Employees are the most integral part of an organization. No organization can work without people. All job roles and responsibilities are important in an organization. And it’s even more important for organizations to ensure all departments work in a streamlined way. This is where certain rules and regulations come into to picture where Statutory Compliance plays an important role to keep things organized within a company.
This set of state and national rules & regulations that every organization has to follow is known as statutory compliance. It’s a legal structure that dictates how every company should take care of its employees and finances.
Importance of Statutory Compliance
Statutory compliance creates a landscape of how the labour and taxation laws must be implemented in an organization. Given the fact of how rapidly the laws evolve due to unforeseeable situations, it’s important for organizations to stay abreast of the changing rules.
Failure to abide by the new laws can lead to legal and financial penalties. That’s why it’s important for organizations to understand numerous labour and tax laws. Since these laws change on State and National levels, companies need to be updated at all times.
Do Statutory Rules and Regulations Differ among Organizations
No, as a matter of fact, statutory compliance ensures all workers of all organizations of every industry get equal rights and opportunities. Similarly, statutory compliance also ensures same tax laws apply to every industry to maintain a uniform work environment for all.
From financial to physical and mental wellbeing of employees, statutory compliance makes it mandatory for all organizations to adhere to the state and national labour & tax laws.
Updated Statutory Compliance Checklist 2022
- The Employees Provident Funds and Miscellaneous Provision Act – 1952 (EPF)
- Shops and Commercial Establishments Act (S&E)
- The Employees State Insurance Corporation Act – 1948 (ESIC)
- The Labour Welfare Fund Act (LWF) 1965
- The Professional Tax Act (PT) 1975
- The Minimum Wages Act-1948
- The Child Labour (Prohibition & Regulation Act), 1986
- The Payment of Wages Act-1936
- The Maternity Benefit Act-1961
- The Contract Labour (Regulation & Abolition) Act – 1970 (CLRA)
- The Payment of Bonus Act-1965
- The Industrial Establishment (N&FH) ACT 1963
- The Payment of Gratuity Act-1972
- The Employment Exchange (Compulsory Notification of Vacancies) ACT-1959
- The Equal Remuneration Act-1976
- The Apprentice ACT, 1961
- The Industrial Employment (Standing Orders) ACT 1946 – Model Standing Order Only
- Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) ACT, 2013
- The Industrial Disputes ACT 1947
- The Employees Compensation ACT-1923
- The Interstate Migrant Workmen (Regulation of Employment and Conditions of Services) ACT, 1979
- The Trade Unions Act, 1926
Other components of statutory compliance are:
Minimum Wages
The minimum wage act dictates that every employee of a company must be paid a certain minimum amount of money in wages. A certain job role must have a minimum salary amount and no organization is allowed to hire people and pay them below it.
The minimum wage act is a state matter and companies must follow state-wise guidelines.
TDS
Employees are exempted from tax till a certain salary bracket. After that, every employee is liable to pay taxes that HR professionals must deduct right at the source, and hence the name TDS (tax deducted at source).
ESI
Indian labour laws dictate that all employees with a salary of INR 15,000 or less are liable for monthly ESIC deductions. The deducted amount is paid to the ESIC department. This amount will make these employees eligible for health benefits under the ESI act.
PF
Provident Fund is a certain amount of money deducted from the employees’ salary of an employee and saved in the PF account. This amount is compounded annually and grows into a big cash reserve over the course of years. PF is also tax-free as of now.
Gratuity
Gratuity is an amount of money that is deducted from an employee’s salary on a regular basis. Once an employee completes 5 years in the company, they are eligible for gratuity at the time for full & final settlements when the employee leaves the company.
How Statutory Compliance Helps Organizations
Apart from the fact that statutory compliance helps organizations avoid legal and financial penalties, it also brings along a plethora of plus points such as:
More Business Opportunities
Investing in statutory compliance services allows organizations to focus better on business decisions. This is one of the key reasons why more companies are hiring statutory compliance services providers these days. With statutory compliance challenges addressed by experts, they can focus on growth opportunities better.
Better Employee Retention
Companies that are statutory compliant ensure their employees get all the benefits they are legally entitled to. In this way, they can provide a professional and safe working environment. As a result, employees are more likely to stay in such companies.
Brand Loyalty in Statutory Compliance HR
Brand loyalty is not limited to customers only. As a business, you also work with many clients and stakeholders that would like to invest in our vision. A statutorily compliant organization is a mark of quality of work, professionalism, and adds to the goodwill of the firm. This helps you build a solid brand image in the market. As a result, more people would like to invest in your company.
Top Challenges of Statutory Compliance
Organizations across the world, especially in fast-developing economies like India face the following challenges in statutory compliance:
Awareness
Many organizations aren’t completely aware of the importance and benefits of statutory compliance. As a result, they tend to ignore the policies and end up paying hefty fines or facing legal actions
Segmented Initiatives in Statutory Compliance HR
Many companies in India have different departments that control various business activities. Streamlining this segmentation eventually becomes difficult, leading to compliance issues.
Dynamic Landscape
As mentioned earlier, the statutory compliance landscape is dynamic in India. With new policies coming up so quickly, it becomes hard to stay updated and stay meet all the guidelines.
Conclusion
When you come to think about it, outsourcing statutory compliance to experts turns out to be the logical decision. With compliance policies experts by you don’t have to worry about new mandates and regulations at all. You get to focus better on business and reap 360-degree benefits.
