Everything you need to know about Statutory Compliances in India

The term HR (“Human resources”) represents the management and development of employees in an organization. No company can work without people (employees), and thus setting up proper policies for employee welfare and development is important for running the business.

Statutory compliances are established so that the business can function correctly without injuring the needs of the people around them. This article addresses the issue of statutory compliance in HR and its importance. 

What is Statutory Compliance?

Statutory compliance meaning is reflected in the term itself. These are a set of legal frameworks that every organization must follow. 
In respect to HR, statutory compliances means that a company must conduct itself within the legal framework regarding the treatment of employees.

What is HR Compliance in India?

The Statutory compliance in India in regards to HR are stated below:

• Labour Welfare Fund Act, Bonus Act
• Industrial Establishment (N&FH) ACT 
• Shops and Commercial Establishments Act 
• ESIC Act
• Employees Provident Funds Act 
• Child Labour Prohibition & Regulation Act
• Interstate Migrant Workmen ACT 
• Professional Tax Act 
• Minimum Wages Act, Trade Unions Act 
• Employment Exchange Act
• Contract Labour Act 
• Payment of Wages Act
• Sexual Harassment of Women Act
• Maternity Benefit Act, Gratuity Act, Equal Remuneration Act
• Employees Compensation Act
• Factories Act
• Industrial Employment Act, Apprentice Act, Industrial Disputes Act

The applicability of different Acts can sometimes vary from state to state.

Why is Statutory Compliance important?

Statutory compliance is important not just for the employee but also for the employer. Not abiding by the law can be proved unfavorable for the company. 

The advantages of fulfilling statutory compliance for the organizations are:

• A compliant company can save time, efforts, and resources that can employ towards important areas affecting its operations and revenue.
• The company can avoid fines/penalties that could otherwise be imposed due to failure to make timely payments.
• The company can protect itself from unreasonable demands from trade unions for wages and other benefits.
• Can avoid adverse incidents and other legal implications.
• The company can protect its goodwill in the market.
• It can build an ethical work culture.
• Increased efficiency boosts employee morale and decreases the employee turnover ratio.

The statutory compliances are important in respect of employees as:

- It warrants fair treatment of employees.
- It ensures that the company follows the minimum wage rate and pay their staff accordingly.
- Ensure a safe working environment for employees. 
- They cannot be forced to work for long hours against the law.

Abiding by the statutory laws builds and retains the loyalty of customers and employees. The compliances affect the company from inside and outside as well, as the reputation of the company is more secured, giving them an edge over existing competition. Generally, companies are more inclined towards carrying out the tasks that concern the operational goals and can neglect the compliance part. To solve this issue, companies can hire or outsource professional statutory service providers to assist them with the compliances.