Labour law is the compliance a company is most likely to be behind on, and the one it is least likely to know it is behind on. Registrations are triggered automatically once headcount crosses a threshold, returns fall due monthly rather than annually, and the liability for a default sits with the employer and the officers personally — often with interest and damages on top of the amount originally due.
This practice group handles provident fund and employees’ state insurance compliance, workplace harassment compliance under the POSH Act, and the wider set of labour registrations, registers and returns that apply to a company as it grows. It also feeds directly into our secretarial audit practice, because labour law is among the ‘other laws specifically applicable’ that a secretarial audit is required to report on.
Employees’ Provident Fund (EPF) Compliances
Provident fund liability attaches to an establishment once it crosses the statutory headcount, and it attaches from that date — not from the date the employer notices. Because the department can reconstruct liability for past periods and add interest and damages to it, a delay in registering is one of the more expensive administrative omissions available to an employer.
We handle registration, the monthly cycle, and the inquiries and assessments that follow where something has been missed.
- Assessing applicability, the date from which coverage is triggered, and which categories of employee and which components of wages are included
- Registration of the establishment, and voluntary coverage where the employer elects it
- Monthly electronic challan-cum-return, computation of employer and employee contributions and the administrative charges, and remittance within the due date
- Universal Account Number generation, member KYC, nomination records and transfer of accounts on joining and leaving
- Maintenance of the statutory registers and records, and the return of ownership and its updation on any change
- Employees’ Pension Scheme and Employees’ Deposit Linked Insurance compliance, and assistance with member claims and withdrawals
- Representation in inquiries to determine dues, and in proceedings for interest and damages on delayed remittance
- Compliance health checks on past periods, quantification of exposure, and regularisation of arrears
The first thing we establish is the correct coverage date and the correct wage base. Most disputes with the department are not about whether contributions were paid but about what they were computed on, and getting the wage definition right at the outset avoids an assessment years later.
For a growing company we watch the headcount against the threshold and tell you before you cross it, so registration happens on time rather than retrospectively.
Where an inquiry has already been initiated, we prepare the reply, reconstruct the records the department asks for and appear at the hearing.
The governing statute is the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. Section 1(3) sets out the establishments to which the Act applies — broadly, every establishment in a scheduled industry employing twenty or more persons — and Section 1(4) permits voluntary coverage by agreement.
The schemes framed under the Act are the Employees’ Provident Funds Scheme, 1952, the Employees’ Pension Scheme, 1995 and the Employees’ Deposit Linked Insurance Scheme, 1976. Contribution rates and the wage ceiling are prescribed under Section 6 and the Scheme.
Determination of dues by inquiry is made under Section 7A; interest on delayed remittance under Section 7Q; and damages under Section 14B. Appeals lie to the Employees’ Provident Funds Appellate Tribunal under Section 7-I. Offences are dealt with under Section 14.
Registration, returns, records and advisory work are carried out in our capacity as Company Secretaries in Practice under the Company Secretaries Act, 1980. Where representation before a court or tribunal is required, our Associate Partner – Legal appears as an Advocate.
Employees’ State Insurance (ESI) Compliances
Employees’ State Insurance is a contributory social security scheme covering sickness, maternity, disablement and employment injury for employees drawing wages up to the prescribed ceiling. Coverage is by notified area and by headcount, and it is easy for a company operating from several locations to be covered at one and not at another.
We handle registration, the monthly contribution cycle and the records that go with it, and we act in the inspections and determinations that follow where the department takes a different view of the wage base.
- Assessing applicability by location and headcount, and identifying which employees fall within the wage ceiling
- Registration of the establishment and of each covered employee, and issue of insurance numbers
- Monthly computation of employer and employee contributions, generation of the challan and remittance within the due date
- Half-yearly returns of contributions and the maintenance of the accident register and other prescribed records
- Advice on which components of remuneration form part of wages for contribution purposes
- Assistance to employees with benefit claims — sickness, maternity, disablement and dependants’ benefit
- Reporting of employment injuries and accidents within the prescribed time
- Representation in inspections, in proceedings to determine contributions and in recovery proceedings
We reconcile the ESI wage base against the payroll register every month rather than once a year. Almost every determination we see arises from allowances that were treated as outside wages and were not.
For companies with branches, sites or a contract workforce, we map coverage location by location, including the principal employer’s liability for contractors’ employees, which is where unexpected liability usually appears.
Where an inspection has been notified, we assemble the records the inspector will ask for in advance and attend the inspection with your team.
The governing statute is the Employees’ State Insurance Act, 1948, administered by the Employees’ State Insurance Corporation. Sections 1(4) and 1(5) govern application to factories and, by state notification, to other establishments; the wage ceiling for coverage is prescribed by rule.
Contributions are payable under Sections 38 to 40, and the principal employer is liable under Section 40 including in respect of employees engaged through an immediate employer. Registers and records are prescribed by the Employees’ State Insurance (General) Regulations, 1950.
Determination of contributions in the absence of records is made under Section 45A; interest under Section 39(5); damages under Section 85B; and offences under Section 85. Disputes are decided by the Employees’ Insurance Court under Section 75.
Registration, returns, records and advisory work are carried out by Company Secretaries in Practice under the Company Secretaries Act, 1980, with an Advocate appearing where a matter goes before the Employees’ Insurance Court.
POSH Compliances
The POSH Act imposes a set of obligations that are checked as a package: a policy, a properly constituted Internal Committee including an external member, awareness and orientation programmes, an annual report to the District Officer, and a statement in the Board’s Report. A company that has a policy but no external member on its committee is not compliant.
