Types of Trainees and Labour Laws related to Trainees in India

A trainee is a person undergoing a training program within an organization, after graduation from the higher and technical course. These trainees may be subsequently absorbed into the organization on completion of the training program.

In India, there are no specific laws that determine or include the word ‘trainees’. We can identify three types of people who undergo training. They are Trainees, Interns, and Apprentices.

Trainees

As mentioned earlier, trainees are those individuals, usually, freshers, who lack specific skills and who undertake the specified training as ‘trainees’. Upon completion of training, they may be absorbed into the organization if found fit. Stipend is paid during the period of training.

Interns

Interns are students who are undergoing their education but due to the requirement of the curriculum, undertake an internship program in an organization. An internship is a temporary position that is mandated in the course that they are undergoing. In most cases, interns do not receive any wages during the period of internship. There are, however, exemptions where interns are paid during their internship.  However, paid internship is an exception.

Apprentices

An apprentice is a person who trains for a career by working under the supervision of a highly experienced individual or worker. The apprentices have a formal contract with the employer. The apprenticeship follows a clear plan and includes on-the-job training combined with an educational curriculum. The individual comes under the Apprentice Act, 1961. Apprentices are paid stipends ranging from Rs:9,000/- to a high of nearly Rs:21,000/-.

Labour Laws related to Trainees

In India, there are no specific labour laws that include trainees. A lot of confusion persists regarding whether they are eligible to receive the benefits that normal employees get. There are instances where trainees are looked upon as employees, and organizations that engage trainees should be aware of certain facts before engaging them.

Are trainees eligible for EPF?

A trainee is eligible to get the benefit of the EPF Act under certain circumstances. If the trainee is not a student and does not come under the Apprentices Act, 1961, then the trainee will be eligible for EPF deductions. This is subject to the trainee attracting Sec.2(b) and Sec.2(e) of the EPF Act.

 

Section 2(b)


section 2(b)

 

Section 2(e)


section 2(b)

Are trainees eligible for ESIC?

Trainees are generally paid a stipend. If the trainee satisfies Sec.2(9) of the ESIC Act, then he is considered an employee and is eligible to be subjected to ESIC contributions.

 

Section 2(9)


section 2(9)
section 2(9)

Are trainees subject to the Minimum Wages Act, 1948?

Trainees, especially in the private sector have to be paid the notified Minimum wages. The Minimum Wages Act contains a listing of the scheduled employment. As per the Act, temporary or probationers under scheduled employment must receive a minimum rate of wages as notified.
The Ministry of Labour and Employment, through its Notification G.S.R 680 (e) dated 22nd September 2014 notified the minimum wages to be paid to trade apprentices.

This minimum rate is calculated as a percentage of the salary of semi-skilled workers of the respective State or Union Territory. The percentages are as follows:

  • 70% during the first year of training.
  • 80% during the second year of training.
  • 90% during the third and fourth year of training.

In the event of a State or Union Territory not notifying the minimum wages then the lowest minimum wages of the scheduled employment for semi-skilled workers shall be considered for calculating the stipend.

 

G.S.R 680 (e)


G.S.R 680 (e)

Are Trainees eligible for Bonus?

Where the trainees are engaged under the Apprentices Act, 1961, they will not be entitled to a Bonus under Sec. 2(13) of the Payment of Bonus Act, 1965. The Apprentice is not considered an ’employee’ and is, therefore, not eligible to receive a Bonus.

If the trainee has not been engaged under the Apprentice Act, 1961, then the trainee is eligible for a Bonus under the Payment of Bonus Act, 1965 subject to satisfying Sec.8 of the Act.

 

section 2(13)


section 2(13)

section 8


section 8

Are Trainees eligible for Maternity benefits?

A trainee with one surviving child, engaged as an Apprentice under the Apprentices Act, 1961, may be granted maternity leave for 90 days from the date of its commencement without payment of the stipend, and the apprenticeship training period shall be extended accordingly.

The apprentice is eligible to receive the stipend during the extended period.

A woman trainee can also avail of the benefit under the Maternity Benefit Act, provided she satisfies Sec. 3(o) and Sec. 5(2) of the Act.

 

Section 3(o)


Sec. 3(o)

 

Section 5(2)


Sec. 5(2)

Conclusion

From the available information, we can understand that

  • Trainees shall be considered for entitlement of EPF and ESI subject to them not being apprentices under the Apprentices Act, 1961.
  • Apprentices engaged under the Apprentices Act, 1961 are not treated as ’employees’ under the ESIC Act, whereas a trainee can be treated as an ’employee’.
  • Interns who are paid needn’t be considered for EPF and ESI, whereas unpaid interns have nothing to be deducted from as they do not receive any remuneration.
  • Trainee women apprentices engaged under the Apprentice Act, 1961 who have one surviving child may be granted 90 days leave under the Maternity Benefit Act, 1961.
  • Apprentices engaged under the Apprentices Act, 1961, or as per the Model Standing Orders, needn’t be considered for EPF.
  • Trade Apprentices are eligible for Minimum Wages.
  • Trainees in the scheduled employment as per the schedule of the Minimum Wages Act must receive a minimum of the notified rate.

