Payroll Compliance Issues- Contractual Worker
HR Team, ETERNAL HR SERVICES PVT. LTD.
(www.eternalhr.com, hr@eternalhr.com, 9220825522)
When it comes to payroll compliance,
Employers in India spend huge amount for their on-roll employees but at times
overlook compliances regarding contractual workers or gig workers or outsourced
workers which may lead to huge compliance penalties under various labour laws
for principal employers in India.
Principal Employers are directly or indirectly responsible for every employee working on their premises or working for them as per applicable labour laws.
Here are some common payroll related compliance problems faced by Principal employers related to temporary workers or manpower outsourcing:
1. Incomplete Registration of Contractual Workers: Complete digital registration of every contractual employee should be done with proper KYC documents like Resume, Personal Photograph, Adhaar Card Copy, Pan Card Copy, Family/ Nominee documents, Bank Proof, Education Documents, Employment Proof and other relevant documents to avoid any legal hassles during their employment with contractor or principal employer or even after exit of concerned employee.
2. Contractual Manpower Record on Contractor’s Website: Display of legal reports related to contractual manpower on contractor’s website is legal requirement of labour department in India today but most of unorganised contractor doesn’t adhere to this and don’t even maintain record in digital format. But employer are either not aware of these facts or are not giving importance to such issues which may lead to legal hassled for them at the time of registration of any contractor in their office or factory or premise. Employers can easily avoid such situation by engaging a payroll expert which can manage all such statutory compliances for their contractual manpower. (www.eternalhr.com , hr@eternalhr.com, 9220825522).
3. Statutory Audit: Lack of Documentation support during compliance audits can lead to huge penalties on employers even after leaving of contractual workers by providing complete KYC documents of Contractual employees and related MIS at the time of statutory audit by government statutory bodies. Such compliance risks can be avoided by hiring a professional payroll agency to monitor payroll compliances for contractual workers like (www.eternalhr.com , hr@eternalhr.com, 9220825522).
4. Exemption benefits of Employees: Government of India from time to time give provisions to employees for exemption under various laws so as to save taxes and increase their in-hand salaries, but if principal employer will not get complete documentation done for exempted employees, they may have to suffer penalties / liabilities / claims from various statutory bodies for contractual workers or outsourced employees.
5. Incorrect Payroll Calculation or errors: Employers must ensure they're managing payroll & compliance contributions of all contractual workers and submitting correct amount of compliance benefits with all labour authorities to avoid any fines or penalties or employee disputes.
6. Failure or delay in employee payment: Error in Payroll or invoice submission or repeated invoice with in-correct payroll for contractual workers by un-organized vendors may lead to delay in wages distribution by employers which results in non-compliance. Such errors bring huge business loss to employers due to high attrition among trained contractual workers. Every Employer should ask for online payment details from every contractor regarding every contractual manpower engaged for employer.
7. Transparent Documentation for employee: Issuing employment documents like Offer letters, Appointment letters, wage slips are statutory requirement for all employers even for contractual workers under labour laws in India, but due to ignorance by some unorganized contractors principal employer have to face huge legal penalties and labour cases. Employer should do periodic checks of contractual workers documents and record to avoid legal risks in future.
8. Payroll Software & HRMS: Still many new startup companies and ever established companies are using excel to manage payroll of their contractual workers, ignoring the fact of legal and compliance risks. Thus it’s very important for every employer to keep digital record regarding KYC, On-boarding documents, Payroll & Payments to contractual workers from time to time and such information can be easily be updated by using variorum cloud based HRMS or Payroll sofytware. If employer doesn’t have any qualified payroll person thus they should engage specialist payroll companies like www.etermalhr.com to handle payroll of startup or mid-sized companies with all compliances.
9. Stay Up-to-Date: Statutory laws keeping on changing with amendments thus every employer should keep themselves updated on statutory compliances related to contractual workers as to avoid non-compliance, any legal or financial risk.
10. Consult a Payroll Specialist: If unsure, working with a payroll expert can help ensure that you stay compliant. www.eternalhr.com , hr@eternalhr.com, 9220825522.
Mentioning herewith few STATUTORY COMPLIANCES APPLICABLE IN INDIA for companies-
Building And Other
Construction Workers Rules, 1996
Child Labour
(Prohibition and Regulation) Act, 1986
Contract Labour
(Regulation and Abolition) Act, 1970 ( Principal Employer & Contractor Both
)
Employee Provident Funds
and Miscellaneous Provisions Act, 1952
Employees' State
Insurance Act, 1948
Employment
Exchanges(CompulsoryNotification of Vacancies) Act, 1959
Environment (Protection)
Act,1986
Equal Remuneration Act,
1976
Factory Act-1948
Fire Prevention &
Firs Safety Act-2005
Industrial Disputes Act,
1947
Industrial Employment
(Standing Orders) Act, 1946
Industrial
Establishments (National and Festival) Holidays Act, 1969
Labour Welfare Fund
Rules, 1988
Madhya Pradesh Shram
Kalyan Nidhi Adhiniyam, 1982
Maternity Benefit Rules,
1966
Minimum Wages Rules,
1960
Payment of Bonus act
1965
Payment of Gratuity Act,
1972
Payment of Subsistence
Allowance Act 1988 ( Karnataka)
Payment of Wages
Act-1936
POSH-Prevention of
Sexual Harassment of women at Workplace (Prevention, Prohibition and Redressal)
Rules, 2013
Shops and Establishments
Rules, 1954
TDS Deduction under
Income Tax Act, 1961
The Employees'
Compensation Act, 1923
Workman Compensation
Act-1923
Workmen's House-Rent
Allowance Act, 1974
For more details feel
Free to contact:
HR team, ETERNAL HR SERVICES PVT. LTD.
(www.eternalhr.com , hr@eternalhr.com, 9220825522)
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