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Labour Law consultancy & compliance services

We offer Consultation and Audit Services on the labour legislative part of compliance which is an integral component of corporate governance.

Labour laws:

1) Provident Fund

The Employees' Provident Funds & Miscellaneous Provisions Act, 1952 has been enacted with the main objective of protecting the interest of the employees after their retirement and their dependents after death of the employee. The Act provides insurance to workers and their dependents against risks of old age, retirement, discharge, retrenchment or death.

Applicability
The Employees' Provident Funds & Miscellaneous Provisions Act, 1952 extends to whole of India except the state of Jammu & Kashmir. It applies on every establishment employing 20 or more persons & engaged in industry specified in Schedule I of the Act or any other activity notified by the Central Government.
It applies to all departments / branches of an establishment wherever situated. Any establishment employing even less than 20 persons can be covered voluntarily under section 1(4) of the Act.

Eligibility
Employees drawing salary / wages at the time of joining up-to Rs. 6,500/- per month are governed by the provisions of the Act;
drawing salary / wages more than Rs. 6,500/- per month may also be brought under the purview of the Act at the discretion of the management and by furnishing a joint undertaking to the Provident Fund Commissioner;
Employees engaged through the Contractor in or in connection with the work of an establishment are also covered under the purview of the Act.

Rate of contribution

Monthly Contribution	Employees Provident Fund	Employees' Deposit Linked Insurance Scheme	Employees' Pension Scheme
By Employer	12% of Basic Salary plus DA	0.50% subject maximum wage limit of Rs. 6,500/-	8.33% (out of 12% contribution payable under EPF) subject to maximum of Rs. 541/-
By Employee	12% of Basic Salary plus DA	NIL	NIL

2) Employees State Insurance Corporation (ESIC)

The Employees' State Insurance Act, 1948 is one of the most prominent social security legislations in India. It has been enacted to provide certain benefits like medical, sickness, maternity and employment injury benefits to employees. The Act is administered by the Employees' State Insurance Corporation, the premier social security organization in India.

Applicability
The Employees' State Insurance Act, 1948 extends to whole of India; It applies to all factories / establishments running with the aid of power and employing 10 or more persons and to those factories which run without the aid of power and employing 20 or more persons;

Eligibility
Employees drawing salary / wages not exceeding Rs. 15,000/- per month are covered under the provisions of ESI Act.
Rate of Contribution
Employer’s contribution- 4.75% of the wages payable to an employee
Employees’ contribution- 1.75% of the wages payable to an employee

3) Gratuity

The Payment of Gratuity Act, 1972 has been enacted to provide for a scheme for payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments upon their superannuation, retirement, resignation, death or disablement due to accident or disease.

Applicability
Payment of Gratuity Act, 1972 extends to whole of India. It applies to every factory, mine, oilfield, plantation, port and railway company, shop or establishment in which 10 or more persons are or were employed on any day of the preceding 12 months;
It applies to all such other establishments or class of establishments in which 10 or more persons are or were employed on any day of the preceding 12 months as the Central Government may, by notification, specify in this behalf.

Eligibility
Gratuity is payable to employees who have rendered continuous service of at least 5 years.
Maximum Limit
Employees covered under the Act are entitled for maximum amount of gratuity of Rs. 20,00,000/-
The employer may be pleased to offer better terms of gratuity. However, any amount exceeding the maximum prescribed limit of gratuity (Rs. 20,00,000/) becomes taxable in the hands of the recipient.

Rate of Gratuity Gratuity is payable at the rate of 15 days' last drawn wages by the employee concerned for every completed year of his service or part thereof in excess of 6 months.
In case of a monthly rated employee, 15 days' wages shall be calculated by dividing the last drawn monthly wages by 26 and multiplying the quotient by 15.
In case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of 3 months immediately preceding the termination of his employment (without taking into account the wages paid for any overtime work).

4) Profession Tax

Professional tax is a tax on all kinds of professions, trades, and employment and is levied based on the income of such profession, trade and employment. It is levied on employees, a person carrying on the business including freelancers, professionals, etc., subject to income exceeding the monetary threshold if any.
Professional tax being levied by the state government is different in different states. Every state has its own laws and regulations to govern the professional tax of that particular state. However, all the states do follow a slab system based on income to levy professional tax.
Further, Article 276 of the Constitution which empowers the state government to levy professional tax also has provided for a maximum cap of Rs 2,500 beyond which professional tax cannot be charged to any person.

PTEC & PTRC
PTEC stands for Professional Tax Enrollment Certificate. Any individual, whether artificial or human individual, is covered under PTEC. The deduction amount of this tax is Rs. 2500 per annum if it is a company, individual, or partnership. In other words, when the employer pays his own tax, it is called PTEC.
PTRC refers to Professional Tax Registration Certificate. An employer registered itself to PTRC for deducting professional tax from the employee’s salary to pay the state govt. respectively and the monthly deduction amount can be Rs. 150/200/300.
Hence, the amount deducted from the employee’s wages is known as PTRC and the amount that employers paid for themselves to the state govt. is called PTEC.

