Statutory Compliances for HR

In today's competitive and legal business world, it is very challenging for employers to manage statutory compliances. No matter how big the organization is, none of the business owners are blessed with the freedom of not fulfilling the statutory compliance. It becomes the responsibility of the organization to fulfill the statutory requirements as well as it is necessary for them to be updated with the continuous changing laws. This ultimately becomes the burden of HR manager. They have to put substantial amount of time and efforts in fulfilling these statutory compliances. HR managers have responsibilities round the clock throughout the month, and the most horrifying responsibility of HR managers is statutory compliance.

This is exactly where we as Aries HR consulting company would be able to fulfill all your statutory obligations and let you concentrate on your core business activity instead of whiling time and effort on mundane activities that do not contribute to your strategies.

Here are some major statutory requirements which are must for any organization to fulfill.

PF (Provident Fund)

The Employees' provident Fund 1952 is enacted to provide a kind of social security to the industrial workers. The Act is applicable for every employee employed in an factory or in connection with the work of a factory or other establishment covered by the schemes other than an excluded employee is entitled are required to become a member of the fund from the date of joining the factory or establishment.

This amount is later paid to the employee after retirement, death or any such cases where the employee is not able to work. Contribution under this scheme:

Employees: 12% on Basic + DA

Employer :

67% on Basic + DA

Administrative Charges : 1.10% on Basic +DA 31 Jan 2015

33% on Basic + DA

(It is to be noted that the employer shall not contribute above Rs. 15000 /- of the pay of employee per month[AM1] .)

The Employer contribution of 12% of the salary of employees is to be paid as under:

3.67% to be remitted in Account No.1 ( Employees Account)

8.33% to be remitted in Account No.10 towards pension fund

In addition to 12% of the employer has to remit 1.61% paid as under

10% Administrative charges in Account No.2

5% EDLI in Account No.21

01% Inspection charges in Account No.22

Legal Formalities To Be Followed:

Declaration Form no.2 has to filled up by new joiners at the time of joining and submitted to RPFC office.

Monthly contribution of Employer & Employee Qualification in Challan for previous month has to be submitted before 15th of every month.

Return of Employees Qualifying Form no. 5 has to be submitted in RPFC office before 15th of every month.

Return of Employees Leaving Form no. 10 has to be submitted in RPFC office before 15th of every month.

Monthly return Form no 12A has to be submitted in RPFC office before 25th of every month.

Annual return & reconciliation statement Form no 3A & 6A has to be submitted in RPFC office before 30th of April.

Transfer of PF A/c Form no. 13 has to be filled of new recruit and submitted to RPFC office.

Final settlement Form no. 19, 10c & 10D has to be filled at the time of leaving the service and submitted in RPFC office.

ESIC (Employee State Insurance Company):

ESIC is a self-financing security and health insurance scheme for all Indian workers. For employees earning ` 15000 or less per month, the employer contribute 4.75 % and the employee contributes 1.75 % with a total contribution of 6.5 %. The ESIC scheme provides medical benefit for employees and their families. Sickness and maternity benefits for employees. The ESIC scheme also provides dependents benefit for dependents in case of death due to employment injury.

Forms to be used under ESIC Schemes:

Form No. 1: ESI Declaration form for New Entrants.

Form No. 1B: Changes in Family declaration

Form No. 72: Application for Duplicate Card

Form MRO 266: Application form for change of Name / Year of Birth of insured person Woman

Form No.6: ESI half yearly return

ESI Challans: Within 21 days from the case of every Month.

Form 37: For registering with Local ESI doctor.

Profession Tax:

Profession tax is the tax charged by state government of India. Every Indian earning income in the form of salary or any other profession has to pay profession tax. Profession tax slab differ from state to state in India. However, not all state impose tax. The following states have levied Professional tax – West Bengal, Karnataka, Telangana, Andhra Pradesh, Maharashtra, Gujarat, Tamil Nadu, Chhattisgarh, Assam, Kerala, Orissa, Meghalaya, Tripura, Bihar, Jharkhand and Madhya Pradesh. The owner of the business has to furnish a return to the tax department within a specific time in the prescribed format. The return should also include tax payment proof.

