Most companies don't break labour law on purpose. They break it because nobody ever sat down and made a labour law compliance checklist. The registration that was due within thirty days of opening, the register that should have been maintained from day one, the committee that becomes mandatory at ten employees, none of these announce themselves. They just quietly become overdue, and you find out during an inspection or when an employee raises a claim.
This is that list. What an Indian business has to do under labour law, roughly in the order it becomes your problem, with the thresholds that trigger each item and the dates that matter. It's written for a founder or an HR person who has to actually get this done, not for a lawyer.
One thing up front. Labour law in India is split between the centre and the states, so a fair amount of this depends on where your people sit. We've flagged those bits rather than give you a single national answer that would be wrong for half the country. If you want the software side of this, our HR compliance software guide covers what a system should handle for you.
This is general guidance for Indian employers, current as at the date above. It isn't legal advice, and state rules under the labour codes are still being notified through 2026, so confirm anything state-specific with your advisor before you act on it.
What Counts as Labour Law Compliance
Labour law compliance is everything the law requires of you as an employer, separate from whether you're paying people correctly. Payroll compliance, PF and ESI and TDS, is one part of it. But the wider set covers how you registered the business, how many hours you can ask people to work, what leave they're owed, what records you keep, what committees you form, and what returns you file.
There are four kinds of obligation in here, and they behave differently enough to be worth separating.
There are one-time registrations, done when you start or when you cross a threshold. There are recurring payments and filings, mostly monthly, some quarterly, some annual. There are standing conditions, things that must simply be true at all times, like having a POSH committee or displaying certain notices. And there are records, the registers and documents you have to be able to produce on demand.
Most businesses handle the first two reasonably well because money moves and someone notices. The last two are where the gaps are, because nothing breaks when you skip them until someone asks.
The Registrations You Do Once
These come first, and several of them have deadlines counted from the day you started operating, not from the day you got around to it.
Shops and Establishments registration. This is state law, and it's the base registration for most offices, shops and commercial establishments. Timelines vary, but most states expect it within 30 days of starting operations. Karnataka, Maharashtra, Delhi and the rest each run their own portal, their own fee, their own renewal cycle. If you have offices in three states, you need three registrations.
Factories Act licence, if you're a factory. Applies if you're manufacturing with power and 10 or more workers, or without power and 20 or more. This one brings a much heavier compliance load, safety officers, canteens, welfare officers at scale, so know early whether you're in it.
EPF registration. Mandatory once you have 20 employees. You can register voluntarily before that, and many companies do because employees expect it.
ESI registration. Mandatory at 10 employees in most states, 20 in a few. Register within 15 days of becoming applicable. The scheme is now notified in 668 districts across every state and union territory, 565 of them fully, so whether your area is covered is much less often the question it used to be.
Professional tax registration. State-specific again. You typically need two things, an enrolment certificate for the business itself and a registration certificate to deduct from employees' salaries.
Contract Labour registration. If you engage 20 or more contract workers through a contractor, you register as the principal employer and the contractor takes a licence. This one gets missed constantly by companies who think housekeeping and security staff aren't their problem. As principal employer, they partly are.
None of these are triggered by revenue, or by how established the company feels. They're triggered by headcount and by state, which is why they tend to arrive earlier than founders expect.
The Headcount Thresholds That Trigger Everything
Compliance in India is mostly a function of how many people you employ, so these are the numbers to keep somewhere visible.
| Headcount | What becomes applicable |
|---|---|
| 1 employee | Minimum wages, timely payment of wages, TDS on salary where applicable, professional tax in states that levy it, and basic employment records |
| 10 employees | ESI in most states. A POSH Internal Committee. Gratuity under the Payment of Gratuity Act, though nobody qualifies until five years of service. Maternity Benefit Act obligations |
| 20 employees | EPF. The Payment of Bonus Act. Contract Labour registration, if 20 or more of the people on site are contract workers |
| 50 employees | Creche facility under the Maternity Benefit (Amendment) Act, 2017. Widely ignored, and shouldn't be |
| 100 and above | Standing orders for industrial establishments, stricter rules around layoff and closure, and further obligations under state rules |
The 10-employee line is the one to watch, because three separate obligations land on it at once and only one of them (ESI) involves money leaving your account, which is why the other two get missed. Gratuity is a liability you should be tracking from that day even though no employee can claim it for another five years.
Two things about the counting. Once you cross a threshold, most of these apply permanently, even if your headcount drops back later. And the count usually includes contract and temporary staff, not only the people on your payroll, which is where companies quietly undercount themselves into non-compliance.
