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Home (/) HR News (/hr-news) Statutory Compliances For HR- What All It Includes?

Statutory Compliances For HR- What All It

Includes?
As an HR ProfessionalStatutory Compliances Which Must
Be Followed In Any Organisation
Human Resource Management is an essential part above
businesses strategic plan for success and HR Manager
has a wide role in it. Being an HR is not an easy task, a key
part of Human Resource Management is to develop and
maintain the workforce. HR managers have responsibilities
round the clock throughout the month, and the most
horrifying responsibility of HR managers is statutory
compliance.
No matter how big is the organization, none of the
business owners are blessed with the freedom of not
fulfilling the statutory compliance. It becomes the responsibility of the organization to fulfill the
statutory requirements as well as it is necessary for them to be updated with the continuous changing
laws. This ultimately becomes the burden of HR manager. They have to put substantial amount of time
and efforts in fulfilling these statutory compliances. Here are some major statutory requirements which
are must for any organization to fulfil.

1. PF (Provident Fund)
The Employees provident Fund 1952 is enacted to provide a kind of social security to the industrial
workers. The Act is applicable for every employee employed in an factory or in connection with the work
of a factory or other establishment covered by the schemes other than an excluded employee is entitled
are required to become a member of the fund from the date of joining the factory or establishment.
This amount is later paid to the employee after retirement, death or any such cases where the employee
is not able to work. Contribution under this scheme:
Employees: 12% on Basic + DA
Employer :
1. 3.67% on Basic + DA

2. Administrative Charges : 1.10% on Basic +DA 31 Jan 2015

3. 8.33% on Basic + DA

(It is to be noted that the employer shall not contribute above Rs. 15000 /- of the pay of employee per
month[AM1].)

The Employer contribution of 12% of the salary of employees is to be paid as under:

3.67% to be remitted in Account No.1 ( Employees Account)
8.33% to be remitted in Account No.10 towards pension fund
In addition to 12% of the employer has to remit 1.61% paid as under
1. 1.10% Administrative charges in Account No.2
2. 0.5% EDLI in Account No.21
3. 0.01% Inspection charges in Account No.22

Legal Formalities To Be Followed:

1. Declaration Form no.2 has to fill up by new joiners at the time of joining and submitted to RPFC
office.
2. Monthly contribution of Employer & Employee Qualification in Challan for previous month has to
be submitted in SBI before 15th of every month.
3. Return of Employees Qualifying Form no. 5 has to be submitted in RPFC office before 15th of
every month.
4. Return of Employees Leaving Form no. 10 has to be submitted in RPFC office before 15th of
every month.
5. Monthly return Form no 12A has to be submitted in RPFC office before 25th of every month.
6. Annual return & reconciliation statement Form no 3A & 6A has to be submitted in RPFC office
before 30th of April.
7. Transfer of PF A/c Form no. 13 has to be fill of new recruit and submitted to RPFC office.
8. Final settlement Form no. 19, 10c & 10D has to be fill at the time of leaving the service and
submitted in RPFC office.

2. ESIC (Employee State Insurance Company):

ESIC is a self-financing security and health insurance scheme for all Indian workers. For employees
earning ` 15000 or less per month, the employer contribute 4.75 % and the employee contributes 1.75 %
with a total contribution of 6.5 %. The ESIC scheme provides medical benefit for employees and their
families. Sickness and maternity benefits for employees. The ESIC scheme also provides dependents
benefit for dependents in case of death due to employment injury.
Forms to be used under ESIC Schemes:
Form No. 1: ESI Declaration form for New Entrants.

Form No. 1B: Changes in Family declaration

Form No. 72: Application for Duplicate Card
Form MRO 266: Application form for change of Name / Year of Birth of insured person Woman
Form No.6: ESI half yearly return
ESI Challans: Within 21 days from the case of every Month.
Form 37: For registering with Local ESI doctor.

3. Profession Tax:
Profession tax is the tax charged by state government of India. Every Indian earning income in the form
of salary or any other profession has to pay profession tax. Profession tax slab differ from state to
state in India. However, not all state impose tax. The following states have levied Professional tax
West Bengal, Karnataka, Telangana, Andra Pradesh, Maharashtra, Gujarat, Tamil Nadu, Chhattisgarh,
Assam, Kerala, Orissa, Meghalaya, Tripura, Bihar, Jharkhand and Madhya Pradesh. The owner of the
business has to furnish a return to the tax department within a specific time in the prescribed format.
The return should also include tax payment proof.

