Understanding Statutory Compliance in HR: Key Regulations and Best Practices

July 7, 2023

What is Statutory compliance in HR?

Statutory compliance in HR refers to the adherence and fulfilment of legal requirements, rules, and regulations established by statutes in the context of managing employees within an organization. It encompasses the obligation of organizations to comply with labour laws established by both the central and state governments in India. These laws are designed to protect the rights and well-being of employees, employers, and the organization as a whole. Adhering to statutory compliance in HR ensures that organizations operate within the legal framework and maintain fair and ethical practices in their employment-related activities.

Need for Statutory compliance in HR:

Statutory compliance is crucial in HR in India as it ensures that organizations comply with the legal framework and regulations when engaging with their employees. Adhering to these rules and regulations can prevent legal troubles and fines, which can be significant depending on the scale of non-compliance. The need for statutory compliance in HR in India arises due to several reasons:

  • Legal Requirement: Compliance with various laws and regulations related to employment, such as the Employee State Insurance Act, Provident Fund Act, Payment of Gratuity Act, Minimum Wages Act, and others, is mandatory for organizations operating in India. Non-compliance can lead to legal penalties, fines, and reputational damage.
  • Protection of Employees’ Rights: Statutory compliance ensures that employees’ rights are protected and that they are provided with benefits such as social security, minimum wages, and other entitlements.
  • Maintaining Ethical Standards: Compliance with labour laws and regulations ensures that organizations maintain ethical standards in their HR practices and do not exploit employees.
  • Avoiding Legal Risks: Non-compliance with statutory requirements can expose organizations to legal risks and legal action by employees, labour unions, and regulatory bodies.

Here is a quick compilation of the various Statutory Compliances In HR

  • The Apprentices Act, 1961
  • The Contract Labour (Regulation & Abolition) Act, 1970
  • The Child Labour (Prohibition & Regulation Act), 1986
  • The Industrial Disputes Act, 1946
  • The Minimum Wages Act, 1948
  • The Payment of Gratuity Act, 1972
  • The Industrial Employment Standing Orders Act, 1946
  • The Employees Provident Fund & Miscellaneous Provisions Act, 1952
  • The Equal Remuneration Act, 1976
  • The Employees’ State Insurance Act, 1948
  • The Payment of Bonus Act, 1965
  • The Payment of Wages Act, 1936
  • The Factories Act, 1948
  • The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
  • The Trade Unions Act, 1926
  • The Workmen’s Compensation Act, 1923
  • Inter-State Migrant Workmen (Regulation of Employment & Conditions Of Service) Act, 1979.

Each one of these has to be filed at various parts of the year, under different forms. Download the Excel sheet for a complete reference.

But your compliance partner must lay out a clear process that follows the following steps:

  • Initial Assessment, where the client’s business needs are understood.
  • Finalization of Check List for various processes & activities
  • Risk assessment & evaluation – adequacy and control measures.
  • Analyzing various HR Compliance policies and checking documents about various activities
  • Financial liabilities associated with the processes if any is being determined – look into audited balance sheet & Annual report
  • Gaps being identified in the above process are transformed into observations
  • Observations are analyzed to form recommendations
  • An overview of the findings is presented to the client (you)
  • Final reports are submitted

Read more:(Effective Statutory Compliance Strategies for HR in the Manufacturing Sector)

Key areas of statutory compliance in HR:

Statutory compliance in HR refers to the adherence and fulfilment of legal requirements, rules, and regulations related to employment, labour, and human resources. These regulations are enforced by government authorities and are designed to protect the rights and interests of employees and employers. Here are some key areas of statutory compliance in HR:

  1. Employment Contracts: Compliance includes ensuring that employment contracts are legally binding, clearly outlining terms and conditions, wages, working hours, leave policies, termination procedures, and other relevant information.
  1. Minimum Wage: Compliance involves adhering to the minimum wage laws and ensuring that employees are paid at or above the legally mandated minimum wage rate.
  1. Working Hours and Overtime: Compliance includes following regulations regarding maximum working hours per day/week, providing rest breaks, and appropriately compensating employees for overtime work.
  1. Leave Policies: Compliance entails providing legally mandated leaves such as annual leave, sick leave, and maternity/paternity leave, and ensuring that employees are granted these leaves as per the applicable laws.
  1. Employee Provident Fund (EPF): Compliance involves deducting and depositing the employee’s contribution to the EPF scheme and fulfilling the employer’s contribution obligations as per the statutory requirements.
  1. Employee State Insurance (ESI): Compliance includes deducting and depositing the employee’s contribution to the ESI scheme and fulfilling the employer’s contribution obligations as per the statutory requirements.
  1. Tax Deductions: Compliance entails deducting and depositing income tax from employees’ salaries as per the prevailing tax laws and providing the necessary tax-related documentation.
  1. Anti-Discrimination and Equal Opportunity: Compliance involves ensuring fair treatment, preventing discrimination based on race, gender, religion, disability, or other protected characteristics, and providing equal employment opportunities.
  1. Health and Safety: Compliance includes providing a safe working environment, following health and safety regulations, conducting regular safety audits, and implementing appropriate measures to prevent workplace accidents and hazards.
  1. Record-keeping and Reporting: Compliance entails maintaining accurate records related to employee details, attendance, wages, taxes, and other relevant information. It also includes timely submission of reports to the appropriate government agencies.

It’s important for HR professionals and organizations to stay updated with labour laws, employment regulations, and any changes introduced by relevant authorities to ensure compliance. Non-compliance with statutory requirements can lead to legal consequences, penalties, fines, and damage to the organization’s reputation. Seeking legal advice or consulting with experts in labour law can help ensure compliance in HR practices.


TalentPro’s statutory compliance services provide HR professionals with the tools and expertise needed to navigate complex legal requirements. Stay compliant and focus on your core business.

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