Social Security Compliances and Labour Laws in India - Complete Guide

Social Security Compliances and Labour Laws in India - Complete Guide

Social Security Compliances and Labour Laws in India - Complete Guide

India has definite laws to regulate the workforce in the industries. With various benefits put in place like gratuity, pension, insurance, etc., organizations are mandated to ensure multiple labour law compliances and procedural requirements to ensure social security of the workforce. Currently, there are various laws addressing the labour and employment scenario. However, their shortcomings have led to the introduction of 4 new labour codes that will repeal all the earlier labour and employment laws and address their shortcomings. After receiving the President’s assent, they are set to become applicable in the near future. These are:

  • The Code on Wages, 2019
  • The Industrial Relations Code, 2020
  • The Occupational Safety, Health and Working Conditions Code, 2020
  • The Code on Social Security Compliance, 2020

Meanwhile, they come into effect, organizations need to comply with the existing requirements. Let’s take a look at the current major labour law compliances in India, their applicability and how they will shape in the upcoming future.

Existing Labour Law Compliances 

Following are the major compliances under labour laws that an organization should ensure with respect to their workforce:

Provident Fund: The provident fund requirements are regulated by the Employee Provident Fund Organisation rules and regulations. According to these rules, every establishment that has 20 or more employees should obtain registration for Provident Fund.

Following are the compliances under the Employee Provident Fund Act:

Sr.  No.


Due Date


Employer and employee’s provident fund dues

15th of the following month


Payment of Pension Fund


Payment of Insurance Fund


Details of employees that are enrolled in the PF

Within 1 month of coverage


Addition of members in the fund

Within 15 days of the following month


Deletion of members

Before 21st of the following month


Details of the employer’s and employee’s contribution done

Within 25th of the following month


Nomination Form

Upon joining the fund


Annual Consolidated Statement of Contribution

Submitted annually along with Form 3A


Return of ownership of the establishment

Within 15 days whenever there is a change in the ownership


Details of wages and contributions

By the 30th of April each year

ESIC: Employee State Insurance Corporation mandates certain companies to ensure reasonable safety and health care for the employees. Therefore, every factory and other establishment as defined under the act has 10 or more employees with a monthly gross salary under Rs. 21,000 should obtain registration under the act. In some states, the limit is 20 employees. Following are the compliances in respect of ESI that the organizations shall adhere to:

  • The organizations shall file monthly contributions through the ESIC portal online in respect of all its registered employees.
  • Details regarding the contributions paid shall be disclosed by filing half yearly returns on or before 12th May (for the period November to April) and 12th November (for the period May to October) each year.
  • The organisations shall file an annual return intimating the changes in the employment to the department.
  • The organisation is liable to maintain certain registers such as attendance register, register of wages, inspection book, etc.
  • The contributions made by the employers and employees shall be duly submitted to the department within the prescribed time.
  • Gratuity: Gratuity is the statutory benefit provided to the employees of an organisation for rendering 5 years of continuous services. Gratuity benefits are primarily governed by the Payment of Gratuity Act, 1972 and Payment of Gratuity (Central) Rules, 1972. The act is applicable to the employees engaged in factories, oilfields, mines, ports, plantations, railway stations, shops, and any other establishment with 10 or more employees. The foundation for the act is the continuous service provided by the employees. It also mentions the methodology for calculation of the gratuity benefits as under:

Establishment Type

Calculation of Gratuity

Normal Establishment

(15 * last drawn salary * no. of years of service) / 26

Seasonal Establishment

7 days of wages for each season

The employers need to adhere to certain statutory compliances w.r.t. to the gratuity that includes:

  • The employers shall form an approved gratuity trust exclusively for the benefit of their employees. The employers shall make periodical contributions in the gratuity trust following which deduction can be claimed under section 36(1)(v) of the Income Tax Act, 1961. Click here to know the process of creating an employee gratuity trust and related compliances.
  • Notice for opening or closure of the establishment to the controller
  • The payment of gratuity shall be done within 15 days of receipt of the claim from the employee.
  • Display of the notice within the establishment that specifies the name of the authorized officer with his designation that can receive the notices under this act
  • After the receipt of the nomination form, the verification of the particulars in relation to the nomination filed in the form shall be completed within 30 days.
  • The intimation about the particulars of the payments made shall be provided to the controller.

The Code on Social Security, 2020

The Code on Social Security Compliances, 2020 already received the President’s assent and will soon regulate the labour and employment scenario in India. The above compliances will be subsumed under this code. The code is framed keeping in mind the ongoing employment landscape and aims to cover the shortcomings of the existing laws. In a bid to cover the unorganized sector as well, the code covered multiple types of employees and workers that includes:

  • Building Worker
  • Contract Labour
  • Home Based Worker
  • Interstate Migrant Worker
  • Self-employed worker
  • Wage Worker
  • Gig Workers
  • Platform Worker
  • Unorganised Worker
  • The Code on Social Security Compliances, 2020 will subsume and repeal the following existing laws:
  • The Employee’s Compensation Act, 1923
  • The Payment of Gratuity Act, 1972
  • The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
  • The Employees’ State Insurance Act, 1948
  • The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
  • The Maternity Benefit Act, 1961
  • The Cine-Workers Welfare Fund Act, 1981
  • The Building and Other Construction Workers’ Welfare Cess Act, 1996

While the act has been drafted and approved, many of the rules and labour compliance provisions are in the stage of drafting. It can be anticipated that it will formalise the security benefits across the organised as well as unorganised sectors leading to further enhancement of labour welfare.

In case of any assistance for Social Security compliances applicable to your organization, feel free to contact the ASC Group.


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