COMPLIANCE UNDER LABOUR LAWS
Presented By:
RSPH & Associates
CA Hitesh Agrawal
Baroda.
(O) 02652342932/33 (M) 9998028737
(A)
Contract Labour (Regulation
& Abolition) Act, 1970
The main objective of this act is to regulate
the contract labour and abolish it in certain
cases.
Applicability
Every industry engaging 20 or more
workers on contract basis.
Every contractor engaging 20 or more
workers.
Obtaining registration & license
Apply in form I for registration in triplicate copy
along with prescribed fees ( Rs.142/- ).
Apply in form IV for license in triplicate copy
along with license & security fees ( Rs.370/- per
worker Generally in all cases- Refundable) .
For license form V is given by Principal employer
to contractor.
Provisions for temporary
registration & license
For work of immediate nature Principal
employer/ Contractor can apply for
temporary registration/ license which is
valid up to 15 days only.
Obligation of Principal employer
Register of contractors
Form XII
Annual return
(on or before 15th Febconsolidated return)
Notice of Commencement/
Completion
Form XXV
Form VI B
Obligation of Contractor
Renewal of license
Register of workman
Employment Card
Service Certificate
Muster Roll
Wages register
Wage slip
Form VII
Form XIII
Form XIV
Form XV
Form XVI
Form XVII
Form XIX
Contd……
Deduction for damage/loss
Register of fines
Register of advances
Register of over-time
Half yearly return
Notice of Commencement
/Completion
Form XX
Form XXI
Form XXII
Form XXIII
Form XXIV
Form VI A
Welfare Facilities
Canteen
Rest rooms
Urinals, Latrines
Drinking Facilities
First Aid Facilities
Section 16
Section 17
Section 18
Section 19
Principal employer will have to provide
these facilities if not provided by contractor.
In annual return these facilities needs to be
shown
Applicability of other Act
Persons cover under this act will be
covered under:
I) Factory Act, 1948
II) Employees’ Provident Fund &
Miscellaneous Provisions Act, 1952
III)Employees’ State Insurance Act, 1948 /
Workmen Compensation Act, 1923
Contd…….
IV)Payment of Bonus Act, 1965
V) Minimum Wages Act, 1948
VI)Payment of Wages Act, 1936
SAP System
Work order is released by concerned deptt.
in the SAP system
Commercial deptt.release
Work order in system
Concerned deptt. Create the indent
Indent is created for Labour
Supply .
Personnel deptt. marks the entry in
SAP on the basis of their counting.
Overtime of the labour is marked
by the concerned deptt.
Payment of Wages
Bills of the contractor of Labour Supply is
passed on the basis of the entry in SAP.
Payment to the contract labour is disbursed
in Contractor Yard.
Payment to the contract labour is disbursed
before the management representative
Representative stamps the register & signs
on it.
Registers which are maintained
Gate Pass register
Attendance Register of Contract Labour
Daily entry of the contractor report
Register having no. of contract Labour
(B)
The Employee's Provident
Fund Act, 1952
Nothing but Social Security to
Employees
The Employee’s Provident Fund Act 1952
The Employee’s Provident Funds Act 1952
Employer role & responsibility
Employee role & responsibility
The Employees Pension Scheme 1995
The Employees Deposit-Linked Insurance
Scheme (EDLI) 1976
List of Forms
Introduction
 Salary consists of two parts i.e. earnings &
deductions
 Provident Fund is one of the statutory deduction done
by the employer at the time of salary payment
 Provident Fund is governed by the Employee’s
Provident Fund Act 1952
….
Statutory
Contribution Rate
TOTAL PF
25.61%
EMPLOYER
12.5%
A/C 1 3.67%
A/C 21 0.5%
EMPLOYEE
12%
A/C 10 8.33%
ADM CHARG
1.11%
A/C 1 1.1%
A/C 21 .01%
Account Number……
Account Number Contribution Type
Contribution Rate
1
Employees PF
12% + 3.67%
2
EPF Admin Charges
1.1%
10
Employee’s Pension
Scheme
8.33% ( Maximum 6500/-)
21
Employee’s Deposit Linked
Insurance Scheme
0.50% ( Maximum 6500/-)
22
EDLI Admin Charges
0.01%
TOTAL…..
25.61%
Employer Role & Responsibility
Monthly Returns
Filing monthly PF returns with the EPFO within 15 days of the
close of each month
Provide list of new employees joined in the establishment during
the preceding month & are qualified to become member in fund
(Form-5)
Provide list of employees leaving service during the preceding
month (Form-10)
Employer should file 'Nil' returns if there is no new employee or
no employee leaving the service during the preceding month
Provide the total no. of members last month, new members
joined and existing members resigned in the preceding month &
total no. of present subscribers to be fund
(Form-12A)
Compliances….
