What is an HR Compliance? Important Checklist

What is an HR Compliance? Important Checklist
Reading Time: 6 mins
Published: May 14, 2024
Last Updated: July 15, 2024
  • Recognizing Indian HR Compliance
  • Benefits of HR Compliance in India
  • Important HR Compliance Checklist

Maintaining Human Resources (HR) compliance is critical for any firm. A solid human resource compliance framework ensures conformity to a complicated network of labor laws, regulations, and best practices imposed by the federal government, state governments, and industry-specific legislation. Following these standards protects both your organization and your employees by creating a safe, fair, and productive workplace.

The main points of HR compliance in India are covered in detail in this article, along with a helpful checklist to assist companies in meeting their legal requirements.

Recognizing Indian HR Compliance

In India, the field of HR compliance is broad and complex. Below is a summary of some of the main topics discussed:

  • The Factories Act, 1948:

This Act specifies factory worker safety requirements and working conditions. It requires certain rules around child labor laws, leave benefits, and working hours.

  • The Minimum Wages Act, 1948: 

The 1948 Minimum Wages Act sets minimum salary criteria for various employee classifications in various businesses and geographical areas.

  • The Payment of Wages Act, 1948: 

This Act governs timely wage disbursement, deductions that can be made from salaries, and maintenance of wage records.

  • The Industrial Disputes Act, 1947: 

Procedures for settling labor disputes between companies and employees have been established in the Industrial Disputes Act, of 1947.

  • The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013: 

This Act aims to provide a safe working environment for women by prohibiting sexual harassment and outlining a complaint redressal mechanism.

  • The Employees' Provident Funds and Miscellaneous Provisions Act, 1952: 

This Act mandates contributions towards provident funds for eligible employees, promoting social security and retirement planning.

  • The Employees' State Insurance Act, 1948: 

This Act provides medical benefits to employees and their dependents through a social insurance scheme.

  • The Shops and Establishments Acts (individual state regulations): 

These state-specific Acts regulate working hours, leave entitlements, and working conditions for employees in shops and commercial establishments.

Benefits of HR Compliance in India

Maintaining HR compliance offers numerous advantages for businesses in India:

Reduced Legal Risks: 

Compliance reduces the danger of costly litigation, fines, and penalties for labor law infractions. Legal issues can cause severe disruptions in corporate operations and harm your company's brand.

Improved Employee Relations: 

A fair and legal work environment fosters higher employee satisfaction, morale, and loyalty. This can lead to increased productivity and reduced employee turnover.

Enhanced Employer Brand: 

A reputation for ethical treatment of employees attracts top talent in a competitive market. Demonstrating compliance showcases your commitment to a positive work culture.

Streamlined Operations: 

By establishing clear HR policies and procedures, businesses can ensure efficient and consistent application of workplace rules, reducing confusion and potential disputes.

HR Compliances

Important HR Compliance Checklist

This checklist serves as a starting point for businesses in India to ensure they're on the right track with HR compliance. Remember, specific requirements may vary by state and industry. Consulting with an HR professional or legal counsel familiar with Indian labor laws is recommended for comprehensive guidance.

1. Recruitment and Hiring:

Non-discriminatory hiring practices: 

The Constitution of India prohibits discrimination based on religion, race, caste, sex (including pregnancy), place of birth, or any other protected characteristic. Ensure job postings and interview processes are fair and unbiased.

Contract Labour (Regulation & Abolition) Act, 1970: 

If your business utilizes contract labor, ensure compliance with this Act, which regulates the working conditions and rights of contract workers.

Child Labour (Prohibition & Regulation Act), 1986: 

Strictly adhere to this Act, which prohibits the employment of children below the age of 14 and regulates working conditions for adolescents (15-18 years old).

2. Compensation and Benefits:

Minimum Wage Compliance: 

Pay employees at least the minimum wage mandated by the central government and the applicable state government.

Overtime Pay: 

According to specific industry regulations and company policies, ensure proper overtime pay calculations are followed for applicable employees.

Payment of Gratuity Act, 1972: 

This Act mandates payment of gratuity to eligible employees upon termination, retirement, or death after a certain period of service.

Employee Provident Fund (EPF) and Employees' State Insurance (ESI) Registration and Contributions: 

Register your company with the Employees' Provident Fund Organization (EPFO) and the Employees' State Insurance Corporation (ESIC) and make timely contributions for eligible employees as mandated by the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and the Employees' State Insurance Act, 1948, respectively. These contributions provide social security benefits to employees.

3. Workplace Safety

The Factories Act, 1948: 

Comply with safety standards and working condition requirements outlined in this Act, specific to your industry and type of factory.

The Industrial Disputes Act, 1947: 

Be aware of your obligations under this Act regarding the formation of workers' unions and dispute resolution procedures.

4. Employee Relations

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013: 

As required by this Act, create an extensive anti-sexual harassment policy. This policy should clearly define prohibited conduct, outline a complaint redressal mechanism, and include training for employees on preventing and reporting sexual harassment.

Maintain grievance redressal procedures:

Establish a clear and accessible process for employees to raise concerns or grievances related to workplace issues. This demonstrates your commitment to fair treatment and helps resolve issues internally before they escalate.

5. Recordkeeping

Maintain employee records: 

Keep personnel files with essential employee information such as job applications, resumes, performance reviews, and salary records. Adhere to retention periods mandated by law to avoid legal issues.

Wage and tax records: 

Maintain accurate and detailed records of employee wages, deductions, and tax withholdings for the period required by law.


HR compliance in India is an ongoing process that necessitates staying updated on evolving regulations and best practices. Businesses can leverage resources such as the websites of the Ministry of Labour and Employment (MoLE) https://labour.gov.in/, EPFO https://www.epfindia.gov.in/, and ESIC https://www.esic.gov.in/about-us for guidance.

Prioritizing HR compliance allows businesses in India to create a safe, fair, and productive work environment for their employees, reduce legal risks, and improve their reputation as responsible employers. This, in turn, may result in a more profitable and sustainable firm in the Indian market.

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