This is the compliance side of our POSH work. The training programmes are delivered by our Corporate Trainings practice, and the two are usually run together.
- Assessing applicability across offices, branches and sites, and constituting a compliant Internal Committee at each workplace
- Identification and appointment of the external member, and the terms on which that member is engaged
- Drafting or revising the anti-sexual-harassment policy and the complaint and inquiry procedure
- Reconstitution of the committee on the expiry of a term or the departure of a member, and maintenance of the record of constitution
- Preparation and filing of the annual report to the District Officer, and drafting of the statement carried in the Board’s Report
- Display of the penal consequences and the committee’s composition at the workplace, as the Act requires
- Advisory support to an Internal Committee conducting an inquiry, on procedure, natural justice and the form of the report
- POSH compliance audits, and remediation where the committee, the policy or the record is deficient
We treat the committee as the critical item. A committee that is short of members, has no external member, or is chaired by someone who is not a woman employed at a senior level is the defect that undoes an inquiry, and it is the defect we find most often.
The annual report and the Board’s Report statement are due every year and are frequently missed entirely. We diarise both and prepare them as part of the annual compliance cycle.
Where an inquiry is under way, we advise the committee on procedure without taking over its function — the committee must reach its own findings, and a report that reads as though someone else wrote it is vulnerable.
The statute is the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, read with the POSH Rules, 2013. Section 4 requires an Internal Committee at every workplace employing ten or more workers, comprising a presiding officer who is a woman employed at a senior level, not fewer than two members from among employees, and one external member.
Section 19 sets out the duties of the employer, including the display of penal consequences, the organisation of awareness and orientation programmes and assistance to the complainant. Sections 9 to 13 govern the complaint and the inquiry, and Section 14 deals with false or malicious complaints.
Section 21 requires the Internal Committee to submit an annual report to the employer and to the District Officer, and Section 22 requires the employer to include the number of cases in its annual report. The Companies (Accounts) Rules, 2014 require the Board’s Report to state that the company has complied with the provisions relating to the constitution of an Internal Committee. Section 26 provides for penalty and for cancellation of licence or registration on repeated default.
Compliance and advisory work is carried out by Company Secretaries in Practice under the Company Secretaries Act, 1980, together with our Associate Partner – Legal, an Advocate enrolled with the Bar Council of India, on the inquiry and evidence aspects.
Other Labour Law Compliances
Beyond provident fund, state insurance and POSH, a company accumulates labour obligations as it grows — shops and establishment registration for each location, professional tax, gratuity, bonus, maternity benefit, minimum wages, contract labour licensing and the registers and returns that go with each of them.
We map what actually applies to your establishment, put the registrations and records in place, and run the returns calendar. Where the four labour codes come into force in place of the existing statutes, we will map the change and tell you what it alters for you.
- A labour law applicability mapping for the company — by state, by location, by headcount and by the nature of the workforce
- Shops and establishment registration and renewal for each location, and professional tax registration and returns
- Gratuity — applicability, nomination records, computation on exit and advice on funding the liability
- Bonus — eligibility, computation, the register and the annual return
- Maternity benefit — entitlement, records and the display and intimation requirements
- Minimum wages and payment of wages — wage structuring for compliance, registers, wage slips and returns
- Contract labour — principal employer registration, contractor licensing, and the records and liability of the principal employer
- Labour welfare fund, equal remuneration, apprentices and the state-specific returns and registers that apply
We start with an applicability map rather than with registrations. Companies routinely hold registrations they do not need and are missing two they do, and the map is what tells you which is which.
Contract labour is where the largest hidden exposure usually sits. As principal employer you can be liable for a contractor’s statutory dues, and we check the contractor’s compliance rather than accepting an undertaking that it is in order.
Everything we take on goes onto the same compliance calendar as your secretarial filings, so there is one calendar for the company rather than three kept by different people.
The statutes most often in issue include the Payment of Gratuity Act, 1972, the Payment of Bonus Act, 1965, the Maternity Benefit Act, 1961, the Minimum Wages Act, 1948, the Payment of Wages Act, 1936, the Contract Labour (Regulation and Abolition) Act, 1970, the Equal Remuneration provisions, the Apprentices Act, 1961, and the applicable state shops and establishments legislation, labour welfare fund and professional tax enactments.
Parliament has enacted four consolidating codes — the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020 — which are being brought into force in stages together with the rules framed by the Central Government and the States. We track that transition and advise on what it changes for a particular establishment.
Labour law compliance is also examined in a statutory secretarial audit under Section 204 of the Companies Act, 2013, which requires the auditor to report on the other laws specifically applicable to the company, and under ICSI Auditing Standard CSAS-4.
This work is carried out by Company Secretaries in Practice under the Company Secretaries Act, 1980. Where a matter requires appearance before a labour authority, an industrial tribunal or a court, our Associate Partner – Legal appears as an Advocate enrolled under the Advocates Act, 1961.
Working with us
Labour law exposure builds quietly. A company that was below the threshold last year is covered this year, a new branch creates a new registration, and a contractor’s default becomes the principal employer’s liability. An applicability review once a year costs very little and is the single most useful thing an employer can do in this area.
Because the same firm holds your secretarial record, labour law compliance is reported in the same calendar and examined in the same secretarial audit, rather than sitting with a separate consultant whose work nobody reconciles.
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This page describes the services offered by MPS & Associates, Company Secretaries, and the statutory provisions under which that work is carried out. It is general information about our practice and is not legal advice, an opinion or a solicitation. Statutory thresholds and procedures change; the position applicable to a particular company should be confirmed before it is acted upon.