Annual Returns
Employer shall send to the Commissioner
within one month of the close of the year, a
consolidated Annual Contribution Statement
(Form-6A) and individual employee sheet
(Form-3A) showing the contributions made by
the employees and employer during the year
( PF Year is March to Feb)
Employee Role & Responsibility
Provide details of self & nominees (Form-2) for PF &
Pension Scheme at the time of joining the
establishment
In case of already having PF A/c, apply for transfer of
previous A/c to the present A/c
If willing to increase contribution, inform the same to
the employer to deduct the amount from the salary
(Voluntary Provident Fund).
Voluntary PF can be upto 100% of wages
Understand that the employer is not liable to pay any
contribution on voluntary PF
Employees Pension Scheme 1995
Introduction
 To give long term protection / financial security to employee upon
retirement and his family in case of his pre-mature death, family
pension scheme has come into force by diverting 8.33% contribution
made by employer towards PF scheme
Application
 Scheme is compulsory for all the existing members who become
members of the Employees Provident Fund Scheme
Eligible
 Monthly pension to employees on retirement
 Widows on death of the member
 Children of the member below 25 years age
 Monthly pension to members upon permanent total disablement during
service
The Employees Deposit-Linked Insurance Scheme 1976
(EDLI)
Application
EDLI scheme is compulsory for all the existing members who
become members of the PF Scheme
Life insurance benefit (death coverage) of the employee is
available under this scheme while in service
Calculation
EDLI is calculated on EDLI slab – Rs. 6500/0.50% EDLI calculated on total EDLI slab (Rs. 6500) wages and
transferred to EDLI fund
0.01% EDLI Administration charges calculated on total EDLI
wages
EDLI / administration charges are payable by the employer
The Employees Deposit-Linked Insurance Scheme 1976
(EDLI)
Eligible
Person who is eligible to receive PF dues of
deceased member who died while in service is only
eligible to receive EDLI fund
Exemption
Employer can seek exemption from the Scheme if
similar / better benefits are provided other than the
Scheme with the consent of majority of employees
List of Forms
Forms For Claiming Benefits Under PF Scheme
Form
Purpose
13
For transferring the PF A/c of a member from one establishment
(revised) to another establishment covered under the Act / Scheme
14
Application for financing a life insurance policy out of PF A/c
19
To be submitted by a member to withdraw his PF dues on leaving
service / retirement / termination
20
In the event of death of member, this form is to be used by a
nominee / family member to claim the member's PF
accumulation
31
For the use of PF members to avail advances / withdrawals as
provided in the scheme
26
List of Forms
Forms For Claiming Benefits Under Pension Scheme
Form
Purpose
10 C
To be submitted by a member to withdraw his EPS fund
10 D
To be submitted by the first claimant i.e.
- member
- widow / widower
- Orphan
- nominee
27
List of Forms
Forms For Claiming Benefits Under EDLI Scheme
Form
Purpose
5 (I.F.)
To be submitted by the person eligible to receive the PF A/c
dues of the deceased member who died while in services
28
Summary
Form
Purpose
2
Nomination Form
5
Return of Employees qualifying for membership to the Employees' Provident Fund for
the first time during every month. Within 15 Days of the following month.
10
Return of members leaving service during the month.
12A
Consolidated Statement of dues and remittance By 25th of the following month to which the
dues relate.
3A
Member's annual Contribution card
6A
Consolidated annual contribution statement
29
Month wise Statutory Deposits & Returns
January
•Before 15th P.F., P.F. Challan
•Before 25th P.F Form 5, 10 & 12A(P.F)
•Monthly statutory register daily/end of the month
(Monthly statutory register should be maintained)
February
•Same as January month
March
•Before 15th P.F., P.F. Challan
•Before 25th P.F Form 5, 10 & 12A(P.F)
•P.F, P.F. Annual Returns form 6A & 3A
30
Accounting of PF Contribution
Suppose total gross salary payable for the month of
January 2010 is Rs. 3,00,000
Out of above, basic salary which is eligible for Provident
Fund contribution is Rs. 2,00,000
Hence, the Employee Provident Fund contribution will be
calculated @12% of basic salary i.e. Rs. 24,000.00
Net salary payable to Employee is Rs. 3,00,000 –
Rs.24,000 = Rs. 2,76,000.00
The entry for above transaction will be made accordingly
Employee’s PF share Entry
Staff salary Expenses Dr. Rs. 3,00,000
(This is the cost which the company has to bear )
Staff Salary payable Account Cr.2,76,000
Employee’s PF payable
Cr. 24,000
(it is your liability to pay to govt.)
