When you hire employees for your company, it is mandatory to conform to various central and state regulations that ensure employees are well protected and have access to various benefits – from retirement funds, medical insurance, bonuses, to gratuity. Additionally, the government expects you to collect taxes from employees and remit the Tax Deducted at Source on fixed dates. If your hiring needs change as per your business cycles, you may choose to avail of human resources from a labour / manpower contractor. There are regulations that you need to conform to when you hire such contracted labour.

Broadly, whenever you hire employees, statutory compliances (governed by various Central and State Acts) can be categorized into the following groups: (Key Acts are listed within each category)

1) Laws related to wages

  1. The Payment of Wages Act, 1936; The Payment of Wages Rules, 1937; The Payment of Wages (Amendment) Act, 2005
  2. The Minimum Wages Act, 1948; The Minimum Wages (Central) Rules, 1950
  3. The Payment of Bonus Act, 1965; The Payment of Bonus Rules, 1970

2) Laws related to Working Hours, Conditions of Services and Employment

  1. The Factories Act, 1948
  2. The Contract Labour (Regulations and Abolition) Act, 1970
  3. Shops and Establishment Act

3) Laws related to Equality and Empowerment of Women

  1. The Maternity Benefits Act, 1961
  2. The Equal Remuneration Act, 1976

4) Laws related to Social Security

  1. The Workmen’s Compensation Act, 1923; The Workmen’s Compensation (Amendments) Act, 2000
  2. The Employees’ State Insurance Act, 1948
  3. The Employees’ Provident Fund & Miscellaneous Provisions Act, 1952; The Employees’ Provident Fund & Miscellaneous Provisions (Amendment) Act, 1996
  4. The Payment of Gratuity Act, 1972

It is critical that you consult with your Chartered Accountant and/or Labour Consultant to accurately interpret the various laws applicable to your organization before hiring employees.

It is desirable that you move to an automated payroll system, such as www.evetan.com,  that gives you the option to auto calculate deductions mandatory as per various labour laws such as PF, and ESI deductions.

eVetan.com which is India’s first pay-per-use online payroll software helps you manage all your statutory compliances (PF, ESI, PT, TDS) including monthly deductions and annual filings.