment earnings which would require taxation under new laws passing through 2020.

Payment Bonus Act,1965

The Payment of Bonus Act provides a monthly bonus to employees in a certain establishment. The amount is calculated by taking into account both your salary and the profits from this company, which can ultimately lead you up towards an annual total valued at ₹21000 or less if it has been completed 30 working days during that financial year(s).

What Are the statutory Compliances For ESI Funds And PF Deductions?

The Employees State Insurance Act, of 1948 provides for the establishment and maintenance of a state-sponsored health insurance scheme that applies to employees earning Rs 21000 or less per month. Non-seasonal factories with 10+ workforce are covered under this act as well!

The Employee Provident Fund (EPF) and the Employees’ Pension Scheme(EPS), both are important for employees in case of retire or if they die early. These funds will provide financial security to those who save wisely during their working years with the aim that it can be utilized after leaving employment. Companies with 20 or more employees must be EPFO-compliant.


The amount is given to employees by an employer when they leave the job after completing five years in service. The calculation for gratuity includes Basic + DA divided by 26 * No of services rendered times 15, which equals gross payment plus accumulated balances (ERE or EPF).

Professional Tax

The professional tax is a mandatory fee that every individual who makes money must pay. The rate and structure of these taxes vary from state to state, but they all have one thing in common- failure to comply will result in penalties!

Maternity Benefit Act, 1961

The Maternity Benefit Act requires employers to inform women in writing and electronically about the maternity benefits available to them. This includes informing women about the benefits they are entitled to before and after childbirth.

In India, the law requires most businesses to offer maternity benefits to their female employees. The maternity benefits program in India is mainly governed by the Maternity Benefit Act of 1961, which applies to all shops and businesses with 10 or more employees. Under this act, factory workers who are women are given maternity benefits that are available under the Employees’ State Insurance Act of 1948. Viriksha HR solutions offer comprehensive HR services in Chennai for organizations who wants to streamline their workforce.

Shops And Commercial Establishment Act, 1953

This law is meant to give both employers and employees in shops and businesses in the unorganized sector some rights and protections. If you start working in a shop or business, you have to register it with the government within 30 days.

Employees State Insurance Act, 1948

The ESI Act provides benefits to employees in case of sickness, maternity, and employment injury. This act applies to factories with more than 10 employees and to other types of businesses with 20 or more employees. All benefits are provided in hospitals, clinics, and by approved medical practitioners. The wage ceiling has been increased from Rs. 7500 to Rs. 10000 per month.


Complying with government regulations can be a daunting task for any organization. But with Viriksha HR Solutions, you can rest assured that your organization will stay up-to-date with all the latest statutory compliances.

We are a leading HR consultancy in Chennai who offer a one-stop solution for all your compliance needs and our team of experts are always on hand to answer any questions you may have. So why wait? Get in touch with us today and let us help you take care of everything!

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