Impact of Pre Closure of Attendance on Statutory Compliance and Labor Laws Adherence - CiteHR

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Dear Patrons,

Greetings from Connect One Dynamic Synergies Private Limited. We hereby share if we Pre Closure of Attendance by Employers what would be the impact on Statutory Compliance:

- Many private establishments in India resort to pre-closure of their employees' attendance cycle to ease their regular monthly salary process.

- Under this practice, if an employee's attendance cycle is decided from the 20th day of the previous calendar month to the 19th day of the current calendar month, employees joining an organization after the 19th day of the current month would get paid during the current month itself by processing supplementary payroll, which is in line with statutory compliance.

- If they are paid only in the subsequent month, it shall be considered a violation of Sec 5 of the Payment of Wages Act, 1936.

- While all eligible employees are statutorily to be extended with social security coverage under the Employees Provident Fund & Miscellaneous Provisions Act, 1952, and Employees State Insurance Act, 1948, they ought to be registered with the respective department from their original date of joining and generate UNIVERSAL ACCOUNT NUMBER (UAN) under EPFO and INSURED PERSON NUMBER (IP No) under ESIC.

- But, in case if these employees' wages were not processed during the current calendar month despite having been employed, there could be a mismatch between the MUSTER ROLL and WAGE REGISTER, which shall be considered as STATUTORY NON COMPLIANCE.

- Additionally, no contribution (both employer and employee share) could be deposited in respect of such registered employees either under EPF & MP Act, 1952, or under ESI Act, 1948, or under both these Acts as their salary for the current month was not processed during the current calendar month itself, which shall also be considered as NON-COMPLIANCE.

- Hence, under both these Acts, the employer shall be statutorily liable for the consequences.

- While Sec 5 of the Payment of Wages Act, 1936, mandates payment of wages to employees either within the 7th day of the succeeding month in case of establishments with less than 1000 employees or within the 10th day of the succeeding month in case of establishments with more than 1000 employees.

- It is suggested that supplementary payroll be processed during the current calendar month itself in respect of such employees and remain statutorily compliant under all applicable labor legislations of the country.

- Further, both the social security legislations EPF & ESI also mandate appropriate compliance and remittance of contribution monthly (calendar month), effective from the original date of joining of an employee in an establishment. With the aforesaid suggestion, this mandate also could be met in fulfilling statutory obligations by an employer.

Thanks and Regards,
Connect One Compliance Team
**Location**: Bengaluru, India
statutory compliance, payment of wages act, wages act, employees state insurance act, esi act, Country-India, City-India-Bengaluru

From India, Bengaluru
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Impact of Pre Closure of Attendance on Statutory Compliance

⚠️ Violation of Labor Laws:
- Pre-closure of attendance leading to delayed payment of wages can result in non-compliance with the Payment of Wages Act, 1936, specifically Section 5 which mandates timely payment.

⚖️ Statutory Non-Compliance:
- Failure to process wages within the current calendar month can lead to discrepancies between muster roll and wage register, constituting statutory non-compliance under various labor laws.

💼 Social Security Coverage:
- Employees must be registered for social security benefits under EPF & ESI Acts from their date of joining. Delayed payment may hinder contributions and compliance with these Acts.

📅 Timely Processing:
- To ensure compliance, it is recommended to process supplementary payroll within the current month for employees joining after the attendance cycle closure.

💰 Contribution Remittance:
- Non-processing of wages in the same month may lead to non-deposit of EPF and ESI contributions, further exacerbating non-compliance issues.

🔍 Employer Liability:
- Employers are legally bound to adhere to labor laws and ensure timely processing of wages and contributions to avoid penalties and legal consequences.

📝 Action Steps:
1. Review and adjust attendance closure dates to align with statutory requirements.
2. Process supplementary payroll promptly for new joiners to meet compliance standards.
3. Regularly reconcile muster roll and wage register to avoid discrepancies.
4. Ensure timely remittance of EPF and ESI contributions for all eligible employees.

By addressing these aspects, employers can maintain statutory compliance and uphold labor regulations effectively.

From India, Gurugram
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