satutory compliance

7/31/2019 Satutory Compliance

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What Are StatutoryCompliances

Meaning-:Statutory means "of or related to statutes," or what wenormally call laws or regulations. Compliance just means tocomply with or adhere to. So statutory compliance means youare following the laws on a given issue.

The term is most often used with organizations, who mustfollow lots of regulations.

When they forget or refuse to follow some of thoseregulations, they are out of statutory compliance. A companythat follows all the rules, is in statutory compliance.

Purpose-:Safeguarding the employees and the enterprise from untowardrisks by managing and consulting on issues such as retirementbenefits and Taxation


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Statutory Compliances ForHR

ESI

Provident Fund

Profession TaxGratuity

The Minimum Wages Act

The Maternity Benefit ActThe Payment Of Bonus Act

The Payment Of Wages Act


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ESI

Employees State Insurance ActThe Act was originally applicable to non-seasonal factories using powerand 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.

E.S.I. Scheme being contributory in nature, all the employees in thefactories or establishments to which the Act applies shall be insured in amanner provided by the Act.The contribution payable to the Corporation in respect of an employeeshall comprise of employers contribution and employees contribution at aspecified rate.Currently, the employees contribution rate (w.e.f. 1.1.97) is 1.75% of the

wages and that of employers is 4.75% of the wages paid/payable in

respect of the employees in every wage period.The existing wage-limit for coverage under the Act, is Rs.10,000/- permonth (with effect from 1.10.2006 ) The ceiling for ESI is 10,000/- grosssalary after reaching the ceiling one will be exempted from ESI.An employer is liable to pay his contribution in respect of every employeeand deduct employees contribution from wages bill and shall pay thesecontributions at the above specified rates to the Corporation within 21days.


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Contd..

There are two contribution periods each of six monthsduration as on 1st April to 30th Sept and 1st Oct. to 31stMarch and two corresponding benefit periods also ofsix months duration as on.1st January to 30th June

and 1st July to 31st December .

Contribution for the purpose of Employees' pensionScheme8.33% of (12% of employers contribution towardsProvident Fund) or Rs.540/- which ever is less, will betransferred to Employees pension scheme and thebalance amount will go towards Employee ProvidentFund


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Provident Fund

Provident Funds and Miscellaneous Provisions Act, provides forcompulsory contributory fund for the future of an employeeafter his retirement or for his dependents in case of his earlydeath.

It extends to the whole of India except the State of Jammu

and Kashmir.

Every factory engaged in any industry specified in Schedule 1in which 20 or more persons are employee.

Every other establishment employing 20 or more persons orclass of such establishments which the Central Govt. may

notify and any other establishment so notified by theCentral Government even if employing less than 20 persons.

PF is contributed from both the sides employee as well asemployer @12% of the basic salary to the employees fund.


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Professional Tax

Professional tax or employment tax is a state-based tax. It isallowed as a deduction from the gross income beforecomputing the tax.Duration for deduction is half-year, shall be from the 1st day of

April to the 30th day of September and from the 1st day ofOctober to the 31st day of March of a year.

PT is deducted slab wise , salary 1 to 3000-nil . 3000 to 3500 -Rs 60, Rs.3501 to 5000 - Rs 120 , Rs 5001 to 10000- Rs 175and above 10000 Rs 200 per month except Rs 300 in themonth of february.Employee means a person employed on salary and is aGovernment servant receiving pay from the revenue of the

Central Government or any State Government is entitled to payprofession taxAny organization whether incorporated or not, which is ownedor controlled by the Central Government or any StateGovernment is eligible to pay PT


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Gratuity

Gratuity is an amount given to employees by employer when theyleave the job after completing five years or minimum 240 daysper year or after retirement. The number of year may differ fromcompany to companyGratuity is payable under the payment of wages act.

Gratuity shall be payable to an employee on the termination of hisemployment after he has rendered continuous service for not lessthan 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 ofservice *15.It is calculated as last drawn salary divided by 26 multiply by 15and then multiply by the no of years of services (min 5 yrs orminimum 240 days per year).


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The Minimum Wages Act1948

This act provides for fixing minimum rates of wages.

The inspectorate staff of the Labour Department takes action oncomplaints received from workmen/Unions.

The penalty for violation of is fine of R.500/- or imprisonment upto aperiod of six months or both.

If a worker gets less payment, he can also file a claim before theCompetent Authority appointed under the Act, which are Deputy LabourCommissioners for the respective districts.

The authority can impose penalty up to 10 times the difference inminimum wages that was due and paid.

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").


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The Maternity Benefit Act, 1961

To regulate employment of women for certain periods before andafter child birth and to provide for maternity benefit.

Payment of maternity benefit shall apply to women workers towhom 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 forthe period of actual absence. The maximum period of entitlementshall be 12 weeks of which not less than 6 weeks shall precede theexpected date of delivery.

Maternity benefit shall be payable to employee or any otherpersons as per the nomination.

The Amount of benefit upto the period of expected delivery shallbe paid in advance. The balance due for the subsequent periodshall be paid within 48 hours from delivery of child.


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The Payment of Bonus Act 1965

The Payment of Bonus Act imposes statutory liability upon theemployers of every establishment covered under the Act to paybonus to their employees.

It provides for payment of minimum and maximum bonus andlinking the payment of bonus with the production and

productivity.The Act applies to every factory where 10 or more workers areworking and every other establishment in which 20 or morepersons are employed, on any day during an accounting year.

Penalty

The punishment provided for contravention of any provisions ofthe Act or any rule made there under is imprisonment for a term,which may extend for six months or with fine, which may extendto Rs. 1000/- or with both.


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The Payment of Wages Act 1936

It is a central legislation which applies to the persons employed inthe factories and to persons employed in industrial or otherestablishments

This Act does not apply on workers whose wages payable inrespect of a wage period average Rs. 1600/- a month or more.

This Act has been enacted with the intention of ensuring timelypayment of wages to the workers without unauthorizeddeductions.

The salary in factories/establishments employing less than 1000workers is required to be paid by 7th of every month and in othercases by 10th day of every month.

A worker, who either has not been paid wages in time or anunauthorized deductions have been made from his/her wages, canfile a Claim either directly or through a Trade Union or through anInspector under this Act.


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Conclusion

The present day legal climate is oneof uncertainty and confusion. In mostcases, a law comes to light only after

its contravention, resulting in severepenalties. Statutory Compliances is amust in keeping you away from the

long arm of the law!

satutory compliance

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