For any business in India, following statutory compliance in HR isn’t optional — it’s mandatory. Missing deadlines or failing to follow labour laws can lead to penalties, lawsuits, and even reputational damage.

Yet, many startups and SMEs struggle because compliance rules keep changing every year. That’s why having a statutory compliance checklist for 2026 is crucial.

Provident Fund (PF) Compliance – EPF Act, 1952

The EPF Act of 1952 requires that organizations with more than 20 people contribute 12% of their employees’ basic salary and DA to the EPF and register as a member of the EPF.

Employee State Insurance (ESI) – ESI Act, 1948

The ESI Act of 1948 provides employees with health, maternity, and welfare benefits through social security. Typically, ESI applies to businesses that have at least 10 employees or more, depending on the state.

Professional Tax (PT)

Professional Tax is a state-specific tax levied on earnings of professionals and salaried workers. Professional Tax is collected according to state-specific regulations and laws, and it must be paid by the employer and deducted from the employees’ gross earnings. Professional Tax has strict compliance requirements, and failure to comply results in fines.

Income Tax (TDS on Salaries) – IT Act, 1961

• The Income Tax Act of 1961 requires companies who provide salaries to deduct the appropriate amount of tax from their employees and submit that information to the Government.
• Employers will deduct TDS monthly as declared by each respective employee on Form No. 24Q.
• All employers must submit their quarterly TDS returns (Form No. 24Q) to the Income Tax Authorities.
• Employers must provide each employee with a copy of Form No. 16 annually.
• Importance of compliance: Employers who do not comply with TDS regulations face heavy tax penalties imposed by the Income Tax Department.

Gratuity – Gratuity Payment Act of 1972

The Gratuity Payment Act of 1972 provides for the payment of a lump sum amount to employees who have served their employer for a continuous period of at least five years.

Bonus – Payment of Bonus Act of 1965

The Payment of Bonus Act of 1965 requires the payment of an annual bonus to eligible employees if their employer has received a bonus.

Shops & Establishments Act (State-Specific)

These are state-based governing laws that determine the working hours, holidays, leaves, and conditions under which shops and offices operate.

Protects employees by providing clear guidelines on working hours, leave, and working conditions for employees.

Maternity Benefit Act (1961)

This law provides protections for female employees during pregnancy and after childbirth.Non-compliance can result in lawsuits and damage to a company’s reputation.

Equal Remuneration Act and Prevention of Sexual Harassment (POSH) Act

These laws provide equal opportunity and equal pay for men and women and protect employees from being harassed in the workplace.

Equal remuneration: Companies must pay men and women the same amount of money for doing the same job.

• POSH Act (Prevention of Sexual Harassment).
• Create an internal complaints committee (ICC).
• Provide employees with training and education on sexual harassment.
• Prepare an annual report on compliance activities.
• The 10th piece of legislation is the Contract Labour (Regulation and Abolition) Act, 1970, which is a piece of legislation that regulates how businesses utilize Contract Labour, as well as how they treat them.

Labour code updates

The central government of India is continuing to implement its Labour Code updates via a phased approach. The four Labour Codes are consolidated into the Wage Code, Social Security Code, Industrial Relations Code, and Occupational Safety & Health Code. Each State Government in India is preparing to issue finalized draft rules to align with the Central Government, to help with uniformity of Wage Calculations, Overtime Regulations and contribution of Employers to social security. Affected Employers and their representatives will have access to new reporting formats and compliance timelines.

Changes to wages and overtime

With the wage code coming into effect there is expected to be a change in how the basic pay and Overtime Regulations are defined and calculated. Employers will need to change their Salary Structure to comply with the minimum level of Basic Pay and how Overtime is calculated.

Wider social security scope

The Social security code will be extended to cover Gig Workers and Workers who are engaging with platforms under the benefits provided for under Statutory Laws (e.g. Maternity benefits, Health Insurance Benefits and Pension Benefits). The HR (Human Resource) Departments of Companies with Gig Workers or Platform Workers should be able to register Gig Workers and Platform Workers once the regulatory process has been finalized.

ESIC- One of dispute resolution

The ESIC has a temporary (one time) amnesty and dispute resolution scheme from 2023 to 2026 to allow Employer’s to clear up disputes from the past surrounding non-compliance about Non-Payment or other penalties. This will encourage Employers to comply with the Laws regarding Registration and provide the opportunity for Employers to avoid future litigation.

Changes that may take place in 2026

New labour codes have been introduced in order to make calculations, overtime rules, and social security contributions easier.

• Wage Code, Social Security code, industrial relations code, and occupational safety and health code, all of which will ease the process, reporting, and scheduling.
• Basic pay and overtime rules can be updated. Companies will revise salary structures to comply with minimum basic pay thresholds.
• Social security code now plans to include gig and platform workers under statutory benefits like maternity, health insurance, and pensions.
• ESIC is running a dispute resolution scheme indefinitely through 2026. This can help resolve past disputes like missed penalties and contributions.

Read more:(shop and establishment act compliance checklist)

Amendments to state labour laws

Some states have already issued amendments to their Local Labour Laws (e.g. Shops and Establishments Act etc.)

Statutory compliance can feel overwhelming, especially for startups and SMEs that don’t have a large HR team. But with a clear checklist and the right partner, staying compliant in 2026 becomes much easier.