HR and Payroll Compliances
All the compliances related to employees and their remuneration are called HR and payroll compliances.
Labour laws comprise of various statutes like the Equal Remuneration Act; Payment Of Gratuity Act; Contract Labour Act, Payment Of Bonus Act; Factories Act; Minimum Wages Act and many more. There are various HR and payroll compliances under these statutes of labour laws, thus they are also called statutory compliances. There are various and mandatory labour law compliances on the central and the state level.
Every organisation, whether a partnership, LLP, company, sheds a lot of business bandwidth to ensure that its payroll is compliant via proper audits. Organisations are oftentimes concerned of facing legal sanctions pertaining to belligerent employees, unreasonable wage demands and trade unions. Labour law compliances avail such organisations protection from the unfair legal sanctions from all the mentioned undesirable circumstances, which varies from penalties to imprisonment and total shutdown.
Relevance of Compliance
Other than prevention of any plausible legal trouble, there are a plethora of benefits for having robust statutory HR compliance in place, which are as follows:
Enhanced business prospects
It leads to more goodwill which in turn gives the company an edge in negotiations helping them secure crucial business contracts. Further, companies with an advanced compliance regime attract more investment.
Low attrition rate
By imbibing statutory compliance in the HR department, the company makes a statement that they have a just, employee-friendly, professional and safe working environment and that the company actually cares about employees by investing in HR compliances. All this translate into enhanced productivity and a low attrition.
Prevention of legal penalties
Solid HR compliances also save the business from the inescapable consequences of non-compliance like litigation, halting of work, revocation or suspension of licenses, disqualification of top-level executives, penalties and sometimes even imprisonment to officials and total shutdown.
Efficient business operations
If the HR compliances are taken care off by a reliable service provider, it allows the company to monomaniacally focus on its core business operations and expansion instead of being constantly worried about regulations and penalties.
For investors and other stakeholders, strict adherence with labour law regulations in the company is of utmost importance and is a question of competence and ethics of management. It always implies that the company operates in a just and transparent manner. Thus, stakeholders like employees’, vendors’, and customers’ faith in the company increases leading to better brand equity and loyalty.
Lack of awareness amongst professionals on labour law compliance requirements; Involvement of various departments in functional activities leading to ineffective labour law compliance and Dynamic statutory requirements are some of the common challenges for organisations in ensuring bullet-proof labour law compliances.
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