Labour Laws

  • Employees Provident Funds & Miscellaneous Provisions Act, 1952
  • The Employees State Insurance Act, 1947
  • The Payment of Bonus Act, 1965
Request a call back

Labour laws are enacted and enforced by both Central and State Governments. These laws are influenced by the human rights and the standards which have been emerged from the United Nations.

There are various Labour Laws prevalent in India which are applicable depending upon the type of industry and activity in which an entity is engaged.

Different laws requires different compliances from time to time. Some of the major compliances' under some major laws which are applicable on most of the types of entity are as follows:
Employees Provident Funds & Miscellaneous Provisions Act, 1952
Applicability for Registration:
Compulsory Registration and contribution

Every establishment which is a factory engaged in specified industry employing 20 or more employees.

Voluntary Registration

An establishment having less than 20 employees can also get registered under the Act voluntarily by entering into an agreement with the existing employees of the organization.

Eligibility for contribution towards by employer and employee

Employee working in a factory or establishment individually or through contractor and drawing a salary of INR 15,000/- per month has to mandatorily make contribution towards EPF along with the employer.

Rate of Contribution:
Particulars Employees' Contribution Employers' Contribution
EPF 12%/10% Diff. of EE Share and Pension Contribution
EPS - 8.33%
EDLIS - 0.5%
EPF Admin Account - 0.50%(w.e.f 01.06.2018)
EDLIS Admin Account - -(w.e.f 01.04.2017)
10% rate is applicable for
  • Any establishment in which less than 20 employees are employed.
  • Any sick industrial company and which has been declared as such by the Board for Industrial and Financial Reconstruction
  • Any establishment which has at the end of any financial year, accumulated losses equal to or exceeding its entire net worth and
  • Any establishment in following industries:-
    (a) Jute (b) Beedi (c) Brick (d) Coir and (e) Guar gum Factories.
Compliance:
S.No. Compliance Form Due Date
1 Contribution Payment ECR Challan 15th of the Following Month
2 Employee Details entitled and required to become members of the Fund Form 9 Within 15 Days of the coverage
3 Return of Ownership Form 5A Within 15 Days of the coverage
4 Monthly report providing details of the employees newly joining the Provident Fund scheme during the given month Form 5 15th of the Following Month
5 Monthly report providing details of members left service during the month Form 10 21st of the Following Month
6 Monthly Details of Payment of Contribution Form 12A 25th of the Following Month
7 Annual Consolidated statement of contribution Form 6A 30th April - Every Year
8 Member's Annual Contribution Card Form 3A 30th April of the following year
Penalties:
  • Whoever, for the purpose of avoiding any payment to be made by himself under this Act, the Scheme, the Pension Scheme or the Insurance Scheme or of enabling any other person to avoid such payment, knowingly makes or causes to be made any false statement or false representation shall be punishable with imprisonment upto 1 year, or with fine of INR 5,000/-, or with both.
  • If a person fails to comply with the provision related to the Contribution to the fund, he shall be punishable with imprisonment upto 3 years but –
    1. Min. 1 year and a fine of INR 10,000/- in case of default in payment of the employee’s contribution which has been deducted by the employer from the employee’s wages.
    2. Min. 6 months and a fine of INR 5,000 in any other case: Provided that the Court may, for any adequate and special reasons to be recorded in the judgment, impose a sentence of imprisonment for a lesser term.
The Employees State Insurance Act, 1947
Applicability for Registration and contribution:

Every establishment which is a factory including shops, hotels, restaurants, cinemas including preview theatres, road-motor transport undertakings and newspaper establishments and Private Medical and Educational institutions employing 10 or more employees.

Eligibility for contribution towards by employer and employee

Any employee working in a factory or establishment individually or through contractor and drawing a salary of INR 21,000/- or less per month has to mandatorily make contribution towards EPF along with the.

Rate of Contribution:
  • Employer's Contribution: 4.75% (3% in newly implemented areas for first 24 months)
  • Employees' Contribution: 1.75%(1% in newly implemented areas for first 24 months)
Compliance:
S.No. Compliance Form
1 Register of Employees Form 6
2 Registration of families Form 1A
3 Issue of Identity Card Form 4
4 Payment of Contribution By 21st of the Following month
5 Half Yearly Returns Form 6A (by 11th of the following month)
Penalties:
  • Whoever, for the purpose of causing any increase in payment or benefit under this Act, or for the purpose of causing any payment or benefit to be made where no payment or benefit is authorised by or under this Act, or for the purpose of avoiding any payment to be made by himself under this Act or enabling any other person to avoid any such payment, knowingly makes or causes to be made any false statement or false representation, shall be punishable with imprisonment for a term which may extend to 6 months or with fine not exceeding INR 2,000/- or with both
  • If any person fails to pay any contribution which under this Act it shall be punishable with, Imprisonment: upto 3 years but -
    1. which shall not be less than one year, in case of failure to pay the employee’s contribution which has been deducted by him from the employee’s wages and shall also be liable to fine of ten thousand rupees
    2. which shall not be less than six months, in any other case and shall also be liable to fine of five thousand rupees
  • If any person:
    1. fails or refuses to submit any return required by the regulations or makes a false return, or
    2. Is guilty of any contravention of or non-compliance with any of the requirements of this Act or the rules or the regulations in respect of which no special penalty is provided, he shall be punishable with imprisonment for a term which may extend to 1 year or with fine which may extend to INR 4,000/-, or with both.
The Payment of Bonus Act, 1965
Applicability for registration:

Every Factory or every other establishment in which 20 or more persons are employed on any day during an accounting year

Eligibility for receiving Bonus from employer:
  • Employees (other than apprentice) employed on a salary or wage of upto INR 21,000/- p.m.
  • Employee will be entitled for Bonus if he/she has worked in the establishment for not less than thirty working days in that year.
Payment of Bonus:
  • Minimum Bonus: 8.33% of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year
  • Maximum Bonus: 20% (if allocable surplus exceeds amount of minimum bonus.
Time Limit:
Bonus shall be paid to the employee by his employer as under—
  • Where there is a dispute regarding payment of bonus pending before any authority under section 22, within 1 month from the date on which the award becomes enforceable or the settlement comes into operation, in respect of such dispute
  • In any other case, within a period of 8 months from the close of the accounting year
Compliance:
S.No. Compliance Form
1 Register showing computation of allocable surplus u/s 2(4) Form A
2 Register showing set off and set on of allocable Surplus u/s 15 Form B
3 Register showing complete details of bonus, du and paid to each employee Form C
4 Annual Return (within 30 days from the expiry of time limit for payment of bonus. ) Form D
Penalty:
If any person—
  • Contravenes any of the provisions of this Act or any rule made thereunder
  • To whom a direction is given or a requisition is made under this Act fails to comply with the direction or requisition, he shall be punishable with imprisonment for a term which may extend to 6 months, or with fine which may extend to INR 1,000/-, or with both.