Gratuity:

Gratuity is a part of salary received by employees form their employers as gratitude for the services performed by the employee in the employment tenure. It is one of the many retirement benefits that employers gives employees at the time of leaving the company.

Applicability:

Every mine, port, oil plantation factory and railway company

Every shop or establishment – employing 10 or more persons in the previous 1 year.

To any other establishment – employing 10 or more persons.

Payment of GratuityGratuity is payable if there is :-

Continuous service of 5yrs (not necessary in case of death or disablement)

On termination due to superannuation or retirement

Resignation, death or disablement due to accident or disease

In case of death, the amount will be paid to nominee or legal heir.

Calculation of Gratuity

Monthly rate of wage last drawn X 15

The employer can pay gratuity in cash, DD or bank cheque. The payment can be by postal money order if the amount is less than Rs.1000 on the desire of employee. The maximum amount payable is Rs. 10,00,000 /-.

The Minimum Wages Act 1948

The Minimum Wages Act 1948 sets the limits on how much wages to be paid to the unskilled, semi-skilled, skilled and high skilled labors. The minimum wages is different in different states in India and it keeps on updating every six months depending upon the states policy. Under the minimum wages act, the minimum wages rate differ for different categories, as follows:

Unskilled

Semi-Skilled

Skilled

High Skilled

The Minimum wage rate differs from state to state, and it is updated every six month.

Records to be maintained under (sec. 18): The Registers should contain the following particulars

Particulars of employed persons

The work performed by them

The wages paid to them

The receipts given by them

The Maternity Benefit Act 1961:

The Maternity benefit act aims to protect the dignity of motherhood and of a new person by providing payment for full and healthy maintenance of the women and her child at the maternity time when she is not working. An Act to regulate the employment of women in certain establishments for certain periods before and after child-birth and to provide for maternity benefit and certain other benefits.

Eligible for Maternity Benefit:

Must work in the establishment for 80 days in 12 months before her date of Delivery.

Women earning less than 15,000 will not be eligible for maternity benefit, but may be offered ESI scheme by her employer.

Duties of Employee for Maternity Benefit:

Ten weeks before the expected delivery date she may ask employer to give her light work.[Produce certificate of pregnancy]

Should intimate the employer Seven Weeks before her delivery date about the leave period.

Name the person to whom the payment will be made in case she cannot take herself.

Payment Of Bonus Act 1965:

The Payment of bonus Act 1965 aims at providing bonus to employees of certain establishments, as a part of profit or productivity or production and for connection with the employees. Every employee receiving salary or wages up to RS.10,000 per month and engaged in any kind of work whether unskilled, skilled, high skilled, supervisory etc. is entitled to bonus for every accounting year if he has worked for minimum 30 working days in that year.

Minimum Bonus:

The minimum bonus which an employer is required to pay for every accounting year is 8.33 % of the salary during the accounting year, or

Rs. 100 in case of employees above 15 years & Rs 60 in case of employees below 15 years, whichever is higher.

Maximum Bonus:

The Maximum Bonus payable is 205 of the salary for that accounting year.

Time Limit for Payment:

The bonus should be paid in cash within 8 months from the close of the accounting year.

8.Payment of Wages Act 1936: The Payment of Wages act aims at avoiding unnecessary delay of payment of wages without any deduction from the wages.

Applicability of the Act id for the persons employed in:

Any factory (a saw mill, ginning factory, godowns, yards etc. as defined in Factories Act, 1948).

Tramway service or motor transport service engaged in carrying passengers or good or both by road for hire or reward.

Air transport service Dock, Wharf or Jetty, Inland vessel, mechanically propelled

Mine, quarry or oil-field plantation

Workshop or other establishment etc.

Workmen's Compensation Act 1923:

The Workmen's Compensation Act 1923, it intents in providing financial protection to workers and their dependents in the form of compensation, in case of accidental injury.

Employer's Liability: To compensate any employee who suffered from any accident on account of his employment, resulting into the following:

Death

Permanent total disablement

Permanent partial disablement

Temporary disablement whether total or partial

Or who has contracted an occupational disease.

Compensation for death resulting from injury, the amount of compensation shall be equal 50% of the monthly wages of the deceased workman multiplied by the relevant factor.} Or an amount of Rs 80,000/- whichever is more.