Nonprofit Compliance Confusion: Are PF, ESI, and Gratuity Required for 150+ Staff?

Can someone guide me on the statutory compliances mandatory for a nonprofit set up with a staff strength of 150+ employees? Are PF, ESI, and Gratuity norms mandatory for a nonprofit organization?

Dear Mayuri, please go through the definitions of the term "industry" under section 2(j) of the IDA, 1947, and under section 2(l) of the Code on Industrial Relations, 2020.

Other than statutory bonus, a non-profit organization run to satisfy any human needs or wants has to comply with all the labor laws applicable to it.

Ensuring Compliance for Payroll and Labor Laws

You are paying 150+ staff and maintaining records like salary registers, social security contributions, professional tax statements, etc., and each of these activities is regulated by various legislations, right? Please ensure that your organization fulfills all payroll and applicable labor statutory compliance. In case compliance is not taken care of properly, get the assistance of an expert immediately and fix it. Also, make sure that somebody within the organization understands and monitors the compliance procedures, even though it is outsourced.

Applicability of Labor Laws for Nonprofits

Mayuri, whether labor laws would be applicable and which of them would be applicable depends upon various factors like the type of your organization, i.e., whether it is a society or any other body, whether any exemptions are issued by the Income Tax Department or any other governmental agency, the number of employees employed, and the funding of your organization, i.e., whether it receives grants, etc. A detailed opinion can only be given after you clarify these aspects.

Regards, S. K. Mittal

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