STATUTORY COMPLIANCE

Meaning-:
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.
The term is most often used with organizations, who must
follow lots of regulations.
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.
Purpose-:
Safeguarding the employees and the enterprise from un
toward risks by managing and consulting on issues such as
retirement benefits and Taxation

Statutory
Compliance
for HR

ESI
Provident Fund
Profession Tax
Gratuity
The Minimum Wages Act
The Maternity Benefit Act
The Payment Of Bonus Act
The Payment Of Wages Act

PF and Miscellaneous Provisions Act, provides

for compulsory
contributory fund for the future of an employee
after his retirement or
for his dependents in case of his early death

It extends to the whole of India except the State

of J&K
Every factory engaged in any industry specified
in Schedule 1 in which
20 or more persons are employed
Every other establishment employing 20 or more
persons or class of such
establishments which the Central Govt. may
notify and any other
establishment so notified by the Central
Government even if employing
less than 20 persons

Provident
Fund

PF is contributed from both the sides @12% of

the basic salary.
Contribution for the purpose of Employees'
pension Scheme is
8.33% of (12% of employers contribution
towards PF) or Rs.540/- which
ever is less, will be transferred to Employees
pension scheme and the
balance amount will go towards Employee PF.

Employee
seasonal factories using
power
and
State
employing 20 or more
Insurance
Act
persons; but it is now
applicable to nonESI
seasonal power
using factories
employing 10 or more
persons and non-power
using factories
employing 20 or more
persons
All the employees in the
factories or
establishments to which
the Act applies
shall be insured under
this Act
The contribution
comprise of employers
contribution and
employees
contribution at a
specified rate

Contribution rate : 1.75% - employees

4.75% employers
The ceiling 10,000/- gross salary. After
reaching the ceiling one will be
exempted. (with effect from 1.10.2006)
Employer is liable to contribute &
deduct specified rate of amount and
submit
it to the Corporation within 21 days.
Two contribution periods each of six
months:
1stApril to 30thSept
1stOct. to 31stMarch
Two corresponding benefit periods of
six months :
1stJanuary to 30thJune
1stJuly to 31stDecember

Professional Tax

Professional tax or employment

tax is a state-based tax. It is
allowed as a
deduction from the gross income
before computing the tax.
Duration of deduction is half year1stday of April to 30thSeptember
1stday of October to the
31stMarch of a year.

PT is deducted slab wise1 to 2500-nil

2500 to 3500 -Rs 60
3501 to 5000 - Rs 120
5001 to 10000- Rs 175

and above 10000Rs 200 per

month except Rs 300 in the month
of February.

Each and every

employee receiving pay
from the revenue of the
Central Government
or any State Government
is entitled to pay
profession tax.
Any organization
whether incorporated or
not, which is owned or
controlled by the Central
Government or any State
Government is eligible
to pay PT

Gratuity is an amount given to employees

by employer
when they leave the job after completing
five years or
minimum 240 days per year or after
retirement. The number
of year may differ from company to
company

Gratuity is payable under the payment of

wages act.
Gratuity shall be payable to an employee
on the termination
of his employment after he has rendered
continuous service
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

Gratuity

Gratuity is calculated as Basic + DA

divided by 26 * No of
years of service *15

The Minimum
Wages Act
1948
This act provides for fixing
minimum rates of wages.
Wages shall mean all
remuneration payable to an
employed person on the
fulfillment of
the contract employment
and includes HRA.
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 the
supply of essential
commodities. It excludes
(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 social
insurance

(iii) Travelling allowance / Travelling concession

(iv) Gratuity

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")

Penalty:The inspectorate staff of the Labor Department

takes action on complaints received
from workmen/Unions.
The penalty for violation of is fine of R.500/- or
imprisonment up to a period of six
months or both.
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.
The authority can impose penalty up to 10
times the difference in minimum wages that
was due and paid

The Maternity Benefit Act, 1961

To regulate employment of women for certain periods before and after

child birth and to provide for maternity benefit.
Payment of maternity benefit shall apply to women workers to whom
ESI Act does not apply.
The Act applies to all establishments in which ten or more people are
employed.
The maternity benefit shall be at the rate of average daily wage for the
period of actual absence. The maximum period of entitlement shall be
12 weeks of which not less than 6 weeks shall precede the expected
date of delivery.
Maternity benefit shall be payable to employee or any other persons as
per the nomination.
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.

The Payment
Of Bonus Act,
1965
The Payment of Bonus
Act imposes statutory
liability upon the
employers of every
establishment covered
under the Act to pay
bonus
to their employees.
It provides for payment
of minimum and
maximum bonus and
linking
the payment of bonus
with the production and
productivity.

The Act applies to every factory where 10

or more workers are working
and every other establishment in which 20
or more persons are
employed, on any day during an
accounting year

Every employee receiving salary or wages

up to RS. 3,500 p.m. and
engaged in any kind of work whether
skilled, unskilled, managerial,
supervisory etc. is entitled to bonus for
every accounting year if he has
worked for at least 30 working days in that
year

Penalty
The punishment provided for
contravention of any provisions of the
Act or any rule made there under is
imprisonment for a term, which
may extend for 6 months or with fine,
which may extend to Rs. 1000/- or
with both.

The Minimum Wages Act,1936

It is a central legislation which applies to the persons employed in the

factories and to persons employed in industrial or other
establishments
This Act does not apply on workers whose wages payable in respect of
a wage period average Rs. 1600/- a month or more.
This Act has been enacted with the intention of ensuring timely
payment of wages to the workers without unauthorized deductions.
The salary in factories/establishments employing less than 1000
workers is required to be paid by 7th of every month and in other
cases
by 10th day of every month.
A worker, who either has not been paid wages in time or an
unauthorized deductions have been made from his/her wages, can file
a
Claim either directly or through a Trade Union or through an Inspector
under this Act.

Conclusion

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!