Employer’s Share of Contri…
Now, make one another entry for employer’s contributions
for the above salary
An employer is also required to pay a sum @12% from the
basic salary before the same is disbursed to employee.
Apart of this, Employer is also require to pay @1.61% (of
basic pay )additional amount as per below
@1.10% towards PF administration fees
@0.50% towards Employees Deposit linked insurance
scheme
@0.1% towards EDLI administration charges
Journal Entry
Dr. Employer PF Contribution Rs.24,000
Dr. PF administration Fees Rs. 2200
Dr. Employee EDLI Rs. 1,000
Cr. Employer’s PF payable Rs. 27,200
Now total PF payable will be Rs. 24,000+
Rs. 27,200 =Rs, 51,200 which you should
pay to PF department through its challan
(C )
Employees’ State Insurance Corporation
Employees - Benefits
Under ESI Scheme, the comprehensive and need based
package of Social Security Benefits in Cash and kind
include the following:
1) Medical Benefit
2) Sickness Benefit
3) Maternity Benefit
4) Disablement Benefit
5) Dependent Benefit
6) Funeral Benefit ( Upto Rs.10000/-)
ESIC Rates……
TOTAL ESIC 6.50%
EMPLOYER 4.75%
EMPLOYEE 1.75%
Employers - Obligations (ESIC)
Get ESIC code with In 15 days from the date on which
establishment is covered under ESIC ( 15000)
Obtain Insurance Number for Employee
Pay ESI contributions (Employers' share @ 4.75% of the
wages and the employees' share @ 1.75% of the wages)
within 21 days of the month following, in which the wages
fall due.
Maintain an 'Accident Book' as prescribed under the
Factory Act/ESI Act
Submit Accident Report within 24 hrs from the date of
event
Furnish annual information on continued coveragae of
factory/establishment by submitting a return in Form no.
01A on or before 31st January every year
Employers - Record Maintanance
Register of Employees in Form -6 (under Regulation 32)
Accident Book in Form - 11 (under Regulation 66)
Inspection Book (under Regulation 102A)
File for copies of return of declaration forms
File for copies of Return of Contribution, Challans, etc.
File for general correspondence with the Regional Office
regarding coverage, inspection etc. and other important
circulars.
File for copies of Accident Reports and correspondence in
connection herewith.
ESIC Accounting Heads…..
ESIC Accounting Heads…..
MINIMUM WAGES ACT,1948
Section 4 of the Act mentions that Minimum wages are based on basic
wages and cost of living index. The yardsticks on which minimum
wage is revised are:
(a) Three consumption units per earner, (b) Minimum food
requirement of 2700 calories per average Indian adult, ( c ) Cloth
requirement of 72 yards per annum per family, (d) Rent corresponding
to the minimum area provided under the Government's Industrial
Housing Scheme (e) Fuel, lighting and other miscellaneous items of
expenditure to constitute 20 % of the total Minimum Wages (f)
Children education, medical requirement, minimum recreation
including festivals/ceremonies and provision for old age, marriage etc.
should further constitute 25% of the total Minimum Wage.
MINIMUM WAGES ACT,1948
Minimum Wages rates in Gujarat at
present…….Annexure 1
Kerala State Govt. has declared Minimum
Wages for CA office also ….. Annexure 2
The Maternity Benefit Act, 1961
Applicability to every factory or establishment in which 10 or
more persons are or were employed on any day of the preceding
twelve months.
Eligibility for Maternity Benefit: Has to work for 80 days in the
preceding 12 months immediately preceding the date of her
expected delivery.
Eligible for 12 weeks maternity benefit of which not more than six
weeks shall precede the date of her expected delivery.
Maternity benefit is paid at the rate of the average daily wage for
the period of her actual absence. The average daily wage means
the average of the woman’s wages payable to her for the days on
which she has worked during the period of three calendar months
immediately preceding the date from which she absents herself.
The Maternity Benefit Act, 1961
Where a woman has delivered a child and dies during her delivery
or during the period immediately following the date of her delivery
for which she is entitled for the maternity benefit, leaving behind
in either case the child, the employer shall be liable for the
maternity benefit for that entire period but if the child also dies
during the said period, then for the days upto and including the
date of the death of the Child.
6 weeks leave with wages for tubectomy and two weks immediately
following the day of an tubectomy.
Nursing breaks – Two times in the course of daily work till the
child attains 15 months.
Prohibition from dismissal for absence during pregnancy.
However, for Misconducts, forfeiting of Maternity Benefit and
Medical bonus permissible.
PROFESSIONAL TAX…..
