Labour Law Compliance Guide for Employers
Everything Indian employers need to know about labour law compliance — PF, ESI, Minimum Wages, POSH, Factory Act, and the new Labour Codes.
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Labour Law Compliance Guide for Employers
Prepared by TaxClue's CA/CS team. Updated for FY 2025–26.
Employees' Provident Fund (EPF)
Mandatory for establishments with 20+ employees. Contribution: 12% of basic salary by employee + 12% by employer. Deposit by 15th of each month.
Employees' State Insurance (ESI)
Mandatory for establishments with 10+ employees earning ≤ ₹21,000/month. Employee: 0.75%, Employer: 3.25% of wages.
Minimum Wages Act
State governments fix minimum wages for different categories. Employers must pay at least the scheduled minimum wages. Revised periodically.
POSH Act (2013)
All workplaces with 10+ employees must constitute Internal Complaints Committee (ICC). Annual report to District Officer. Non-compliance: ₹50,000 fine.
Shops & Establishments Act
State-specific registration required. Governs working hours, overtime, leaves, employment of women and children.
Factories Act (1948)
Applies to factories with 10+ workers (with power) or 20+ (without power). Covers safety, health, welfare, working hours, and annual leave.
New Labour Codes (Upcoming)
Four Labour Codes (Wages, Industrial Relations, Social Security, OSH&WC) will replace 29+ existing laws. Implementation state-by-state.
Penalties
PF default: 12–18% interest + ₹5,000–₹50,000 penalty. ESI: ₹10,000 per default. POSH: ₹50,000 and license cancellation.
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