Overview of Central and State Labor Laws in India
India has more than 50 central labor laws. There are CIRM (CLC) - central machinery and state labor departments to enforce labor laws. Of course, state governments' own labor laws are enforced by the state labor department. These 50 central laws are classified as follows (yes, many state governments have their own labor law rules for these 50):
- Labor laws enacted and enforced by the Central Government (ESI, PF, etc.)
- Labor laws enacted by the Central Government and enforced by both the Central as well as the State Governments
- Labor laws enacted by the Central Government and enforced by the State Governments
Each labor law specifies that the appropriate government is the implementing authority and outlines the registration/compliance procedure. Many Acts do not provide for registration or licenses, which are directive in nature. Many Acts state that the appropriate government is the state government for private establishments.
Questions for Registration & Compliance
A private establishment has its Head Office (HO) and branches in the same state as well as in other states. Assume the company maintains its books of accounts centrally, and employee payments are done at the HO level or at the local branch level.
1. Does the labor law department provide a common registration number for all labor laws? (I know LWF/Contract Labor has separate registration/license numbers, but what about the Bonus Act, Gratuity Act, Minimum Wages Act, etc.?)
2. Should every branch separately submit labor law returns to the jurisdictional office?
3. How should the return submission reference the establishment/branch?
4. The Gratuity Act states that if the company has branches in more than one state, the Central CLC is the jurisdiction. How does the switchover work?
Practicing labor law consultants may educate the group.
From India, Virar
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3India has more than 50 central labor laws. There are CIRM (CLC) - central machinery and state labor departments to enforce labor laws. Of course, state governments' own labor laws are enforced by the state labor department. These 50 central laws are classified as follows (yes, many state governments have their own labor law rules for these 50):
- Labor laws enacted and enforced by the Central Government (ESI, PF, etc.)
- Labor laws enacted by the Central Government and enforced by both the Central as well as the State Governments
- Labor laws enacted by the Central Government and enforced by the State Governments
Each labor law specifies that the appropriate government is the implementing authority and outlines the registration/compliance procedure. Many Acts do not provide for registration or licenses, which are directive in nature. Many Acts state that the appropriate government is the state government for private establishments.
Questions for Registration & Compliance
A private establishment has its Head Office (HO) and branches in the same state as well as in other states. Assume the company maintains its books of accounts centrally, and employee payments are done at the HO level or at the local branch level.
1. Does the labor law department provide a common registration number for all labor laws? (I know LWF/Contract Labor has separate registration/license numbers, but what about the Bonus Act, Gratuity Act, Minimum Wages Act, etc.?)
2. Should every branch separately submit labor law returns to the jurisdictional office?
3. How should the return submission reference the establishment/branch?
4. The Gratuity Act states that if the company has branches in more than one state, the Central CLC is the jurisdiction. How does the switchover work?
Practicing labor law consultants may educate the group.
From India, Virar
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Labor Departments and Registration Systems
Labor departments do not have a common registration system under different labor Acts. The CLRA Act, Shop & Commercial Establishment Act, Factories Act, Plantation Labor Act, BOCOW Act, ESI Act, EPF Act, and ISMW Act have a mandatory system of registration for establishments.
However, Acts such as the ID Act, Bonus Act, Gratuity Act, Payment of Wages Act, Standing Orders Act, EC Act, etc., do not prescribe registration.
An establishment is a geographical entity; therefore, each establishment should generally be treated as an independent entity.
For establishments with branches in multiple states, the central government is the appropriate authority that will appoint Inspectors and Controlling Authorities under the Gratuity Act. If gratuity is paid in accordance with the law, there is no need to be concerned about the government.
Each registration will provide a unique reference number.
Consolidation of Labor Laws
The government should consolidate all labor laws, encompassing all aspects under a single Act, separately for different sectors such as Plantation, Mines, Factories, Commercial establishments, etc. Each such enactment should include provisions for safety, welfare, health, bonus, gratuity, payment of wages, minimum wages, welfare funds, EPF, ESI, dispute resolution, arbitration, and adjudication. This would simplify the process of registration, licenses, returns, registers, etc., for employers and enforcement officers.
Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]
From India, Thiruvananthapuram
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Labor departments do not have a common registration system under different labor Acts. The CLRA Act, Shop & Commercial Establishment Act, Factories Act, Plantation Labor Act, BOCOW Act, ESI Act, EPF Act, and ISMW Act have a mandatory system of registration for establishments.
However, Acts such as the ID Act, Bonus Act, Gratuity Act, Payment of Wages Act, Standing Orders Act, EC Act, etc., do not prescribe registration.
An establishment is a geographical entity; therefore, each establishment should generally be treated as an independent entity.
For establishments with branches in multiple states, the central government is the appropriate authority that will appoint Inspectors and Controlling Authorities under the Gratuity Act. If gratuity is paid in accordance with the law, there is no need to be concerned about the government.
Each registration will provide a unique reference number.
Consolidation of Labor Laws
The government should consolidate all labor laws, encompassing all aspects under a single Act, separately for different sectors such as Plantation, Mines, Factories, Commercial establishments, etc. Each such enactment should include provisions for safety, welfare, health, bonus, gratuity, payment of wages, minimum wages, welfare funds, EPF, ESI, dispute resolution, arbitration, and adjudication. This would simplify the process of registration, licenses, returns, registers, etc., for employers and enforcement officers.
Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]
From India, Thiruvananthapuram
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Well explained, sir. Now, some questions—since many of my known organizations are not complying with Labour Law returns or registrations:
1) How does an employer file returns under the Bonus Act, Gratuity Act, Payment of Wages Act, etc.? Is it simply by submitting returns to the jurisdictional officer? How is return compliance enforced by the jurisdictional office under these Acts as per the existing system?
2) If a company has different shops/branches in the same state but in different jurisdictional locations, will there be any exemption to take registration/return filing at the HO jurisdiction level? (In the scenario of record maintenance and employee-related compliance managed at the HO level.)
3) The Gratuity Act prescribes that the CLC is the jurisdiction in the case of establishments having offices in more than one state. Suppose an establishment files at the state labor department but has its own branch in another state in the middle of the financial year—then is a switchover to file at the CLC office allowed from the following compliance period?
Regards,
Benz
From India, Virar
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1) How does an employer file returns under the Bonus Act, Gratuity Act, Payment of Wages Act, etc.? Is it simply by submitting returns to the jurisdictional officer? How is return compliance enforced by the jurisdictional office under these Acts as per the existing system?
2) If a company has different shops/branches in the same state but in different jurisdictional locations, will there be any exemption to take registration/return filing at the HO jurisdiction level? (In the scenario of record maintenance and employee-related compliance managed at the HO level.)
3) The Gratuity Act prescribes that the CLC is the jurisdiction in the case of establishments having offices in more than one state. Suppose an establishment files at the state labor department but has its own branch in another state in the middle of the financial year—then is a switchover to file at the CLC office allowed from the following compliance period?
Regards,
Benz
From India, Virar
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The number, format, authority concerned, manner of submission, and time limit for return submission, etc., in respect of various states will be slightly different for each state. You have to read the state rules/orders of that state to know that.
Annual Return of Bonus
The annual return of the bonus paid to employees is the return under the Bonus Act.
Gratuity Act Compliance
There is no return under the Gratuity Act. You have to submit a notice of opening, notice of closure, and notice of payment/rejection of gratuity to the controlling authority. Exhibit a notice containing an abstract of the Act & rules on your notice board in the prescribed format.
Payment of Wages Act
There are no returns under the Payment of Wages Act. You can ignore the Act if all your employees are getting a salary above Rs 18,000 per month.
The inspectors can visit your establishment and verify the records to ascertain compliance. If non-compliances are found, they can prosecute you.
Centralized Compliance
For centralized compliance of different branches in a state at the Head Office, you can get permission from the Labor Commissioner of the state.
All returns are to be submitted in the prescribed format to the concerned authority, and you should obtain a receipt.
Best regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]
From India, Thiruvananthapuram
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Annual Return of Bonus
The annual return of the bonus paid to employees is the return under the Bonus Act.
Gratuity Act Compliance
There is no return under the Gratuity Act. You have to submit a notice of opening, notice of closure, and notice of payment/rejection of gratuity to the controlling authority. Exhibit a notice containing an abstract of the Act & rules on your notice board in the prescribed format.
Payment of Wages Act
There are no returns under the Payment of Wages Act. You can ignore the Act if all your employees are getting a salary above Rs 18,000 per month.
The inspectors can visit your establishment and verify the records to ascertain compliance. If non-compliances are found, they can prosecute you.
Centralized Compliance
For centralized compliance of different branches in a state at the Head Office, you can get permission from the Labor Commissioner of the state.
All returns are to be submitted in the prescribed format to the concerned authority, and you should obtain a receipt.
Best regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]
From India, Thiruvananthapuram
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Thank you, sir. A few ambiguities got cleared. Overall, many of my known SMEs are not maintaining or complying with labor laws, except for a few statutes like PF, ESI, and LWF. To my knowledge, they have not been inspected by the labor department. In some cases, shop authorities come to check minimum wage compliance.
Compliance Challenges for SMEs
Labor laws even exempt SMEs from furnishing returns. What would be advisable for SMEs not complying with applicable labor laws? They simply ignore the labor law part.
Regards
From India, Virar
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Compliance Challenges for SMEs
Labor laws even exempt SMEs from furnishing returns. What would be advisable for SMEs not complying with applicable labor laws? They simply ignore the labor law part.
Regards
From India, Virar
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Exemption Under The Labor Laws Act 1988
Please go through 'The Labor Laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishments) Act 1988,' which exempts establishments having fewer than 20 employed persons from furnishing returns and maintaining registers under 9 central Acts.
Regards,
Varghese Mathew
Trivandrum
[Phone Number Removed For Privacy Reasons]
From India, Thiruvananthapuram
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Please go through 'The Labor Laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishments) Act 1988,' which exempts establishments having fewer than 20 employed persons from furnishing returns and maintaining registers under 9 central Acts.
Regards,
Varghese Mathew
Trivandrum
[Phone Number Removed For Privacy Reasons]
From India, Thiruvananthapuram
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