Managing manpower in an organisation is one of the important aspect of business. Labour audit is required for handling manpower efficiently.

1. LABOUR AUDIT –
LEGAL PERSPECTIVE
Deepa Rafeeque

2. DR2

3. What is Labour Audit???
 Its an audit conducted on
policies, procedures of the
company,
in respect of labour,
Applicability of relevant laws,
Compliances & non-compliances.
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4. Importance of labour Audit
 It helps to detect non – compliances of
labour and employment laws applicable to
a business and take corrective measures
to avoid any unwarranted legal actions.
 It is useful in promoting cordial relations
between employees and employers, and
 It also lead to better governance and
value creation for the business.
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5. Process of Labour Audit
 Understand the core business of the
company
Location of registered office;
Location of business place;
Service/Manufacturing industry;
Core business activity;
Ancillary activities.
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6. Ascertaining of Manpower
Structure
 The present structure and number of
manpower;
 This includes both – on roll
employees and outsourced
employees;
 Their duties, responsibilities
 Their contribution to the business
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7. Identify the Applicable Labour
laws
 Identify the applicable labour law;
 Centre or State laws
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8. List out the relevant authorities &
compliances
 List out the relevant Authorities under
various applicable Laws;
 List out the required complains under
laws;
 The frequency of said compliances;
 Who all are responsible officials for
such compliances.
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9. Verification of present compliance
level
 What are the required compliances under
applicable laws;
 How the compliances are being done;
 The responsible officials for compliances;
 Till now any notices or action for non-
compliances.
 How to zero down the non-compliances.
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10. Imp Compliances
 Contract Labour (Regulation &
Abolition) Act
 To check about prohibition
Registration Of Principal Employer (PE)
License for contractor
Wages to be paid in presence of PE
Payment of PF,ESI to be ensured by PE
Availability of all basic facilities to
workmen
Contract information on notice board
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11. Contd…
 Minimum Wages Act
Prescribed minimum wages must be
paid.
If there are two different rates are
prescribed for same category – one by
Central Govt and other by State Govt
The whichever is higher to be paid.
Annual returns
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12. Contd…
 Payment of Wages Act
Wage period to be fixed
 Should not be more then a month
No unauthorised deductions to be made
Register to be maintain regarding
deductions & fines
Annual returns
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13. ESI & PF
 Deduction of ESI & PF is mandatory
 If contractor fails to do so, PE is
responsible for said payment
 The deduction made towards ESI & PF
are to be deposited with Appropriate
Authorities
 The deposit to be made alongwith
Employer’s share.
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14. Benefits to the labour/Employee
 Boost the morale of the workers/employees
to a large extent;
 It increases social security of
workers/employees;
 It helps to instil on workers/employees a
sense of belongingness towards their
employers;
 It ensures timely payment of wages, gratuity,
bonus, overtime, compensation etc of the
workers;
 Timely payment of entitlements certainly
reduces the absenteeism in the
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15. Benefits to Employer
 It helps to increase productivity in view of lower
absenteeism in the establishments. Higher the
productivity, higher will be the profits;
 Employer reputation in the Industry/business
world certainly increases;
 It reduces or even eliminate
penalties/damages/fines/ that may be imposed
by the government;
 Co-operation and good understanding improves
labour relations. The Congenial atmosphere is
indispensable for good corporate governance;
 It also helps in preventing strikes, lock outs etc.
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16. Benefits to Government
 Reduction in the number of field staff for inspection
of Industries/Factories/Commercial Establishments
as most of their work will be done by an
Independent Professional;
 Compulsory Labour Audit will ensure compliance
of past defaults;
 In case the Government seeks to introduce filing
fees for Compliance Report under Labour
Legislation, the revenue of the Appropriate
Government will rise phenomenally;
 India’s image before the International Labour
Organization will certainly improve as a country
will negligible non-compliance of labour legislation.
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17.  Labour Audit is a continuous process.
 Must be taken seriously.
 For the benefit of all stake holders.
 learn Unlearn Relearn
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