Human Resource Management
1. Scope – Provident Fund
The Act applies to:
- Every establishment with 20 or more employees.
- Certain establishments with less than 20 employees may also be covered voluntarily or by notification.
- Covers employees in factories, mining, plantations, shops and establishments, private companies, schools, hospitals, etc.
Eligible Employees
- All employees drawing basic wages + DA ≤ ₹15,000/month must mandatorily be covered.
- Employees earning above ₹15,000 can voluntarily opt in, with employer consent.
- International workers employed in India are also covered.
Compliance Obligations for Employers
- Register with EPFO and obtain Establishment Code
- Generate Universal Account Numbers (UANs) for all employees
- Deduct PF from employee salary and remit it monthly by 15th of next month
- File monthly ECR (Electronic Challan-cum-Return).
- Maintain compliance with inspections, audits, and filing of returns (Form 5, 10, 3A, 6A, etc.)
Employee Benefits Under PF
- Lump sum retirement corpus (EPF accumulation + interest)
- Monthly pension after retirement (EPS)
- Life insurance to nominee (EDLI)
- Partial withdrawals allowed for:
- Medical treatmen
- Marriage or education of children
- House purchase or renovation
- Retirement after 58 years
Recent Updates / Enhancements
- E-nomination made mandatory
- Higher Pension Option under EPS (for eligible members)
- Aadhaar linking compulsory for UAN
- EPFO Grievance Portal and digital helpdesk
Non-Compliance Consequences
- Penalty under Section 14B & 7Q (damages + interest)
- Prosecution and imprisonment for serious defaults
- Loss of reputation and employee trust
2. Scope – Professional Tax
Professional Tax is a state-level tax levied on professions, trades, callings, and employment. It is governed by the respective State’s Professional Tax Acts, and not by the Central Government. The tax is applicable to both salaried individuals and self-employed persons.
Applicability
- Levied on:
- Salaried employees
- Professionals (doctors, lawyers, architects, CAs, etc.)
- Traders and business owners
- Freelancers and consultants
- Companies, LLPs, firms, HUFs, etc.
Employer’s Role
For salaried employees, the employer is responsible for:
- Deducting PT from salaries monthly
- Remitting it to the state government
- Filing PT returns periodically
Employers must register for Professional Tax Registration Certificate (PTRC) and Enrollment Certificate (PTEC
- PTRC: For deducting and depositing PT from employees
- PTEC: For paying tax on the business/profession itself
- Filing PT returns periodically
Filing and Payment Frequency
- Monthly, quarterly, or annually – as per state rules and the number of employees
- Returns must be filed on the state commercial taxes portal
- Filing PT returns periodically
Penalties for Non-Compliance
- Late payment: Interest + penalty
- Failure to register or file: Monetary fines and legal action
- Continuous default may lead to prosecution
3.Scope – ESIC ( If Applicable to Company)
The Employees’ State Insurance (ESI) is a self-financing social security and health insurance scheme for Indian workers. It is governed by the Employees’ State Insurance Act, 1948, and administered by the Employees’ State Insurance Corporation (ESIC), an autonomous body under the Ministry of Labour and Employment, Government of India.
A. Applicable Establishments
- Mandatory for establishments:
- With 10 or more employees (in some states, threshold is 20)
- Engaged in factories, shops, hotels, cinemas, educational institutions, hospitals, etc.
- Also applies to:
- Private medical institutions, schools, NGOs, contract labour, and construction sites (if notified).
B. Eligible Employees
- All employees earning a gross salary ≤ ₹21,000/month
- For persons with disability: limit extended to ₹25,000/month
- Includes full-time, part-time, contractual, and casual workers
C. Employer's Compliance Responsibilities
- Register under ESIC portal
- Generate ESI numbers for all covered employees
- Timely deduction and deposit of contributions
- Filing of monthly returns
- Maintain records and registers
- Facilitate inspections and audits by ESIC
D. Non-Compliance Consequences
- Interest and damages on late payment
- Disqualification from government contracts
- Penalties and prosecution under Section 85 of the ESI Act
- Loss of employee trust and potential legal disputes
4.Scope – Labour Laws ( If Applicable to Company)
Labour Laws in India are a set of regulations enacted to govern the relationship between employers, employees, and the government. These laws cover a wide range of issues including employment terms, wages, working conditions, social security, dispute resolution, and employee welfare.
- Employment & Industrial Relations
- Governs terms of employment, recruitment, termination, and lay-offs.
- Ensures fair treatment of workers and protection from arbitrary dismissal.
- Important Acts:
- Industrial Disputes Act, 1947
- Trade Unions Act, 1926
- Industrial Employment (Standing Orders) Act, 1946
- Labour Codes (Industrial Relations Code, 2020) (notified but not fully implemented yet)
- Social Security & Benefits
- Provides long-term benefits like retirement, disability, maternity, and health insurance
- Important Acts:
- Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF)
- Employees’ State Insurance Act, 1948 (ESI)
- Payment of Gratuity Act, 1972
- Maternity Benefit Act, 1961
- Social Security Code, 2020
- Working Hours & Conditions
- Regulates working hours, overtime, rest periods, holidays, and leave entitlements
- Ensures safe and humane working conditions.
- Important Acts:
- Factories Act, 1948
- Shops and Establishments Act (state-specific)
- Contract Labour (Regulation and Abolition) Act, 1970
- Occupational Safety, Health and Working Conditions Code, 2020
- Health, Safety & Welfare
- Ensures workplace safety and provision of welfare facilities like canteens, crèches, first-aid, etc
- Important Acts:
- Factories Act, 1948
- Building and Other Construction Workers Act, 1996
- Dock Workers (Safety, Health and Welfare) Act, 1986
- Women and Child Labour Protection
- Prohibits child labour and ensures special protections for women workers.
- Important Acts:
- Child Labour (Prohibition and Regulation) Act, 1986
- Maternity Benefit Act, 1961
- Sexual Harassment of Women at Workplace Act, 2013
- Welfare of Contract and Migrant Workers
- Provides regulation and protection for outsourced and migrant workers.
- Important Acts:
- Contract Labour (Regulation and Abolition) Act, 1970
- Inter-State Migrant Workmen Act, 1979
- Building and Other Construction Workers Act, 1996
- Labour Codes – The New Framework
- The Government of India has consolidated 29 central labour laws into 4 Labour Codes:
- Code on Wages, 2019
- Industrial Relations Code, 2020
- Social Security Code, 2020
- Occupational Safety, Health and Working Conditions Code, 2020
- Non-Compliance Consequences
- Penalties, fines, and imprisonment
- Cancellation of licenses/registrations
- Legal action from employees or unions
- Reputational damage
- Deliverables
- Provident Fund
- UAN Generation for Employees
- Monthly Contributions & Payments
- Returns & Forms
- Employee Declaration Forms
- Record Maintenance
- Employee Services Support
- Annual Returns & Reconciliation
- Compliance Audit & Inspection Support
- Exit Process Documentation
- Professional Tax
- Professional Tax Registration
- Monthly Deduction from Employees’ Salaries
- Payment of Professional Tax
- Filing of PT Returns
- Employee Registration (if required by state)
- ESIC
- Employee Enrolment
- Monthly Contribution & Payment
- ECR Filing (Monthly Return)
- Maintenance of Statutory Records
- Support During Inspections
- Labour Laws
- Audit & Inspection Support
- Statutory Returns & Filings