GLOSSARY / HR Compliance

HR Compliance

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    What is HR Compliance?

    HR Compliance refers to adopting rules, policies, and procedures to manage the workforce efficiently. It influences all types of HR functions, such as people support, strategy formulation, and policy implementation.

    HR Compliance, or HRC, mainly comprises direct employment-related governmental laws, workplace diversity and discrimination laws, and workplace safety and compensation security laws. Thus, HR compliance oversees HR functions and processes compliance with labor laws and employment-related governmental regulations.

    Why is HR Compliance important?

    HR Compliance plays a crucial role due to the following reasons:

    • It helps in adequately placing all HR policies and procedures.
    • It ensures that all employees know basic workplace safety norms and practices.
    • It establishes a guiding principle on the human resource management do’s and don’ts.
    • It ensures the organization adheres to governmental rules and regulations.
    • It helps maintain ethical human resource management practices.
    • It motivates employees and nurtures a positive workplace environment by maintaining peace and harmony between internal and external stakeholders.

    What are the types of HR compliance?

    The main types of HR compliance are:

    • Statutory compliance: It mainly comprises employment-related governmental rules and policies, such as the minimum wage laws.
    • Regulatory compliance: It overlaps with statutory compliance but mandates the organization to follow the rules and regulations laid down by a regulatory body.
    • Contractual compliance: It mandates the company to adhere to contractual terms between two companies, thus avoiding potential lawsuits.
    • Union law compliance: Companies must adhere to the rules and regulations laid down by the labor union and trade unions their employees have joined.

    What are some of the best practices for maintaining HR compliance in India?

    Here are five of the best practices for maintaining HR compliance in the Indian landscape:

    • Constantly monitoring changes: State and union employment laws are constantly evolving, so HRs must constantly monitor the government websites to stay updated.
    • Documentation: Maintain an employee handbook of the company’s procedures and rules to keep everyone in the workplace informed and adhere to legal rules and regulations.
    • Promote transparency: HR professionals and the leadership team must be transparent in their commitment to compliance to reduce the risk of errors and penalties.
    • Conduct regular training sessions: Lead workshops and webinars to train the workforce on the best practices on the latest industrial law or state regulations changes.
    • Regular HR Audits: Identify weaker areas in your compliance-related environment through HR audits, including the organization’s record-keeping policy, to avoid costly lawsuits.

    How does HR ensure compliance with employment laws and regulations?

    HR professionals can ensure compliance with employment laws and regulations by:

    • Knowledge of the employment laws, as mentioned in the Constitution, which include the conditions in industries, wages, leave, old-age pensions, maternity benefits, etc.
    • Understanding the application of various labor laws, such as those applicable to industrial establishments, mines and plantations, and being aware of laws dependent on the minimum number of workers and salary thresholds.
    • Being aware of the hiring requirements, including equality of opportunity in employment, adequate means of livelihood and the theory of equal pay for equal work.
    • Knowing minimum wage requirements and checking the minimum wage rates of various states in India. Check out the minimum wage rates of various states in India here.
    • Understanding leave and benefits laws, such as the Maternity Benefits Act of 1961 and the Employee State Insurance Act.

    Complying with these laws will help HR professionals ensure compliance with government laws and avoid costly penalties and lawsuits that damage their brand image in the marketplace.

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    What laws and regulations govern HR compliance in India?

    Here is a comprehensive checklist of all the labor laws that govern HR compliance in India:

    Legislation  Objective and Applicability  Compliance of requirements 
    Apprentices Act, 1961  Regulation and control of training of apprentices and governs the hiring of apprentices in certain trades. 
    • Appointment of apprentices if the company falls under the notified industry.
    • Submission of returns.
    • Maintenance of registers.
    Contract Labor (Regulation and Abolition) Act, 1970  It regulates the employment of contract labor in establishments wherein 20 or more workmen are or were employed on any day during the past 12 months. 
    • Working conditions 
    • Adequate facilities for men and women workers 
    • Maintenance of registers 
    • Submission of returns 
    Employee State Insurance Act, 1948  Provision of benefits to employees in case of sickness, maternity, and employment injury. 
    • Remittance of contribution every month. 
    • Maintenance of registers 
    • Submission of returns 
    Employee’s Provident Fund and Miscellaneous Provisions Act, 1952  Institution for contributory provident funds, pension funds, and deposit linked insurance funds for employees applying to industries under Schedule I employing 20 or more employees or any other establishments mentioned by the Government. 
    • Payment of contribution every month 
    • Maintenance of registers 
    • Submission of returns 
    Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959  Equal remuneration for men and women worker for the same work. 
    • No discrimination with respect to payment for the same work done by men or women. 
    • Maintenance of registers 
    Factories Act, 1948  Provides for the 

    health, safety, welfare, service conditions and other aspects of workers in factories employing more than 10 people and working with the aid of power or employing 20 people and 

    working without the aid of power. 
    • Licensing and renewal of license under the Act. 
    • Adequate safety measures within the factory. 
    • Adequate welfare measures for workers. 
    • Payment of wages as per provisions. 
    • Payment of overtime wages. 
    • Maintenance of registers. 
    • Submission of returns. 
    Industrial Disputes Act, 1947  Secure industrial peace and harmony by providing machinery and procedure for the investigation and settlement of industrial disputes by negotiations. 
    • Prevention of unfair labor practices. 
    • Prior permission of Government/Labor authority before closing the establishments. 
    • Payment of compensation to workers on closure, layoff, or retrenchment. 
    Industrial Employment and Standing Orders Act, 1946  Employers should clearly define and publish standing orders and make the employees aware of the same. 
    • Formulation of standing order and getting it approved from Labor authority. 
    • Public display of the orders for the workers. 
    The Maternity Benefit Act, 1961  Regulate the employment of women for certain periods before and after childbirth and provide leave, wages, bonus, nursing breaks etc. 
    • Grant of leave along with payment of wages after childbirth or other maternity-related problems. 
    • Submission of returns. 
    Minimum Wages Act, 1948  Fixing minimum wage rates in certain employments. 
    • Provision for minimum wage as prescribed by the Government. 
    • Maintenance of registers. 
    • Submission of returns. 
    Payment of Bonus Act, 1965  Provide a bonus to people employed in certain establishments employing more than 20 workers at any time in the accounting year. 
    • Payment of bonus. 
    • Submission of returns. 
    Payment of Gratuity Act, 1972  Payment of gratuity to employees for their long-term service of 5 years or more. 
    • Payment of gratuity to employees leaving after 5 years. 
    • Notice of opening to labor authority. 
    • Displays required 
    • Maintenance of registers. 
    • Submission of annual returns. 
    Payment of Wages Act, 1936  Payment of wages in a particular form at a regular interval without unauthorized deductions. 
    • Payment of wages without unauthorized deductions. 
    • Maintenance of registers. 
    • Displays required 
    • Submission of annual returns. 
    The Indian Boilers Act, 1923  Regulate the licensing and use of boilers in Industry. 
    • Licensing of boilers 
    • Adequate safety precautions. 
    • Appointment of trained personnels to handle boilers. 
    • Maintenance of registers. 
    The Weekly Holidays Act, 1923  Granting weekly holidays to people employed in shops, restaurants, and theatres.  Provisions of weekly holidays. 
    Trade Unions Act, 1926  Registration of trade unions for lawful collective bargaining.  Registration of trade unions. 
    Workmen’s Compensation Act, 1923  Provide compensatory payments in case of accidents in the workplace. 
    • Provision of compensation in case of accidents. 
    • Submission of returns. 

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