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Statutory Compliance for HR


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Statutory Compliance for HR

  1. 1. Statutory Compliance<br />Meaning-:<br />Statutory means "of or related to statutes," or what we normally call laws or regulations. Compliance just means to comply with or adhere to. So statutory compliance means you are following the laws on a given issue.<br />The term is most often used with organizations, who must<br />follow lots of regulations.<br />When they forget or refuse to follow some of those regulations, they are out of statutory compliance. A company that follows all the rules, is in statutory compliance.<br />Purpose-:<br />Safeguarding the employees and the enterprise from un toward risks by managing and consulting on issues such as retirement benefits and Taxation<br />
  2. 2. Statutory Compliance for HR<br />ESI<br />Provident Fund<br />Profession Tax<br />Gratuity<br />The Minimum Wages Act<br />The Maternity Benefit Act<br />The Payment Of Bonus Act<br />The Payment Of Wages Act<br />
  3. 3. Provident Fund<br />PF and Miscellaneous Provisions Act, provides for compulsorycontributory fund for the future of an employee after his retirement orfor his dependents in case of his early death<br />It extends to the whole of India except the State of J&K<br />Every factory engaged in any industry specified in Schedule 1 in which<br />20 or more persons are employed<br />Every other establishment employing 20 or more persons or class of suchestablishments which the Central Govt. may notify and any otherestablishment so notified by the Central Government even if employingless than 20 persons<br />PF is contributed from both the sides @12% of the basic salary.Contribution for the purpose of Employees' pension Scheme is8.33% of (12% of employers contribution towards PF) or Rs.540/- whichever is less, will be transferred to Employees’ pension scheme and thebalance amount will go towards Employee PF.<br />
  4. 4. Employee State Insurance Act ESI<br />Was originally applicable to non-seasonal factories using power andemploying 20 or more persons; but it is now applicable to non-seasonal powerusing factories employing 10 or more persons and non-power using factoriesemploying 20 or more personsAll the employees in the factories or establishments to which the Act appliesshall be insured under this ActThe contribution comprise of employer’s contribution and employee’scontribution at a specified rate<br />Contribution rate : 1.75% - employees 4.75% - employersThe ceiling 10,000/- gross salary. After reaching the ceiling one will beexempted. (with effect from 1.10.2006)Employer is liable to contribute & deduct specified rate of amount and submitit to the Corporation within 21 days.Two contribution periods each of six months: <br /> 1st April to 30th Sept 1st Oct. to 31st MarchTwo corresponding benefit periods of six months : <br /> 1st January to 30th June 1st July to 31st December<br />
  5. 5. Professional Tax<br />Professional tax or employment tax is a state-based tax. It is allowed as a<br />deduction from the gross income before computing the tax.<br />Duration of deduction is half year-1st day of April to 30th September1st day of October to the 31stMarch of a year.<br />PT is deducted slab wise-1 to 2500-nil2500 to 3500 -Rs 603501 to 5000 - Rs 1205001 to 10000- Rs 175<br />and above 10000 Rs 200 per month except Rs 300 in the month of February. <br />Each and every employee receiving pay from the revenue of the<br /> Central Government or any State Government is entitled to pay profession tax.<br />Any organization whether incorporated or not, which is owned or controlled by the Central Government or any State Government is eligibleto pay PT<br />
  6. 6. Gratuity<br />Gratuity is an amount given to employees by employerwhen they leave the job after completing five years orminimum 240 days per year or after retirement. The numberof year may differ from company to company<br />Gratuity is payable under the payment of wages act.<br />Gratuity shall be payable to an employee on the termination<br />of his employment after he has rendered continuous service<br />for not less than five years.(a) on his superannuation, or(b) on his retirement or resignation, or(c) on his death or disablement due to accident or disease<br />Gratuity is calculated as Basic + DA divided by 26 * No of<br />years of service *15<br />
  7. 7. The Minimum Wages Act 1948<br />(iii) Travelling allowance / Travelling concession(iv) Gratuity<br />The appropriate government may fix-:A minimum rate of wages for time work ("a minimum time rate").A minimum rates of wages for piece work ("a minimum piece rate").A minimum rate of wages on a time work basis ("a guaranteed time rate")A minimum rate of overtime work done (“a overtime rate")<br />Penalty:-<br />The inspectorate staff of the Labor Department takes action on complaints received<br />from workmen/Unions.<br />The penalty for violation of is fine of R.500/- or imprisonment up to a period of six<br />months or both.<br />If a worker gets less payment, he can also file a claim before the Competent Authority appointed under the Act, which are Deputy Labor Commissioners for the respective districts.<br />The authority can impose penalty up to 10 times the difference in minimum wages that<br />was due and paid<br />This act provides for fixing minimum rates of wages.<br />Wages shall mean all remuneration payable to an employed person on the fulfillment of<br />the contract employment and includes HRA.<br />It Includes (i) a basic rate of wages and special allowance call the cost of living allowance (ii) a basic rate with or without cost of living allowance plus any concession on thesupply of essential commodities. It excludes<br />(i) The value of rent free accommodation, supply of light, water, medical.....(ii) Contributions paid by the employer towards the PF or any scheme of socialinsurance <br />
  8. 8. The Maternity Benefit Act, 1961<br />To regulate employment of women for certain periods before and after<br />child birth and to provide for maternity benefit.<br />Payment of maternity benefit shall apply to women workers to whom<br />ESI Act does not apply.<br />The Act applies to all establishments in which ten or more people are<br />employed.<br />The maternity benefit shall be at the rate of average daily wage for theperiod of actual absence. The maximum period of entitlement shall be12 weeks of which not less than 6 weeks shall precede the expecteddate of delivery.<br />Maternity benefit shall be payable to employee or any other persons as<br />per the nomination.<br />The Amount of benefit up to the period of expected delivery shall be paid in advance. The balance due for the subsequent period shall be paid within 48 hours from delivery of child.<br />
  9. 9. The Payment Of Bonus Act, 1965<br />The Act applies to every factory where 10 or more workers are workingand every other establishment in which 20 or more persons areemployed, on any day during an accounting year<br />Every employee receiving salary or wages up to RS. 3,500 p.m. andengaged in any kind of work whether skilled, unskilled, managerial,supervisory etc. is entitled to bonus for every accounting year if he hasworked for at least 30 working days in that year<br />Penalty<br /> The punishment provided for contravention of any provisions of theAct or any rule made there under is imprisonment for a term, whichmay extend for 6 months or with fine, which may extend to Rs. 1000/- orwith both.<br />The Payment of Bonus Act imposes statutory liability upon theemployers of every establishment covered under the Act to pay bonusto their employees.<br />It provides for payment of minimum and maximum bonus and linking<br />the payment of bonus with the production and productivity.<br />
  10. 10. The Minimum Wages Act,1936<br />It is a central legislation which applies to the persons employed in the<br />factories and to persons employed in industrial or other establishments<br />This Act does not apply on workers whose wages payable in respect of<br />a wage period average Rs. 1600/- a month or more.<br />This Act has been enacted with the intention of ensuring timely<br />payment of wages to the workers without unauthorized deductions.<br />The salary in factories/establishments employing less than 1000workers is required to be paid by 7th of every month and in other casesby 10th day of every month.<br />A worker, who either has not been paid wages in time or anunauthorized deductions have been made from his/her wages, can file aClaim either directly or through a Trade Union or through an Inspectorunder this Act.<br />
  11. 11. Conclusion<br />The present day legal climate is one of uncertainty and confusion. In most cases, a law comes to light only after its contravention, resulting in severe penalties.Statutory Compliances is a must in keeping you away from the long arm of the law!<br />