The Monthly Checklist
This is the part that runs every month, forever. Dates below are the standard ones, but check your state for professional tax. If you want the failure modes rather than the calendar, our piece on common payroll compliance mistakes covers what actually goes wrong at each of these steps.
| Due | What you have to do |
|---|---|
| By the 7th | Pay wages for the previous month to monthly-paid employees. The Code on Wages sets separate timelines for weekly and daily wages |
| By the 7th | Deposit TDS deducted on salaries for the previous month |
| By the 15th | Deposit PF contributions and upload the ECR file on the EPFO portal |
| By the 15th | Deposit ESI contributions for the previous month |
| Varies by state | Professional tax. Karnataka is monthly by the 20th, Maharashtra runs monthly or annually depending on your liability, and other states differ again |
Late salary is worth calling out separately, because most companies file it under HR problems rather than compliance ones. Under the Code on Wages it is a statutory deadline like any other, and a pattern of paying on the 12th is a pattern of missing it.
Also monthly, though not a payment: keeping your registers current. A wage register updated once a year in a panic is not a maintained register.
The Quarterly and Annual Checklist
Quarterly. File Form 24Q, the TDS return for salaries, by the 31st of the month following each quarter, with the fourth quarter's due at the end of May. Getting this wrong shows up later in employees' Form 26AS, which means they find out before you do.
Annually, and these are the ones to actually put in a calendar. Issue Form 16 to every employee by 15 June for the previous financial year. File the POSH annual report with the district officer, covering complaints received and disposed, whether or not you had any. Since 14 July 2025 there is a second POSH obligation sitting on top of that one, and a lot of companies have not caught up with it yet. The Companies (Accounts) Second Amendment Rules, 2025, notified on 30 May 2025, require every company registered under the Companies Act to put three specific numbers in its Board's Report: complaints of sexual harassment received during the year, complaints disposed of, and cases pending for more than 90 days. The same amendment requires a statement confirming compliance with the Maternity Benefit Act, 1961. Rule 8 previously asked only for a general statement that you had complied with POSH, so this is a real change in what you have to be able to count. Pay bonus under the Payment of Bonus Act within eight months of the close of the financial year, so by 30 November for a March year-end. File your annual returns under Shops and Establishments and other applicable state laws, several of which are now consolidated on the Shram Suvidha portal.
Labour Welfare Fund. State-specific and usually half-yearly or annual. Small amounts, easy to forget, and still a default when missed.
Renewals. Shops and Establishments registrations, factory licences and contract labour licences all have renewal cycles. Diary them the week you receive them, because nobody sends a reminder.
Wages, Hours and Leave: The Rules People Get Wrong
Minimum wages. Set by state, and they vary by skill category, sometimes by zone or district within the state. They're revised regularly, usually twice a year through the variable dearness allowance. Paying above minimum wage last year does not mean you're above it now. This is one of the most common findings in inspections, and it's entirely avoidable.
Working hours and overtime. The general position is 8 to 9 hours a day and 48 hours a week, with a weekly off, and overtime payable at twice the ordinary rate of wages. Overtime is not optional and not something you can contract out of for covered employees. Companies with shift operations should be especially careful here.
Leave. Earned leave entitlement is set by state Shops and Establishments rules or the Factories Act, commonly around one day for every 20 days worked, plus casual and sick leave under state rules. National and festival holidays are also state-notified. Your leave policy can be more generous than the statute. It cannot be less.
Maternity benefit. 26 weeks of paid leave for the first two children and 12 weeks thereafter, applicable to establishments with 10 or more employees. Work-from-home is permitted where the nature of work allows and both sides agree.
Full and final settlement. Under the Code on Wages, dues are to be settled within two working days where employment ends by removal, dismissal, retrenchment or resignation. Most companies still run 30 to 45 day cycles here, which sits well outside what the code allows.
Registers and Records You Have to Maintain
This is the quiet half of labour law compliance and the half that gets rebuilt frantically the week an inspector visits.
At minimum you should be maintaining a register of employees, a wage register showing what was earned and what was deducted, an attendance or muster roll, a leave register, and a register of any fines or deductions. Under the older Acts each one had its own prescribed format; the labour codes and recent central rules have moved towards consolidated registers, which is a genuine simplification once your state notifies its rules.
Beyond registers, keep the documents that prove you did what you claim. PF and ESI challans, TDS challans and returns, wage slips issued to employees, appointment letters, and your POSH committee constitution order and annual reports.
Electronic maintenance is permitted in most cases now, so none of this has to mean physical ledgers. Retention periods, though, run for years, typically three to eight depending on the record. That means these files need to survive both a change of HR person and a change of software, which is a harder test than it sounds.
The Four Labour Codes, and What They Change
India consolidated 29 older labour laws into four codes, on wages, on social security, on industrial relations, and on occupational safety, health and working conditions. These came into force at the centre in late 2025, with states still finalising their own rules through 2026. The state-level detail is still settling, but the framework is already the one you're operating under, so this has stopped being a change to keep an eye on for later.
