Compliance

Most discussions of compliance list statutes. That is the less useful half. Almost every obligation in Indian employment law attaches at a threshold, so the operative question is not what the law says but whether it applies to you today.

The pattern to notice is that the numbers differ, and an organisation crossing one threshold has not necessarily crossed the others. Growing from eighteen to twenty-two people changes some obligations and not others.

Several thresholds are not about today's headcount.

Section 28 of the Industrial Relations Code applies the standing orders Chapter where three hundred or more workers are employed, or were employed on any day of the preceding twelve months. Section 41(2) of the Code on Wages applies the bonus Chapter to an establishment employing twenty or more persons, or which employed that many on any day during the accounting year.

So an establishment that hired seasonal staff for two weeks, or briefly exceeded a threshold during a project, is in scope for the following period even though its current headcount is below it.

This is the single most common way organisations are out of compliance without knowing. Headcount is checked, found to be below a number, and the obligation is treated as inapplicable, when the test was never about the current figure.

The practical control is to check thresholds against peak headcount over the relevant look-back period rather than against the number on the day someone asks.

The four labour Codes consolidated a great deal of central legislation, and a common misreading is that they replaced everything.

They did not. Section 143 of the Occupational Safety, Health and Working Conditions Code, 2020 repeals thirteen central enactments, and the Code does not mention shops and commercial establishments anywhere. State shops and establishments enactments are therefore not repealed or displaced by it, and they continue to govern many establishments on hours, leave, rest and registers.

For a multi-state employer this is the awkward part of compliance. The central position is uniform and the state position is not, so leave entitlements, working hours and register formats can differ between locations of the same organisation.

Running one national policy set at the most generous applicable standard is usually cheaper than maintaining several, though it is a commercial decision rather than a compliance requirement.

Organisations tend to worry about the substantive obligations and are more often caught on the administrative ones.

• Registers, which section 50 of the Code on Wages requires: a register of persons employed, muster roll, wages and other prescribed details.
• The notice on the notice board, which section 50(2) requires to carry an abstract of the Code, category-wise wage rates, the wage period, the day and time of payment and the Inspector-cum-Facilitator's details.
• Wage slips, required under section 50(3).
• Returns and filings under the applicable enactments and their rules.
• Registration of the establishment where required, such as under section 3 of the OSH Code for establishments to which it applies.

These are unglamorous, cheap to comply with, and produce findings immediately because they are documentary. An organisation that has its substantive practices right and no registers is more exposed on inspection than one with the reverse.

Section 50(4) exempts an employer of not more than five persons for agriculture or domestic purpose from those three duties, subject to producing reasonable proof of payment on demand.

Compliance is rarely lost by decision. It is lost by growth and by turnover of the people who knew.

• Headcount crosses a threshold and nobody rechecks, because the obligation was assessed once at incorporation.
• A new location opens in a state with different requirements and inherits the head office policy set.
• Contract labour arrives through a vendor and the principal employer obligations are not considered.
• The person who understood the filings leaves and the calendar leaves with them.
• A statute is replaced and the internal documentation continues to cite the repealed one, which is how a policy becomes confidently wrong.

The last is worth naming because it has happened at scale recently. The labour Codes and the new tax legislation replaced enactments that a great deal of Indian HR material still cites, and a policy citing a repealed Act is not merely dated: it is describing rules that no longer exist.

The control that works is a periodic recheck of thresholds, locations and citations, on a schedule rather than on a prompt from an inspection.