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The Coffee Break Guide to Compliance – Vol. 14

Posted by: on 14 September 2018 in Compliance, HR, Human Capital Management, Talent Management

This post is part of the Coffee Break Guide to Compliance by Anandan Subramaniam. Please subscribe to the blog updates if you’d like to be notified of these posts. Please comment below with your doubts and queries.

The Coffee Break Guide to Compliance – Vol. 14 {Compliance Checklist for Employer to Recruit the ‘Right Person’ for Indian Establishments}

The risk of non-compliance is always high, especially where the labour laws are unexpectedly complex such as in India. For any non-compliance, the Employer has to invest their valuable time to set right the records (and money in case of penalties). Outsourcing cannot be a solution for all areas of production/service delivery.

With this in mind, not all potential candidates are the right candidates for your organisation. Apart from regular background verification or pre-emptive screening, the Employers can proactively manage the compliances in the recruitment stage itself.

Basic Compliance Checklist

The age of the recruit shall be determined by his/her Birth Certificate or School certificate. These are the primary documents for proof of age and are required for Superannuation from the organisation, Gratuity upon superannuation, ESI remittance and PF & Pension remittances. Further, it is the right document to decide whether the recruit is an adult or a child, where engaging a child is prohibited.

The academic qualification is to determine the status – whether the candidate can be considered as an Intern or Unskilled/Skilled/High Skilled under the Minimum Wages Act.

Contribution towards Provident Fund shall be decided with the Nationality or Passport. Hence, details of Passport, Citizenship, and Overseas Citizen of India status are to be collected. NRI recruits are to be checked for possession of Aadhaar. Getting Aadhaar card for them will take 182 days after coming back to India.

An occupational disease is an illness caused by occupational exposure in the workplace. It can be caused to a normal individual or a person who is already having some illnesses. To safeguard the interest of the Employer on such issues, a comprehensive Medical Certificate may be obtained during recruitment.

Employers get benefits for employing Persons with Disablement. Disability Certificate, with percentage of disablement, determines the Employer benefits towards PF, ESI and Gratuity. Also, it helps the Employer to provide adequate facilities and precautions for such individual Employee to perform his/her job inside the premises.

Compliance under Various Acts

The selected individual needs to share the nominee details for compliance under various Acts – Gratuity, PF, ESI & Payment of Wages. This needs to be recorded in the appropriate forms as compliance under the respective Acts.

Under Maternity Benefit Act, a women employee gets a benefit of 26 weeks for the first two deliveries and 12 weeks for the third and after. This is not only a monetary benefit, but this will help the respective department to plan ahead in case of the Employee avails the benefit. Hence, details related to the number of children may be recorded in the recruitment stage.

Of late, no resumes are shared with residential address details. These details may be required at a later stage to reach out the employee in emergency cases. Recording temporary and permanent address will help the employer to reach out in case there is a need to send any notices, information etc. Collection of personal email IDs and personal landline/mobile number /alternate contact number will be helpful for Employers when the Employee goes on long leave / uninformed leave / long sick leave / maternity leave / absconding, etc. Any communication under provisions of various Acts can be managed with such recording of details during recruitment stages. Later, this needs to be updated whenever there is a change.

Aadhaar card details are mandatory for social security Acts like, PF, ESI and LWF (in a few States).

PAN and Bank details are a requirement as KYC under PF Act.

Details from Previous Employment

Details required from the recruit, if previously employed, are as mentioned below. This is a mandatory requirement for compliance under various labour laws.

1. UAN number and Pension remittance details, required for deduction under EPF Act
2. IP number details required for coverage on the same number to avail better benefits under ESI Act
3. Gratuity already availed details (copy of Form L), to determine the permissible maximum Gratuity under Income Tax Act
4. Profession Tax already deducted for the year – to decide on quantum of further PT, to be deducted for the respective year
5. Labour Welfare Fund already deducted for the year – to decide on quantum of further LWF to be deducted for the respective year
6. Income certificate on the tax deducted for the year – to arrive the balance tax to be deducted for the pending months of the financial year

Spending some extra time at the recruitment phase / selection phase to gather all required information and documents, makes the Employer labour law-compliant.


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