PTRC slab rates in Maharashtra

Monthly salary/wage up to Rs 7,500 (men)	NIL
Monthly salary/wage up to Rs 10,000 (women)	NIL
Monthly salary/wage between Rs 7,501 – Rs 10,000	Rs.175
Monthly salary/wage > Rs 10,000	Rs 200 (300 for the last month)

PTRC payment & Return due date
If Profession tax liability during the year is less than 1 Lakhs- 31st March of the year
If Profession tax liability during the year is more than 1 Lakhs- 30th/31st of the next month.

5) Bonus

The Payment of Bonus Act, 1965 has been enacted to provide & regulate the payment of bonus to employees in certain specified establishments either on the basis of profits or on the basis of productivity of the establishment.

Applicability
Payment of Bonus Act, 1965 extends to whole of India. Payment of Bonus Act, 1965 applies to every factory and to every other establishment in which 20 or more persons are employed on any day during an accounting year;
The Government may also apply the act on any factory or establishment in which has less than 20 but not less than 10 persons are employed;
Payment of Bonus Act, 1965 is applicable on every employee whether doing any skilled, unskilled, manual, supervisory, managerial, administrative, technical or clerical work for hire or reward and whether the terms of employment are express or implied.

Eligibility
Payment of Bonus Act, 1965 is applicable on employees drawing wages / salary up-to 10,000/- per month.
Only those employees are entitled for bonus, who have worked for at least 30 working days in an accounting year.

Bonus Rate
8.33% of the salary or wages earned by an employee in a year or Rs. 100/-, whichever is higher.

Maintenance of registers under Labour laws:

1) Employee Register
The information about the employees who work in the establishment is kept on file in the employee register. To eliminate any employee-related suspicions, such a record is necessary.
Employee register should contain following information
a) Details of the organization such as organization name, owner name, Labour Identification number
b) Details of the employee such as employee code, full name, gender, contact details, KYC details, educational qualifications, etc.

2) Wage Register
Wage register should contain following information:
a) Information regarding establishment & employees
b) Information regarding wages such as wage rate, working days, hrs worked, basic pay, overtime details, deductions, etc

3) Attendance Register
Attendance register should contain following information:
a) Name of the employee
b) Number of days summary
c) Date and time of in and out
d) Signature of authorized person,etc

4) Leave Register
Leave register should contain following information:
a) Specifications of the Establishment as required
b) Days Worked
c) However, opening balance, added, prohibited, taken advantage of, and closing balance is all included in compensatory rest.
d) Information on earned leaves
e) Except for the rest, not the permit column, it contains all of the information mentioned before.
f) Medical Leave Information on Additional Leaves.
g) Lastly, the initial balance for the year’s leave must be shown in the register for January of the relevant year, and the year’s ending balance must be shown in the register for December.

5) Loan & Recovery Register
Leave register should contain following information:
a) Recovery types, such as damage, loss, fines, advances, and loans
b) Details of the Loan
c) Further, the loan/damage date
d) Amount
e) Specifics of any issued notice
f) The first month, last month/last year;
g) Date of complete Recovery

Labour law audit:

Though Labour Law Audit in India is not compulsory, we highly recommend our clients to go for Labour Law Audit before outsourcing their Labour Law Compliances to specialized companies. Under this head of services, we conduct comprehensive scrutiny of statutory compliances of a company (employer) as per applicable central / state specific labour laws governing to its trade and submit our Labour Law Audit Report with our suggestions / recommendations. If required, we may also offer Labour Law Due Diligence to such companies.
We offer the following services to our clients to check their Labour Law Compliances status and to help them in ensuring good corporate governance on their part:

• Audit of overall Labour Law Compliances Status by our new clients under various applicable Labour Laws / Social Security Legislations.
• Periodical Labour Law Audit of Compliances by Contractors engaged at the point of our clients to mitigate their liability as Principal Employer under applicable Labour Laws.
• Due Diligence for our clients as Principal Employers under applicable Labour Laws.
• Reporting on Labour Law Audit with comments / suggestions for improvement in overall Labour Law Compliance Mechanism under applicable Labour Laws / Social Security Legislations.
• Conducting Labour Law Due Diligence for client's obligations under Labour Laws / Social Security Legislations.
• Conducting specific purpose Labour Law Audit & Labour Law Due Diligence, viz.
• Labour Law Due Diligence for Mergers & Acquisitions
• Labour Law Due Diligence for TakeOvers
• Labour Law Due Diligence for IPOs
• Labour Law Due Diligence for Joint Ventures
• Labour Law Due Diligence at the time of Winding-up of Companies / Closure of Establishment