Labour, HR & Payroll Compliance

Under Section 1(3) of the Employees' Provident Funds and Miscellaneous Provisions Act 1952, EPF applicability is triggered when an establishment employs 20 or more persons. Once an establishment crosses this threshold, it continues to be covered even if the number of employees subsequently falls below 20. The employer contribution is 12% of basic wages plus dearness allowance plus retaining allowance as defined in Section 2(b) of the EPF Act 1952, with a minimum of ₹15,000 per month as the wage ceiling for mandatory contribution under the EPF Scheme 1952. Of the employer's 12%, 8.33% goes to the Employees' Pension Scheme 1995 (capped at ₹1,250 per month on the ₹15,000 ceiling) and 3.67% goes to EPF. The employee also contributes 12%. Contributions must be deposited by the 15th of the following month under Paragraph 38 of the EPF Scheme 1952.

An employer deducting TDS on salary must comply with Section 192 of the Income-tax Act 1961, which requires computing the estimated total income of the employee for the year and deducting TDS proportionately each month at the applicable slab rate. From FY 2024-25, the new tax regime under Section 115BAC is the default and employees must opt in writing for the old regime under CBDT Circular No. 04/2023. The payslip must also show EPF employee contribution (12% of basic, EPF Act 1952), ESI employee contribution (0.75% of gross wages under Section 40 of the ESI Act 1948, applicable for employees earning up to ₹21,000 per month), and Professional Tax deducted as per the applicable state enactment (such as the Maharashtra State Tax on Professions, Trades, Callings and Employments Act 1975). The employer must issue Form 16 (Part A and Part B) by June 15 under Rule 31 of the Income-tax Rules 1962.

Under Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013 (commonly called the POSH Act), every employer who employs 10 or more employees is required to constitute an Internal Complaints Committee (ICC). Since you have 12 employees, you are mandated to constitute an ICC. The ICC must have a Presiding Officer who is a senior woman employee, at least two other employees from amongst employees committed to the cause of women, and one external member from an NGO or women's association under Section 4(2). The employer must conduct an annual awareness programme for employees and submit an annual report to the District Officer under Section 21 of the POSH Act. Non-compliance with ICC constitution is an offence under Section 26 and can attract penalties of up to ₹50,000 for first-time violations.

The Payment of Bonus Act 1965 applies to every establishment with 20 or more employees. Under Section 10, every employer must pay a minimum bonus of 8.33% of the wages earned by the employee during the year or ₹100, whichever is higher, even if the employer does not earn any profit. The maximum bonus under Section 11 is 20% of wages. 'Wages' for bonus calculation is defined under Section 2(21) as basic salary plus dearness allowance, capped at ₹7,000 per month or the minimum wage notified for the relevant employment, whichever is higher, as amended by the Payment of Bonus (Amendment) Act 2015 (effective April 1, 2014). Employees whose salary exceeds ₹21,000 per month are excluded from the Act's coverage under Section 2(13). Bonus must be paid within 8 months of the close of the accounting year under Section 19.

Yes. The Contract Labour (Regulation and Abolition) Act 1970 applies under Section 1(4) to every establishment where 20 or more contract workmen are employed on any day in the preceding 12 months, and to every contractor who employs 20 or more workmen. Since you will deploy 15 workers through a contractor, the threshold is not met at the principal employer's level, but the contractor themselves may be registered if they employ 20 or more workers across all their clients. Even below the threshold, the Code on Wages 2019 (not yet fully notified for all states) requires timely wage payment to contract workers. Best practice requires ensuring that the contractor maintains their own EPF and ESI registrations for the 15 workers, provides them payslips, and that your establishment is not treated as the 'principal employer' bearing residual EPF/ESI liability under Section 21(4) of the Contract Labour Act in case the contractor defaults.