Labour Law Audits in Kerala: Key Insights and Guidelines
Introduction
Labour law encompasses a wide range of legal issues, including employment rights, compensation, working conditions, trade union activities, and employee relations, all designed to protect workers’ rights. On October 13, 2020, the Labour Law Audit near the Kerala Commissionerate issued an order to implement a Central Inspection System responsible for conducting compliance inspections across the Department of Labour, factories, boilers, and the State Pollution Control Board. This system will also integrate joint inspections involving the Department of Labour, factories, and boilers as part of the Ease of Doing Business (EDB) initiative.
Risk Assessment
Businesses are categorized into low, medium, or high-risk groups based on several factors, including:
- Number of Employees
- Type of Business Activity
- Number of Contract Employees
- Compliance Status Based on Combined Annual Return/Online Inspection
- Complaints (from employees, trade unions, management, and the public)
- Mandatory Inspections
Businesses without employees will be classified as low-risk and completely exempt from the inspection system, unless they fail to register or renew their status. For three years, online inspections are not mandatory for SEZ/EPZ establishments, low-risk industries, startups, etc.
Applicability
The applicability of the Labour Law Audit in Kerala is determined by:
- Type of Business
- Number of Employees
- Types of Employers and their Work Activities
- Status of Registration: Permanent or Temporary
Labour Law Audit
A qualified labour auditor, typically a company secretary, conducts the labour law audit. The auditor outlines the parameters for the audit, identifying relevant federal, state, and local laws, along with employer-specific regulations. The audit assesses an employer’s compliance with labour laws and verifies adherence to these regulations.
Procedure
As part of the “Ease of Doing Business” initiative, the Government of Kerala launched the Shram Suvidha portal on October 16, 2014. This platform aims to streamline the registration process under various labour laws, making it simpler and more efficient. Employers can use the Shram Suvidha Portal to complete registrations, submit annual returns, and obtain inspection reports from multiple authorities. Each registered organization is assigned a unique Labour Identification Number (LIN), known as the Shram Pehchan Sankhya. The portal facilitates a conducive business environment by reducing costs, saving time, and providing a hassle-free process for compliance with labour laws in Kerala.
Checklist
Before starting the audit, the auditor prepares a labour audit checklist, which should include the following elements to identify applicable laws based on the industry and employee count:
- Registration in the Shram Suvidha Portal
- Employer Contributions to Employee Benefits
- Adequate Safety and Security Measures
- Compliance with Display Standards as Required by the Act
- Timely Payment of Statutory Contributions (e.g., ESI, EPF)
- Maintenance of Relevant Records and Registrations per Labour Laws
- Submission of Periodic Returns
Conclusion
Non-compliance with labour laws can lead to serious consequences for employers, including legal action, fines, imprisonment, and damage to their reputation among employees and the government. Therefore, it is crucial for employers to view compliance as a fundamental responsibility. They should ensure adherence to the compliance audit checklist and seek advice from experienced professionals to navigate these regulations effectively.