What is Statutory Compliance?
The pre-defined set of rules within which companies must function in a country is referred to as statutory compliance. These rules are derived from the legal framework in the country. It covers everything from how organizations operate to how they treat their employees. Since there are both state and central laws for statutory compliance, an organization in a state in India must comply with both national-level as well as state-level laws.
Government rules for statutory compliance
1.The Industrial Disputes Act, 1947
Enacted in 1947, the Act extends to worker unions and individual employees employed in any industry across the country. The provisions of this Act are used to settle disputes between employees and their employers or between two employees. The Act, which is used to settle disputes within industrial establishments, aims at maintaining peace and harmony in such establishments in Indian industries.
2. The Payment of Wages (Amendment) Act, 2017
This Act guarantees the payment of wages to employees by the employer on time without any deductions other than those stated by the Government.
3.The Payment of Bonus Act (Amendment), 2007
This Act ensures that all employees get the annual bonus in certain establishments, industries, and factories with more than 20 employees. The amount of bonus is calculated with the profits made by the organisation and the employee’s salary. Employees with a salary of Rs 21,000 or less who are working with the organisation for more than 30 days are eligible for a minimum of 8.33% and a maximum of 20% of bonus.
4.The Payment of Gratuity Rules, 1972
This Act promises gratuity and incentives to the employees working in a particular organisation. The Act applies to all establishments having more than 10 or more employees.
Gratuity is the amount that is deducted from the monthly wages of the employee and provided after the employee completes 5 years in the establishment for the services rendered by them during their employment.
5.The Employees Compensation (Amendment) Act, 1923
This Act mandates the employer to inform the employee about his/her compensation before the commencement of employment. They must be informed about the risks, potential losses, and threats to life during employment. Any failure to do so can result in a penalty ranging from Rs 5,000 to Rs 50,000.
6.The Employees’ Provident Fund & Miscellaneous Provisions (Amendment) Act, 1952
This Act ensures the social welfare and security of the employee in an establishment and is applicable for establishments with over 20 employees. Both the employee and the employer are required to contribute the same amount to the employee’s provident fund account..
7.The Employees’ State Insurance ESI Act, 1948
The ESI Act ensures several medical benefits to employees in case of sickness, maternity, medical emergencies, and injuries who are employed in non-seasonal factories using power – with 10 or more workers – and factories without power – with 20 or more employees.
8.Tax Deducted at Source
TDS is a specific percentage of money deducted from the employee’s wage/salary as per the Income Tax Act. This is the most important statutory compliance that employers in India have to adhere to
9. Professional Tax
Professional tax is a tax on all kinds of professions, trades, and employment and is levied based on the income of such profession, trade and employment. It is levied on employees, a person carrying on the business including freelancers, professionals, etc., subject to income exceeding the monetary threshold if any.
