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

Statutory Compliances For HR- What All ItIncludes?

As an HR Professional Statutory Compliances Which MustBe Followed In Any Organisation 

Human Resource Management is an essential part abovebusinesses strategic plan for success and HR Managerhas a wide role in it. Being an HR is not an easy task, a keypart of Human Resource Management is to develop andmaintain the workforce. HR managers have responsibilitiesround the clock throughout the month, and the mosthorrifying responsibility of HR managers is statutorycompliance.

No matter how big is the organization, none of thebusiness owners are blessed with the freedom of not

fulfilling the statutory compliance. It becomes the responsibility of the organization to fulfill thestatutory requirements as well as it is necessary for them to be updated with the continuous changinglaws. This ultimately becomes the burden of HR manager. They have to put substantial amount of timeand efforts in fulfilling these statutory compliances. Here are some major statutory requirements whichare 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 industrialworkers. The Act is applicable for every employee employed in an factory or in connection with the workof a factory or other establishment covered by the schemes other than an excluded employee is entitledare 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 employeeis not able to work. Contribution under this scheme:

Employees: 12% on Basic + DAEmployer :

1. 3.67% on Basic + DA

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2. Administrative Charges : 1.10% on Basic +DA 31 Jan 20153. 8.33% on Basic + DA

 

(It is to be noted that the employer shall not contribute above Rs. 15000 /- of the pay of employee permonth[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 fundIn addition to 12% of the employer has to remit 1.61% paid as under

1. 1.10% Administrative charges in Account No.22. 0.5% EDLI in Account No.213. 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 RPFCoffice.

2. Monthly contribution of Employer & Employee Qualification in Challan for previous month has tobe 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 ofevery month.

4. Return of Employees Leaving Form no. 10 has to be submitted in RPFC office before 15th ofevery 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 employeesearning ` 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 theirfamilies. Sickness and maternity benefits for employees. The ESIC scheme also provides dependentsbenefit 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 declarationForm No. 72: Application for Duplicate CardForm MRO 266: Application form for change of Name / Year of Birth of insured person WomanForm No.6: ESI half yearly returnESI 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 formof salary or any other profession has to pay profession tax. Profession tax slab differ from state tostate 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 thebusiness 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 servicesperformed by the employee in the employment tenure. It is one of the many retirement benefits thatemployers gives employees at the time of leaving the company.

Applicability:Every mine, port, oil plantation factory and railway companyEvery 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 retirementResignation, death or disablement due to accident or diseaseIn 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 orderif[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, semi-skilled, skilled and high skilled labors. The minimum wages is different in different states in India and itkeeps 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:

UnskilledSemi-SkilledSkilledHigh 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. Particulars of employed persons2. The work performed by them3. The wages paid to them4. 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 providingpayment for full and healthy maintenance of the women and her child at the maternity time when she isnot working. An Act to regulate the employment of women in certain establishments for certain periodsbefore 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 beoffered 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 apart of profit or productivity or production and for connection with the employees. Every employeereceiving 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 hasworked for minimum 30 working days in that year.

Minimum Bonus:The minimum bonus which an employer is required to pay for every accounting year is8.33 % of the salary during the accounting year, orRs. 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 actaims at avoiding unnecessary delay of payment of wageswithout 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 orboth by road for hire or reward.Air transport service Dock, Wharf or Jetty, Inland vessel, mechanically propelledMine, quarry or oil-field plantationWorkshop or other establishment etc.

 

9. Workmen’s Compensation Act 1923:The Workmen’s Compensation Act 1923, it intents in providing financial protection to workers and theirdependents in the form of compensation, in case of accidental injury.

Employer’s Liability: To compensate any employee who suffered from any accident on account ofhis employment, resulting into the following:

DeathPermanent total disablementPermanent partial disablementTemporary disablement whether total or partialOr who has contracted an occupational disease.

Compensation for death resulting from injury, the amount of compensation shall be equal 50% of themonthly wages of the deceased workman multiplied by the relevant factor.} Or an amount of Rs80,000/- whichever is more.

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

 [AM1] This rule has been changed.

 [AM2] Payment Gratuity Act

 

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