Labour Law Compliance

Any principal employer engaging 20 or more contract labourers on any day in the preceding 12 months must register under Section 7 of the Contract Labour (Regulation and Abolition) Act 1970 in Form I before the contract work commences. Every contractor deploying 20 or more workers must simultaneously obtain a licence under Section 12 in Form IV. Failure to register or licence attracts imprisonment up to 3 months or a fine up to ₹1,000 under Section 23. State governments may lower the threshold to 10 workers by notification, so the applicable state rules must always be verified alongside the central act.

Every employer covered under the Employees' Provident Funds and Miscellaneous Provisions Act 1952 must deposit both employee and employer contributions — 12% of basic wages each — in the Electronic Challan cum Return (ECR) on the EPFO unified portal by the 15th of the following month under Paragraph 38 of the EPF Scheme 1952. Form 5 (new joiners), Form 10 (exits), and the monthly ECR must be filed simultaneously. Delayed deposit attracts damages at rates up to 25% per annum under Section 14B, plus interest at 12% per annum under Section 7Q. From April 2017, the UAN-based ECR 2.0 format is the only accepted return format, and physical challans are no longer valid.

Minimum wages are notified state-wise and schedule-wise under Section 5 of the Minimum Wages Act 1948; employers must pay the rate applicable to the scheduled employment category and geographic zone as revised by notification, typically every six months via Variable Dearness Allowance (VDA) orders. Register of Wages must be maintained in Form X under Rule 21 of the Minimum Wages (Central) Rules 1950, recording daily attendance, overtime, and deductions for each worker. Employers must also display an abstract of the Act and current wage rates in Form XI at the worksite under Rule 22. Payment below the notified minimum wage is a cognizable offence under Section 22 attracting up to 6 months imprisonment and/or fine up to ₹500, with enhanced penalties under the Code on Wages 2019 once notified.

Under the Factories Act 1948, the annual return in Form 21 must be submitted to the Chief Inspector of Factories by January 31 each year under Rule 120 of the Central Factories Rules. The Contract Labour (R&A) Act 1970 requires an annual return in Form XXIV by the principal employer by February 15. Under the Payment of Bonus Act 1965, Form D (bonus paid register) must be maintained and returns filed within 30 days of payment under Section 26 read with Rule 5. The Maternity Benefit Act 1961 annual return under Rule 17 is due by January 31. Non-filing of annual returns attracts prosecution under the respective penal provisions of each act.

The Code on Wages 2019 consolidates the Minimum Wages Act 1948, Payment of Wages Act 1936, Payment of Bonus Act 1965, and Equal Remuneration Act 1976 into a single statute under Section 1, but its provisions require state rules to be notified before they come into force in each state. As of mid-2026, most states have not yet notified their rules, so the four original acts continue to apply in those jurisdictions. Once operative, the Code introduces a universal minimum wage floor applicable across all employments regardless of scheduled-employment status under Section 6. The definition of 'wages' under Section 2(y) of the Code is narrower — it excludes allowances exceeding 50% of total remuneration — which materially affects bonus and overtime computations, requiring payroll systems to be recalibrated at the time of state-level enforcement.