HR compliance is a critical aspect of managing employees and business operations. HR managers must ensure that company policies align with legal requirements to avoid penalties, lawsuits, and reputational damage.
In India, with the introduction of the Labour Codes 2020, compliance has become more structured, but businesses must still adhere to laws related to wages, workplace safety, employee rights, and social security benefits.
This article provides an HR compliance checklist to help HR managers track essential legal obligations and maintain a legally compliant and employee-friendly workplace.
1. HR Compliance Checklist: Key Areas to Track
An HR manager’s compliance responsibilities can be categorized into the following key areas:
✅ Employee Documentation & Records
✅ Wages, Payroll & Tax Compliance
✅ Workplace Policies & Code of Conduct
✅ Social Security & Employee Benefits
✅ Labour Law Adherence & Legal Filings
✅ Workplace Safety & Health Compliance
2. Employee Documentation & Records
HR managers must ensure that all employee-related records are maintained as per legal guidelines.
Checklist for Employee Documentation
📌 Employee Onboarding & Contracts
- Employment Offer Letter & Appointment Letter
- Signed Employment Agreement (as per company policy)
- Employee ID & Aadhaar/PAN Details
- Educational & Experience Certificates
📌 Statutory Employee Records
- Attendance & Leave Records
- Salary Slips & Tax Deduction Reports
- Provident Fund (PF) & Employee State Insurance (ESI) Details
- Gratuity Eligibility Records
📌 Exit Formalities & Full & Final Settlement
- Resignation Letter or Termination Notice
- Relieving Letter & Experience Certificate
- Gratuity & EPF Settlement
📌 Retention Period
- Employee records must be kept for at least 3–5 years for compliance and audits.
3. Wages, Payroll & Tax Compliance
Incorrect payroll processing can lead to heavy penalties under Indian labour laws.
Checklist for Payroll Compliance
📌 Salary & Wage Regulations
- Ensure salaries are paid on time (before the 7th of each month) (Payment of Wages Act, 1936).
- Minimum wages must be in compliance with The Code on Wages, 2019.
📌 Tax Deductions & Payroll Filings
- Deduct and deposit TDS (Tax Deducted at Source) for employees as per Income Tax Act.
- Ensure PF (12% of Basic Salary) & ESI Contributions (3.25% employer, 0.75% employee) are deducted and deposited.
- File Professional Tax (varies by state) and Labour Welfare Fund (LWF) contributions.
📌 Bonuses & Overtime Pay
- As per the Payment of Bonus Act, 1965, eligible employees must receive a bonus of 8.33% to 20% of their salary.
- Overtime payment should be double the hourly rate as per Factory Act, 1948.
📌 Gratuity Payment
- Employees who have completed 5 years of continuous service are eligible for gratuity under The Payment of Gratuity Act, 1972.
4. Workplace Policies & Code of Conduct
HR managers must ensure that workplace policies are legally compliant and clearly communicated.
Checklist for HR Policies
📌 Anti-Harassment & POSH Compliance
- The Prevention of Sexual Harassment (POSH) Act, 2013 mandates that companies with 10+ employees must:
✅ Set up an Internal Complaints Committee (ICC)
✅ Conduct POSH training for employees
✅ Have a written anti-harassment policy
📌 Code of Conduct & Disciplinary Policies
- Clearly define policies for attendance, punctuality, ethical conduct, conflict resolution, and grievance redressal.
📌 Leave & Holiday Policies
- Provide statutory leave entitlements as per Shops & Establishments Act (varies by state).
- Maternity leave (26 weeks) as per The Maternity Benefit Act, 1961.
- Casual, sick, and paid leave policies must be documented.
📌 Equal Opportunity & Diversity Policy
- Ensure non-discrimination based on gender, caste, religion, or disability as per Equal Remuneration Act, 1976.
5. Social Security & Employee Benefits
HR managers must ensure that employees are enrolled in mandatory social security schemes.
Checklist for Social Security Compliance
📌 Provident Fund (PF) & Employee State Insurance (ESI)
- Employees with salaries below ₹15,000/month must be covered under ESI.
- PF is mandatory for companies with 20+ employees.
- PF Contributions: 12% of basic salary (both employer & employee).
- ESI Contributions: 3.25% (employer) + 0.75% (employee).
📌 Gratuity & Pension
- Employees completing 5 years of service are eligible for gratuity.
- Companies must contribute towards Employees’ Pension Scheme (EPS).
📌 Maternity & Paternity Benefits
- 26 weeks of paid maternity leave as per the Maternity Benefit Act, 1961.
- Paternity leave policies (if applicable) should be clearly documented.
6. Labour Law Adherence & Legal Filings
HR managers must keep track of legal filings and labour law obligations.
Checklist for Labour Law Compliance
📌 Employment Laws
- Ensure compliance with The Code on Wages, 2019 for minimum wage, equal pay, and salary disbursement.
- Follow Shops & Establishments Act for state-wise working hours, leave policies, and overtime rules.
📌 Mandatory Labour Law Returns
- PF & ESI Filings: Monthly
- Labour Welfare Fund Filings: Annual/bi-annual (varies by state)
- Bonus & Gratuity Filings: Annual
📌 Contract Labour & Outsourcing Compliance
- If hiring contract employees, ensure registration under The Contract Labour (Regulation & Abolition) Act, 1970.
7. Workplace Safety & Health Compliance
Maintaining workplace safety is a legal requirement under Indian labour laws.
Checklist for Workplace Safety
📌 Health & Safety Regulations
- Companies with 10+ employees must comply with the Occupational Safety, Health & Working Conditions Code, 2020.
- Provide fire safety training, first aid, and emergency protocols.
📌 Workplace Ergonomics & Hygiene
- Ensure a clean and hygienic work environment.
- Provide safe drinking water, clean restrooms, and proper ventilation.
Conclusion
HR compliance is essential to avoid legal penalties, employee disputes, and operational disruptions. By following this comprehensive HR compliance checklist, HR managers can:
✅ Ensure legal adherence to Indian labour laws
✅ Protect employees’ rights & benefits
✅ Prevent payroll errors & lawsuits
✅ Improve workplace ethics & safety
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References
- Ministry of Labour & Employment: https://labour.gov.in
- Employees’ Provident Fund Organisation: https://www.epfindia.gov.in
- Shops & Establishments Act (State-wise Rules): https://clc.gov.in