Statutory Compliance in HR refers to the legal framework organizations must operate by when it comes to the treatment of their employees. Since every country has several hundreds of federal and state labor laws in place that companies must abide by, it’s essential to stay up to date with this list to ensure that your organization is always operating by the appropriate laws. Now that we’ve covered statutory compliance meaning, let’s cover why statutory compliance is required by your company.
Statutory Compliance in HR is essential for all companies, big and small, around the world to abide by to keep their business safe and out of trouble. To minimize the risk of your organization suffering from noncompliance of statutory requirements, it’s imperative that your business leaders maintain a deep knowledge of rapidly changing statutory compliance requirements. The best way for your business leaders to stay up to date with rapidly changing statutory compliance in HR is to implement payroll management software at your organization and follow this detailed overview.
Statutory Compliance Requirements
There are many statutory compliance laws around the world but more so in India. If your organization has any offices in India, it’s important that you keep these compliance requirements in mind as to not violate any compliance laws.
- PF Act: This act was put in place to help employees fund their future after retirement and can be used to support the employee’s dependents in case of their early death.
- EDLI: The Employees’ Deposit Linked Insurance act is designed to provide an assurance benefit to employees in addition to their PF benefit. This regulation is important to understand because according to this act, employees do not contribute to this benefit, only the employer does.
- ESI Act: This act applies to employees who make less than 21,000 Indian Rupees per month, about $295 USD. For employees who make less than this amount, the ESI Act provides them with cash and medical benefits for them and their family.
- Minimum Wages Act: This act was created to ensure that both skilled and unskilled workers received an adequate living wage. This act not only ensures that employees make enough money for survival requirements but also takes care of education, medical needs, and ensures workers receive some level of comfort at their jobs.
Statutory Compliance Checklist
Now that you have a better understanding of different statutory compliance requirements around the world, how can you ensure that you are always up to date with changing requirements? This statutory compliance checklist should help you guarantee that you’re always up to date when it comes to providing a safe, compliant workplace.
Are you adhering to the Minimum Wages Act?
Created in 1948, the minimum wages act ensures that all employees have enough money to survive and the wage is determined by both the Central Government and State Government, no matter which country you’re operating in.
Is your company registered for Provident Fund?
The PF Act is a savings tool designed to help employees save part of their income for their future. It’s important to keep in mind that any company with over 20 employees is required to register for Provident Fund or could face hefty penalties.
Is your company registered for ESIC?
This act brings affordable healthcare to employees and their families and is designed to help employees who make less than 21,000 Indian Rupees per month or about $295 USD.
Have you included Gratuity as part of your employees’ CTC?
The Gratuity Act, created in 1972, applies to all organizations and comes completely from the employer, not the employee.
Have you made all necessary deductions?
Tax Deducted at Source and Professional Taxes are important to adhere to in order to avoid penalties and fines. These penalties and fines vary state to state and from country to country making them imperative to avoid.
If you’re not sure if your organization is meeting all statutory compliance laws, the best way to meet all statutory compliance in HR and avoid any penalties or fines is to outsource your compliance regulations to a company with a proven track record of meeting all compliance regulations.