The change with the widest reach is the definition of wages. The codes set a floor where basic pay plus dearness allowance must be at least 50% of total remuneration, and anything in excess of that gets pulled back into wages for statutory purposes. For companies that kept basic pay low and allowances high, that means basic goes up, and PF, gratuity and bonus calculations go up with it. Your cost per employee moves, and so do the numbers you file. If you're re-cutting salary structures because of this, our guide to employee salary structure in India works through how the components fit together. The codes themselves are published on the Ministry of Labour and Employment site.
Other things worth knowing. Gratuity eligibility for fixed-term employees drops to one year of service rather than five. Appointment letters become mandatory for all employees, which sounds obvious until you check whether every one of your workers actually has one. Registers and returns move towards a single consolidated set. And several thresholds and definitions shift, which is why the numbers in section three should be re-checked against your state's notified rules rather than treated as settled forever.
Tracking the notification dates yourself is a losing game, and most companies who try give up by the second quarter. Either your payroll vendor watches for them or your consultant does. If neither is, you will find out late.
Where Businesses Slip Up
Counting only payroll employees. Thresholds usually count everyone working at your establishment, including contract, temporary and probationary staff. A company with 8 employees and 5 housekeeping contractors is past 10, and ESI and POSH applicability follow.
Treating multi-state as one state. Professional tax, labour welfare fund, minimum wages, leave rules, holiday lists and Shops and Establishments registration are all state-level. Three states means three sets of rules running at once, not one policy with footnotes.
Skipping POSH because there have been no complaints. The Internal Committee, the policy, the employee awareness and the annual report are all required regardless. The annual report is due even in a year with zero complaints, and a missing committee is a penalty in itself: up to ₹50,000 under Section 26 of the Act, with repeat non-compliance putting your business licence and registrations at risk. Since July 2025 the numbers also have to appear in your Board's Report, which means a company that has never constituted a committee now has to say so in a document its auditors read.
Letting registers go stale. Reconstructing a year of wage registers in three days before an inspection is both painful and obvious to the person reading them. Maintained means maintained as you go.
Forgetting the contractor's compliance is partly yours. As principal employer, you're liable if your contractor doesn't pay wages or doesn't deposit PF and ESI for their workers. Collect their challans monthly. Don't take their word for it.
Assuming small means exempt. Minimum wages, wage payment timelines, and basic record-keeping apply from your first employee. There's no grace period for being new, which is why smaller companies often carry more unmanaged risk per employee than large ones do.
Questions People Ask
Which labour laws apply to a small company with under 10 employees?
More than most founders expect. Minimum wages, timely payment of wages, professional tax where the state levies it, TDS on salary, basic employment records, and your state's Shops and Establishments registration all apply well before you reach 10. What you escape below 10 is mainly ESI, the POSH committee requirement and gratuity applicability.
Do these rules apply to remote employees in other states?
Generally yes, and this catches people out. Professional tax and, in many cases, Shops and Establishments obligations follow where the employee works, not where your head office is. If you've hired remotely across five states, check each one rather than defaulting to your registered office's rules.
Are we liable for contract workers we didn't hire directly?
Partly. As principal employer under the Contract Labour Act you're responsible for ensuring wages are paid and statutory dues deposited if the contractor fails to do it. Registration is required at 20 or more contract workers, and you should be collecting proof of the contractor's PF and ESI payments every month.
What actually happens in a labour inspection?
An inspector asks for your registrations, your registers, your wage records, your PF and ESI challans, and evidence of the standing requirements like the POSH committee and notice displays. Most adverse findings come from missing records rather than deliberate underpayment, which is a reassuring thing to know because records are the easiest part to fix in advance.
What changed for POSH reporting in 2025?
Two things now run in parallel. The POSH annual report to the district officer continues as before, required at 10 or more employees whether or not you had complaints. On top of that, the Companies (Accounts) Second Amendment Rules, 2025, effective 14 July 2025, require companies registered under the Companies Act to disclose in the Board's Report how many sexual harassment complaints were received, how many were disposed of, and how many cases have been pending beyond 90 days, plus a statement confirming compliance with the Maternity Benefit Act. The practical effect is that POSH numbers are now audited rather than filed and forgotten.
How often does this checklist need revisiting?
At least annually, and whenever you cross a headcount threshold, open in a new state, or the labour codes' state rules are notified for a state you operate in. Those three events are what change your obligations.
Where This Leaves You
Nothing on this list is hard on its own. The difficulty is that the items sit in different Acts, in different states and on different due dates, and nobody's job description says "notice when we cross ten employees."
So make it a list with owners and dates. Register what needs registering, calendar the monthly and annual filings, maintain the registers as you go rather than in a panic, and re-check the whole thing whenever your headcount or your geography changes. That's genuinely most of it. The mechanics of the payroll side sit in our Indian payroll compliance guide, and if you're choosing a system to carry any of this, the buyer's guide covers the wider decision.
If you'd rather the deductions, filings and registers came out of the same system that already runs your attendance and payroll, book a free demo and bring the states you operate in. It's a faster conversation when you can see the actual registers and filing files rather than a feature list.
