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Business Compliance & Labour Law

Labour Law Compliance

Labour Law

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Regulatory Framework

Core labour-law compliance for an Indian employer currently spans several standalone statutes pending full Labour Code implementation: the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (Section 6 — 12%/12% PF contribution, ₹15,000 wage ceiling, establishments with 20+ employees); the Employees' State Insurance Act, 1948 (Section 39, as revised by G.S.R. 423(E) dated 13 June 2019 — 3.25%/0.75% contribution split on wages up to ₹21,000/₹25,000); the Payment of Gratuity Act, 1972 (Section 4 — gratuity on 5 years of continuous service, 15/26 x last drawn wages x years of service, statutory ceiling ₹20 lakh per S.O. 1420(E) dated 29 March 2018); the Contract Labour (Regulation and Abolition) Act, 1970 (registration of the principal employer and licensing of contractors employing 20 or more contract workers); and the Minimum Wages Act, 1948 (state-notified minimum rates and timely-payment obligations).

The Wages, Industrial Relations, Social Security, and Occupational Safety, Health and Working Conditions Codes were notified as commenced with effect from 21 November 2025, per PIB release PRID 2192463, with the central rules operationalising the Codes expected to follow around May 2026. Once those rules take effect, the above Act-specific citations, rates and thresholds will migrate to the corresponding Code chapters and sections; until then, employer obligations continue to be governed by the base Acts and rates cited above, and this page will be updated with Code-era citations as the rules are finalised.

Overview

Labour law compliance is the ongoing management of a business's obligations under the labour statutes — the employment contracts and the registers, the wages under the Minimum Wages Act 1948 and the Payment of Wages Act 1936, the working conditions under the Factories Act 1948 and the Shops and Establishments laws, the social security under the Employees' Provident Funds Act 1952, the ESI Act 1948 and the Payment of Gratuity Act 1972, and the contract labour under the Contract Labour (Regulation and Abolition) Act 1970 where the business engages contractors. The compliance is the set of obligations the business runs every pay cycle.

The labour compliance is the operational layer of employment — the statutory deductions and the contributions on every payroll, the registers that must be maintained and the returns that must be filed, the licences that must be current and the notices that must be displayed. The business that runs the compliance as a system finds the inspections are routine; the business that runs it as an afterthought finds the inspections are events.

The cost of broken labour compliance is the cumulative exposure: the contributions unpaid and the interest accrued, the registers missing at the inspection, the wages below the statutory minimums, the prosecution exposure under the statutes. The labour position compounds quietly and surfaces expensively.

This service is for businesses with employees and contract workforces. We map the applicable statutes, run the payroll compliance — the PF, the ESI, the gratuity, the wages — maintain the registers and file the returns, manage the licences and the registrations, handle the inspections and the notices, and review the compliance annually so the labour position is current and clean.

How It Works

  1. 1

    Statute Applicability Mapping

    We map the applicable labour statutes to the workforce.

    Harun Raaj & Associates does this1 week
  2. 2

    Payroll Compliance Setup

    We set up the PF, the ESI and the statutory payroll deductions and the contributions.

    Harun Raaj & Associates does this1-2 weeks
  3. 3

    Registers & Returns

    We maintain the registers and file the statutory returns.

    Harun Raaj & Associates does thisMonthly
  4. 4

    Licences & Registrations

    We manage the licences, the registrations and the renewals.

    Harun Raaj & Associates does thisAs required
  5. 5

    Inspection & Review

    We handle the inspections and review the compliance annually.

    Harun Raaj & Associates does thisAnnual

Frequently Asked Questions

Which establishments must register under the Contract Labour (Regulation and Abolition) Act and by when?
Any principal employer engaging 20 or more contract labourers on any day in the preceding 12 months must register under Section 7 of the Contract Labour (Regulation and Abolition) Act 1970 in Form I before the contract work commences. Every contractor deploying 20 or more workers must simultaneously obtain a licence under Section 12 in Form IV. Failure to register or licence attracts imprisonment up to 3 months or a fine up to ₹1,000 under Section 23. State governments may lower the threshold to 10 workers by notification, so the applicable state rules must always be verified alongside the central act.
What are the monthly compliance obligations under the Employees' Provident Funds and Miscellaneous Provisions Act 1952?
Every employer covered under the Employees' Provident Funds and Miscellaneous Provisions Act 1952 must deposit both employee and employer contributions — 12% of basic wages each — in the Electronic Challan cum Return (ECR) on the EPFO unified portal by the 15th of the following month under Paragraph 38 of the EPF Scheme 1952. Form 5 (new joiners), Form 10 (exits), and the monthly ECR must be filed simultaneously. Delayed deposit attracts damages at rates up to 25% per annum under Section 14B, plus interest at 12% per annum under Section 7Q. From April 2017, the UAN-based ECR 2.0 format is the only accepted return format, and physical challans are no longer valid.
How is the minimum wage determined and what records must an employer maintain under the Minimum Wages Act 1948?
Minimum wages are notified state-wise and schedule-wise under Section 5 of the Minimum Wages Act 1948; employers must pay the rate applicable to the scheduled employment category and geographic zone as revised by notification, typically every six months via Variable Dearness Allowance (VDA) orders. Register of Wages must be maintained in Form X under Rule 21 of the Minimum Wages (Central) Rules 1950, recording daily attendance, overtime, and deductions for each worker. Employers must also display an abstract of the Act and current wage rates in Form XI at the worksite under Rule 22. Payment below the notified minimum wage is a cognizable offence under Section 22 attracting up to 6 months imprisonment and/or fine up to ₹500, with enhanced penalties under the Code on Wages 2019 once notified.
What annual returns are required and what are the filing deadlines under major central labour laws?
Under the Factories Act 1948, the annual return in Form 21 must be submitted to the Chief Inspector of Factories by January 31 each year under Rule 120 of the Central Factories Rules. The Contract Labour (R&A) Act 1970 requires an annual return in Form XXIV by the principal employer by February 15. Under the Payment of Bonus Act 1965, Form D (bonus paid register) must be maintained and returns filed within 30 days of payment under Section 26 read with Rule 5. The Maternity Benefit Act 1961 annual return under Rule 17 is due by January 31. Non-filing of annual returns attracts prosecution under the respective penal provisions of each act.
How does the Code on Wages 2019 change existing compliance obligations, and when does it apply?
The Code on Wages 2019 consolidates the Minimum Wages Act 1948, Payment of Wages Act 1936, Payment of Bonus Act 1965, and Equal Remuneration Act 1976 into a single statute under Section 1, but its provisions require state rules to be notified before they come into force in each state. As of mid-2026, most states have not yet notified their rules, so the four original acts continue to apply in those jurisdictions. Once operative, the Code introduces a universal minimum wage floor applicable across all employments regardless of scheduled-employment status under Section 6. The definition of 'wages' under Section 2(y) of the Code is narrower — it excludes allowances exceeding 50% of total remuneration — which materially affects bonus and overtime computations, requiring payroll systems to be recalibrated at the time of state-level enforcement.

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