Labour, HR & Payroll Compliance

An employer's recurring HR and payroll compliance obligations draw on the same core statutes now transitioning to the four Labour Codes. Statutory payroll deductions include Provident Fund under Section 6 of the EPF Act, 1952 (12% employer/12% employee, ₹15,000 wage ceiling, with 8.33% of the employer share, capped at ₹1,250, routed to the Employees' Pension Scheme, 1995 and the balance 3.67% to the Provident Fund) and Employees' State Insurance under Section 39 of the ESI Act, 1948, as revised by G.S.R. 423(E) dated 13 June 2019 (3.25% employer/0.75% employee on wages up to ₹21,000, or ₹25,000 for employees with disability). Gratuity accrues under Section 4 of the Payment of Gratuity Act, 1972, on completion of 5 years of continuous service, computed as 15/26 x last drawn wages x years of service, subject to the ₹20 lakh statutory ceiling under S.O. 1420(E) dated 29 March 2018.

Where contract workers are engaged, the Contract Labour (Regulation and Abolition) Act, 1970 requires registration of the principal employer and licensing of contractors, where 20 or more contract workers are employed. State Minimum Wages Act, 1948 notifications set the applicable wage floor by scheduled employment and must be tracked separately for each state of operation.

The Wages, Industrial Relations, Social Security and Occupational Safety, Health and Working Conditions Codes were notified as commenced from 21 November 2025 (PIB PRID 2192463); central rules are expected around May 2026, after which payroll and HR compliance processes will migrate to the Codes' provisions.

Labour and HR compliance is the management of a business's obligations to its workforce under the labour laws — the industrial relations and the standing orders, the wages under the Minimum Wages Act 1948 and the Payment of Wages Act 1936, the hours and the working conditions under the Factories Act 1948 and the Shops and Establishments laws of the states, the social security under the Employees' Provident Funds Act 1952, the ESI Act 1948 and the Payment of Gratuity Act 1972, and the employment records and the registers each statute requires. The compliance is the register-and-return machinery of the workforce.

The labour compliance is the cost of employment that the business must run deliberately — the PF and the ESI deductions and the contributions, the registers and the returns, the minimum wages and the working hours, the factory and the shop licences. Each statute has its own registers, its own returns and its own inspectors, and the compliance is the discipline that keeps all of them current.

The cost of broken labour compliance is the inspection and the prosecution exposure: the demands and the penalties under the statutes, the prosecutions for the wage and the register violations, and the liability that compounds when the inspection finds the systemic gap. The labour compliance is also the layer that the buyers, the investors and the auditors increasingly test.

This service is for businesses with employees. We map the applicable labour laws to the business — the central and the state statutes, the industry and the headcount — set up the registers, the returns and the compliance calendar, manage the PF, the ESI and the other statutory payments, handle the inspections and the notices, and review the labour compliance annually so the workforce position is clean.