Employer carrying out any business/Profession
No limit on No. of Employees (Even employer
employing only 1 employee then also he is liable)
Due date of payment is 15th of Next Month for
Employee’s share
Due date of payment for Employer’s share is 30th
September ( For F.Y.2011-12 due date was
30/09/2011)
Salary Register ,Salary Slip, Appointment Letter
to be maintained
Rates on which PT is deductible:Sr.No.
Salary Slab
PT Rate
1
0-2999
Nil
2
3000-5999
20
3
6000-8999
80
4
9000-11999
150
5
12000 & Above
200
Employer’s Share of PT…
Sr.No.
Type of Person
Rate (Rs.)
1
Registered under VAT & T.O. < 250000
0
2
Registered under VAT & T.O. > 250000 < 500000
500
3
Registered under VAT & T.O. > 500000 < 1000000
1250
4
Registered under VAT & T.O. > 1000000
2400
5
All other Professionals/Businessman
2000
Annual Return under Labour Acts……
The Payment of Wages Act, 1936 and Gujarat Payment of Wages rules 1963
(ii) The Minimum Wages Act, 1948 and Gujarat rule 21(4) 1961, there
under
(iii) The Contract Labour (Regulation and Abolition) Act, 1970 and Gujarat
rules 82 (1), 82 (2), 1972 there under
(iv) The Factories Act, 1948 and Gujarat Factories Rules 1963 (GFR)
(v) The Maternity Benefit Act 1961 and Gujarat Maternity Benefit Rules
1964.
(vi) The Payment of Bonus Act, 1965 and Rule 5 there under
(vii) The Payment of Gratuity Act, 1972 and Gujarat rules, 1973 there under
(viii) The Equal Remuneration Act, 1976 and Gujarat rules, 1976 there under
(ix) The Industrial Employment (Standing Orders) Act, 1946 and Gujarat
rules there under 1982
(x) The Physically Handicapped persons (Employment in Factories)
Act,1982 and Gujarat Physically Handicapped Persons (Employment in
Factories) Rules, 1982.
(xi) The Indian Boilers Act, 1923.
Annual Return under Labour Acts……
Due date 31st January for Yearly Return
For Half yearly returns it is 31st July & 31st
January.
Consolidated return is required to be filed. (
Annexure 3)
January to December Calendar Year
-:SUMMARY OF REGSITERS & RECORDS TO BE MAINTAINED:Sr.No Act
.
1
Factories Act
Documents to be maintained
2
EPF & MP Act, 1952
3
ESI Act
4
Payment of Wages Act,1936
a.
b.
c.
d.
e.
f.
g.
a.
b.
a.
b.
c.
a.
Accident Register with Forms
Inspection Book
Muster Roll & Wage Register
Muster Roll for Exempted workers
Register of Adult Workers
Register of Compensatory holidays & Overtime
Register of Leaves with wages
Register of Contribution
Inspection book
Accident Register
Register of Contribution
Inspection Book
Register of Fines, Deduction & Advances
5
Minimum Wages Act,1948
a. Wage Slip
6
Payment of bonus Act,1965
a. Register A,B & C
7
Equal Remuneration Act,1976
a. Register in Form D
8
Contract Labour (R&A) Act,1970
a. Register in Form 13
Accountant’s Role
Maintain Records in good condition ( As there is no provision for how
many years books should be maintained)
Adhere to Statutory Due dates ( As missing payment due dates will
lead to penalty/interest on unpaid amount & will lead to chances of
disallowance under Income Tax Provisions)
Provide data to consultant well before time
Reconcile statutory deductions employee wise & total monthly salary
wise.
Get salary records audited from PF/ESIC Department once every five
years
If company has its own PF trust then get trust accounts audited with
Chartered Accountant & submit it to PF department( Rotation of CA
with every 3 years)
Accountant’s Role
Do’s if company employing Labour Contractor:a. Work Order should be issued to the Contractor (
Before issuing work order copy of all statutory
licenses like PF/ESIC should be kept on record)
b. Take Copy of Labour License before start working
with contract labour
Accountant’s Role
c. Ensure Attendance register & Salary Register with
salary slip of Contract labourer available with the
company (Minimum wages to be paid )
d. Take copies of PF/ESIC paid challans from
Contractor & preserve them for future
departmental Audit ( As a principle employer if
contractor does not pay then company will be
liable)
e. Maintain Labour License Expiry register of all
contractor working in the company to avoid legal
obligations on organization
Accountant’s Role
Do’s Before Finalization of Accounts at periodic interval:a) Salary as per Financial Statement = salary as per PF/ESIC
records
b) Match all statutory payments made with financial records
c) Ensure Year end outstanding payment is matching with
contribution paid in April
d) Ensure proper deduction of TDS of employees.
…..THANK YOU…..