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What Is Labour Law Compliance Audit and Why You Should Care?

Labour Laws in India are hard to understand and comply with, especially when it is not your niche expertise or operational area. Companies often struggle at the time of compliance audits. It is so because the rules change rapidly, and the audit checklist is quite exhaustive. There are over 100 state laws and 40 central laws that are presently part of the labour law list. Labour law compliance audits help to see if all the required labour laws are being followed and all the compliance is done as required.

Let us look at what exactly is labour law compliance audit and why it should be a factor of concern for companies.

What is Labour Law Compliance Audit?

An audit is all about unravelling the policies of the company. It is to make sure that all the labour laws are being followed thoroughly. Audits can help in finding current loopholes in the process and organization. Internal and external audits both are necessary to skip any possible error or miss. These kinds of audits can help organizations in taking timely corrective measures.

Below is the process of labour law audit and the required parameters for it:


  1. Understanding the organization and geography

    It is vital to understand what the organization does and which industry it falls under. The auditor then segregates the laws based on geography. Apart from this, assessing the manpower is also essential for correct evaluation.
  2. Relevant labour laws and their compliance

    The next essential point to know is which laws are even relevant and need a go-through during the audit. Listing down all the laws which are relevant to the organization is an important step. The compliance of these laws needs to be monitored along with scrutinizing the concerned authority responsible for doing so. Checking the compliance records comes last.
  3. Present compliance status

    During labour law audits, external parties try to understand the process of compliance. The auditors look at the past complaints and actions taken against the same. On top of this, they assess the areas of improvement where non-compliance is happening.


An extensive report is thus prepared based on the findings and investigation. These reports find the risks and areas that fall under the non-compliance zone. Further on, a variety of corrective measures are taken.

Why do companies need to do the labour law compliance audit?

Labour audits define the corporate culture of an organization. Companies are now becoming more employee-centric, leading to good relationships and bonding. Labour audits offer a variety of benefits to both employees and employers.

  • Timely payments and proper rollout of benefits are the foundational parameters for building synergy between the employer and employee. This becomes possible with labour law compliance and further audits to improve the system.
  • Such audits provide a feeling of security. This in turn increases productivity and a sense of being valued, resulting in better retention and less absenteeism.
  • These kinds of compliance audits help in creating a brand value and name, with a subtle yet impactful positioning in the market.


Challenges in labour law compliance audit

The labour law compliance audits are multi-layered. These audits can be done internally or can be delegated to external auditing firms. Labour audits consist of many challenges which need a keen understanding and resources, to overcome them. Here are a few challenges that are often faced at times of audits:

  • Lack of documentation

    It is often noticed that there is no proper method to document the details of employees and their other details related to wages. This is one of the most challenging aspects of the audit as it is the foundational aspect of leading an audit.
  • Lack of accuracy

    With manual compliance checks and audits in process, accuracy is often left behind. Mistakes in creating reports and filing the form returns create a large gap and miss at the time of audit.


To deal with these challenges, an automated process is required. Companies can maintain all details in a dashboard, with handy reports and repositories, along with timely reminders. In short, organizations need a system that helps them in maintaining the labour law compliance, to skip the rush hour at the time of audits.

Why do you need experts to do it?

Labour law compliance is not as easy as it seems. With many reports, repositories, and calculations required, it can become a daunting task. We at Coreintegra provide end-to -end service that helps you with a variety of aspects of labour law compliance. We systemize your process with ease and no hassle. Get in touch with our team to know more about the process.