Regulatory Compliance Queries for a CA Partnership LLP Firm in Mumbai: Applicability of Provident Fund, ESIC, and Maternity Benefit Act

We are a CA Partnership LLP firm based in Mumbai, employing 50 individuals. We are seeking clarification on whether we fall under the purview of the Mumbai/Maharashtra Shop and Establishment Act. Could you help us understand if the Provident Fund (PF) is applicable to us and under which specific law? Similarly, we would like to know if the Employee's State Insurance Corporation (ESIC) applies to us and under what legislation. Also, does the Maternity Benefit Act apply to us, and if so, for how many days and under which specific law? Are there any other laws that we should be aware of?

As a CA Partnership LLP firm based in Mumbai with 50 employees, you are indeed subject to certain labour laws.

1. The Mumbai/Maharashtra Shops and Establishment Act applies to all establishments, including yours, that operate within the state of Maharashtra.

2. The Provident Fund (PF) is applicable to your firm under the Employees' Provident Fund and Miscellaneous Provisions Act, 1952. This law applies to any firm employing 20 or more individuals. As you have 50 employees, you fall under this act.

3. The Employee's State Insurance Corporation (ESIC) is applicable to your firm under the Employees' State Insurance Act, 1948. This act applies to non-seasonal factories employing 10 or more persons. While your firm is not a factory, the act has been extended to cover shops, hotels, restaurants, cinemas, and road motor transport establishments employing 20 or more persons.

4. The Maternity Benefit Act, 1961 applies to your firm. This act applies to all establishments employing 10 or more persons. Under this act, a woman is entitled to a maximum of 26 weeks of maternity benefit (leave).

5. Other laws that might apply to your firm include the Payment of Gratuity Act, 1972 (applicable to establishments with 10 or more employees), the Payment of Bonus Act, 1965 (applicable to establishments with 20 or more employees), and the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (applicable to all establishments).

Please consult with a legal professional or a labour law consultant to ensure your firm is in compliance with all relevant laws and regulations.

Since Chartered Accountants and Auditors constitute a 'learned' or 'liberal profession' which will not come under the definition of 'industry' as given in section 2(j) of the Industrial Disputes Act, the coverage of the labour laws needs to be checked with reference to each Act. A firm of Chartered Accountants with few Articles Clerks shall not be covered under ESI Act and EPF Act. In Deloitte Haskins & Sells Vs Regional Director, ESI Corporation, the Gujarat High Court has said that chartered accountancy firm cannot be considered a shop or commercial establishment but is rather a professional establishment and its employees are thus not covered under ESI. The court observed that the person who renders professional services like Advocates and Chartered Accountants are governed and regulated by the special Acts, ie, Advocates Act and Chartered Accountants Act. The Court has also observed that services to be rendered by the Chartered Accountants includes services to be provided at the places of the client. Thus, the activity of the Chartered Accountant is not confined to the office premises only. The firm of the Chartered Accountant, therefore, cannot be covered in definition of “shop” or commercial establishment so as to attract the provisions of the Act.

Similar verdicts on applicability of EPF & MP Act also show that CA firm as it is not covered under the Act. If a CA firm is not a shop (or even an industry) then how can it be covered by labour laws like Maternity Benefits Act or Payment of Gratuity Act? Of course, PoSH Act is not necessarily confined to industry or factory or shop but it has a wider scope and therefore, the PoSH will be applicable to a CA firm also.

However, if the CA firm employs 20 or more employees (not articled clerks who are considered as Apprentices undergoing mandatory training as part of their curriculum) the EPF will be applicable to it. In the case of big audit firms, you can find employee employer relationship between the employees and the Company. They employ persons to assist or do the work of other companies. The persons employed will not be working as independent chartered accountants but as employees only. In the case of a small CA firm, there will be a group of Chartered Accountants who work independently and jointly without any commitment of servant to master. But if that CAs employ some assistants (not Articled Clerks) by offering salary, they will be counted for applicability. This will be a counter for the judgement of Gujarat High Court in the Deloitte case, I believe. In Deloitte, there are a huge number of persons who have master servant relationship and who get salary. The PF and other labour laws are also available to them also. Then why this controversy...?

As a CA Partnership LLP firm based in Mumbai with 50 employees, you do fall under the scope of the Maharashtra Shop & Establishment Act. This Act regulates the working conditions, hours, and welfare of employees in shops and establishments in Maharashtra.

PF applies to your firm under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. Since you have 50 employees, you are required to register with the PF authorities and contribute to the PF fund for your employees

ESIC is applicable to your firm under the Employees' State Insurance Act, 1948. Since you have 50 employees and your firm is located in Mumbai, you are required to register with the ESIC authorities and contribute to the ESIC fund for your employees

The Maternity Benefit Act applies to your firm under the Maternity Benefit Act, 1961. As per this Act, eligible female employees are entitled to maternity benefits for 26 weeks (previously 12 weeks, but amended in 2017 to 26 weeks).


Besides you are bound to comply with the following Acts
1. Payment of Gratuity Act, 1972: Applicable since you have 10 or more employees.
2. Payment of Bonus Act, 1965: Applicable since you have 20 or more employees.
3. Industrial Disputes Act, 1947: Applicable since you have 50 or more employees.
4. Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013: Applicable to all employers.
5. Professional Tax: Applicable as you are based in Maharashtra..