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Here Is What Software and IT Companies Need to Know About Compliance

India has over 200 state labour laws and nearly 50 central ones.

These laws help create a seamless and hassle-free work environment for employers, employees (both permanent and contractual), and trade union members. The legislation also strives to strike a balance between the rights, obligations, and needs of employers and their workers.

Previously, many companies assumed that labour laws apply primarily to manufacturing industries or engineering companies. But as more and more start-ups and software companies are growing all over the country, labour law compliance awareness has become a necessity for the moment.

India has the 3rd largest  start-up ecosystem in the world with more than 9,000  tech start-ups alone. Besides, it also has over 200  multinational IT companies with a global presence in 80 countries. Most of the organisations operate on investments of billions, and it is a big issue if they are found to be non-compliant with the countrys labour laws.

While all the labour laws may not apply to the tech companies, let us shed some light on a few that do:

Payment of Wages Act, 1936
This Act deals with the payment of wages to the workers in an establishment. It ensures on-time payment without any deductions unless authorised by the Act. The law also mandates the employers to seek the Governments permission for fines or penalties imposed by the employers on the wages. To establish the rights of the employees to raise complaints against unauthorised practices by their employers, the Act also helps create the machinery to hear and deal with such complaints as a neutral body.

If any organisation or individual neglects the payment of wages within the fixed period, he may be punishable under the Act with an additional fine of INR 750 per day. Further, if the employer commits the same mistake twice within two years, they can even serve imprisonment up to 6 months along with a fine of up to INR 22,500. Hence, all companies should fix a date range within which they should pay their employees in full without any deductions unless authorised by the Government.

Industrial Disputes Act, 1947
The sole objective of this Act is to ensure industrial peace and communication. It provides the machinery and processes to investigate and settle disputes through proper negotiations to prevent strikes, lockouts, and other related issues. As such disputes arising from unlawful termination, victimisation, or other practices can cause loss of efficiency and productivity and hamper technical or economic progress, settlements are necessary.The Act ensures social justice to both parties involved, and not only one of them.

Any breach or violation of this Act can lead to imprisonment of up to 6 months or a hefty fine. The engineers or software developers working in an IT organisation are termed workmen under the Industrial Disputes Act, which seeks to preserve their rights. Hence, the employers in the IT industry need to be well-aware of this Act while creating their policies.

The Employees Provident Fund and Miscellaneous Provisions Act, 1952
This law is applicable for companies having 20 or more employees and aims to provide financial security to employees after retirement. Under this Act, employees are mandated to contribute a certain amount from their monthly wage towards the EPF scheme, and the same amount should be paid by the employer as well. According to some amendments to this law, the maximum wage limit for EPF deductions is currently INR 15,000 per month. Any employee procuring more than that may or may not choose to contribute towards his EPF account.

Non-compliance with the EPF Act is strictly punishable by the Indian Government. If an employer is found guilty of not contributing towards the Employee Provident Fund even after deducting the amount from the salary, they will have to pay a severe fine. Hence, employers should be careful about not making any mistake and ensure 100% compliance to prevent lawsuits and hefty fines.

Maternity Benefits Act, 1961
There are some laws to safeguard the interests of women employees in the country, and the Maternity Benefits Act 1961 is a popular one. It seeks to make their lives easier during pregnancy and childbirth so that they need not be anxious about losing their jobs. Under this Act, the women employees are entitled to receive paid maternity leaves from 12-26 weeks and remote-working allowance after the period, if needed. For companies having 50 or more employees should also have creche facilities and women should be allowed to visit their baby at least four times a day.

If an employer violates the Maternity Benefits Act, they can be punished with imprisonment of up to 3 months, and a fine, or both. The IT and software companies that hire women employees should be aware of the nitty-gritty of this Act to ensure 100% compliance.

Sexual Harassment of Women Employees at Workplace Act, 2013
It is a comparatively newer law that aims to make workplaces safe for women employees. It was released by the Parliament on 3rd September 2012 to take stringent measures to preserve the fundamental rights of women at their workplace. As any harassment with sexual implications violates the rights of women, this Act can help the individual, or the company to take strict actions against it. The working women have all rights to work with dignity, and the Act helps ensure the same.

Any violation of this Act is seen as a human right violation and punished accordingly. The Act also mandates setting up of an Internal Complaints Committee (ICC) in every workplace, where women can express their grievances or raise complaints against harassment without any problems. This ICC also needs to comply with the policies mentioned in the Act and needs to settle such matters with patience and due diligence.

Wrapping it up
Every IT or software establishment should be aware of such major labour laws that seek to ensure a healthy, safe, and pleasant work environment for their employees. However, it can be a tad difficult for a person from a non-legal background to understand these laws and refer to them before taking day-to-day decisions. It is recommended to take help from expert compliance managers, who can help provide the legal assistance and guidance needed to prevent violations. Not all breaches are intentional. Hence, it is better to take adequate prevention to reduce adversities.

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