4. Gratuity:
Gratuity is a part of salary received by employees form their employers as gratitude for the services
performed by the employee in the employment tenure. It is one of the many retirement benefits that
employers gives employees at the time of leaving the company.
Applicability:
Every mine, port, oil plantation factory and railway company
Every shop or establishment employing 10 or more persons in the previous 1 year.
To any other establishment employing 10 or more persons.
Payment of Gratuity
Gratuity is payable if there is :Continuous service of 5yrs (not necessary in case of death or disablement)
On termination due to superannuation or retirement
Resignation, death or disablement due to accident or disease
In case of death, the amount will be paid to nominee or legal heir.

Calculation of Gratuity

Monthly rate of wage last drawn X 15

26

The employer can pay gratuity in cash, DD or bank cheque. The payment can be by postal money order
if[AM2] amount is less than Rs.1000 on the desire of employee. The maximum amount payable is Rs.
10,00,000 /-.

5. The Minimum Wages Act 1948

The Minimum Wages Act 1948 sets the limits on how much wages to be paid to the unskilled, semiskilled, skilled and high skilled labors. The minimum wages is different in different states in India and it
keeps on updating every six months depending upon the states policy. Under the minimum wages act,
the minimum wages rate differ for different categories, as follows:
Unskilled
Semi-Skilled
Skilled
High Skilled
The Minimum wage rate differ from state to state, and it is updated every six month.
Records to be maintained under (sec. 18): The Registers should contain the following particulars
1.
2.
3.
4.

Particulars of employed persons

The work performed by them
The wages paid to them
The receipts given by them

6. The Maternity Benefit Act 1961:

The Maternity benefit act aims to protect the dignity of motherhood and of a new person by providing
payment for full and healthy maintenance of the women and her child at the maternity time when she is
not working. An Act to regulate the employment of women in certain establishments for certain periods
before and after child-birth and to provide for maternity benefit and certain other benefits.
Eligible for Maternity Benefit:
Must work in the establishment for 80 days in 12 months before her date of Delivery.
Women earning less than 15,000 will not be eligible for maternity benefit, but may be
offered ESI scheme by her employer.

Duties of Employee for Maternity Benefit:

Ten weeks before the expected delivery date she may ask employer to give her light work.
[Produce certificate of pregnancy]
Should intimate the employer Seven Weeks before her delivery date about the leave period.
Name the person to whom the payment will be made in case she cannot take herself.

7. Payment Of Bonus Act 1965:

The Payment of bonus Act 1965 aims at providing bonus to employees of certain establishments, as a
part of profit or productivity or production and for connection with the employees. Every employee
receiving salary or wages up to RS.10,000 per month and engaged in any kind of work whether

unskilled, skilled, high skilled, supervisory etc. is entitled to bonus for every accounting year if he has
worked for minimum 30 working days in that year.
Minimum Bonus:
The minimum bonus which an employer is required to pay for every accounting year is
8.33 % of the salary during the accounting year, or
Rs. 100 in case of employees above 15 years &
Rs 60 in case of employees below 15 years, whichever is higher.

Maximum Bonus:
The Maximum Bonus payable is 205 of the salary for that accounting year.
Time Limit for Payment:
The bonus should be paid in cash within 8 months from the close of the accounting year.

8.Payment of Wages Act 1936: The Payment of Wages act

aims at avoiding unnecessary delay of payment of wages
without any deduction from the wages.
Applicability of the Act id for the persons employed in:
Any factory (a saw mill, ginning factory, godowns, yards etc. as defined in Factories Act,
1948).
Tramway service or motor transport service engaged in carrying passengers or good or
both by road for hire or reward.
Air transport service Dock, Wharf or Jetty, Inland vessel, mechanically propelled
Mine, quarry or oil-field plantation
Workshop or other establishment etc.

9. Workmens Compensation Act 1923:

The Workmens Compensation Act 1923, it intents in providing financial protection to workers and their
dependents in the form of compensation, in case of accidental injury.
Employers Liability: To compensate any employee who suffered from any accident on account of
his employment, resulting into the following:
Death
Permanent total disablement
Permanent partial disablement
Temporary disablement whether total or partial
Or who has contracted an occupational disease.
Compensation for death resulting from injury, the amount of compensation shall be equal 50% of the
monthly wages of the deceased workman multiplied by the relevant factor.} Or an amount of Rs
80,000/- whichever is more.

HR mangers have to be updated with the changes in above mention acts, and fulfill the requirement for
the compliance. Statuary requirement are the integral part of the payment process, and hence it has to
be automated. Automated payroll system will carry out smooth functioning, without any inconvenience
to the HR Manager, ultimately reducing the burden of HR manager.

[AM1]This rule has been changed.

[AM2] Payment Gratuity Act

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