GetifyHR has gained tremendous experience in handling these issues. Our Payroll Outsourcing Module is perfectly designed to handle all aspects of Payroll processing like generation of Payslips, Leave and Attendance, and Statutory requirements like EPF, ESI, PT, and TDS. Ours is a one-stop solution for all Payroll related issues.

HRM - Laws and Regulations

Human Resources Management (HRM) – Complying with Laws and Regulations

Introduction

Human Resources Management is a vital activity in any organization.  People are the greatest assets to a company or organization. Human Resources Management is a strategic approach to effectively and efficiently managing the employees in an organization. Human Resource Management is the process of employing people, training them for specific roles, remunerating them for their performance, developing policies for their well being, and strategizing to retain them.

The HR department acts as a liaison between the employer and the employees. The HR team helps to maintain the organizational structure of the workplace and ensures safe and efficient performance of the jobs. HR management holds many responsibilities and in this article, we will briefly touch on the functions of the HR department and fully focus on laws and regulations that companies have to comply with to be fully compliant.

Functional areas of Human Resources Management

HRM activities involve Hiring and Recruitment, Training, and development, maintaining Employer-Employee relationships, instilling and maintaining the company culture, handling the benefits and compensations due to the employees, handling indiscipline, and managing compliance issues. The focus of a company is to generate revenue and this can be achieved by, utilizing the skills and abilities of people.  HRM play a critical role in achieving this.

Hiring and Recruitment

Recruiting the best talent and retaining them is the top priority of many organizations. Similarly hiring to fill a role is a vital activity that is an ongoing process in any organization. The HR department plays a critical role in the hiring and recruitment process. The HR team works very closely with the other department heads or supervisors to identify the needs. The recruitment strategy is formulated and the HR team handles all activities like placing advertisements, screening applications, and interviewing the candidates.

Training and development

Retaining talent is a very critical task for all organizations, and the HR team performs this critical task.  The HR department to help employees to prepare for career advancements within the organization initiates Training and Development programs. This will assist in retaining talent and will benefit both employers and employees. This would usher in higher productivity and lower turnover rates. This also encourages job satisfaction and boosts the employees’ confidence in the organization.

Employer-Employee relationship

Maintaining a healthy employer-employee relationship contributes not only to the growth of the company but also creates greater trust in the management. The HR department is the liaison between the employer and the employees and will help mitigate any disagreements.

Amicable settlement of all employee grievances whether regarding benefits, compensation, work hours, workload, etc are achieved through consultations, thus creating a positive work atmosphere. This is vital for the growth of the company.

Maintaining Company Culture

Company culture may vary from company to company. The HR department may share the company’s values, vision, and rules with the employees during the onboarding process. Maintaining company culture means being able to identify any shortcomings within the organization and being able to address them for better functioning of the company. The HR team addresses these shortcomings effectively.

Benefits and Compensation

Though it is an administrative task, the HR departments oversee both the mandated and voluntary company benefits. Employees contribute towards social security, unemployment, and workers’ compensation are mandated benefits, whereas other benefits like paid time off, disability income, etc are voluntary. They serve as additional incentives to the employees, both potential and current. HR managers are fully aware of the company benefits policy and are capable of clearly explaining this to the employees.

Handling indiscipline

The HR team is highly experienced and is, therefore, well equipped to handle indiscipline. Disciplinary action like issuing show cause notices, and termination are delicate issues and have to be handled fairly and consistently to prevent escalations. HR Managers must have a clear system in place to hold employees accountable. They should be able to consult with legal counsel to ensure they are well within the law in the handling of disciplinary issues.

Complying with Laws and Regulations

Statutory Compliance requirements have to be fully complied with by all companies that employ 10 or more employees. The Government enacts these rules and regulations to safeguard the interests of the employees by providing healthy working conditions and ensuring fair work practices.

The HR teams are entrusted with the task of seeing that the company is fully compliant with all the statutes, rules, and regulations. The government keeps tweaking these rules very often and the onus is on the HR team to update these changes.

These are some of the more important functions of Human Resource Management. We shall now proceed to the Labour Laws and Regulations that are to be managed by the Human Resource Management team.

Labour Laws and Rules

Labour Laws are a body of laws, administrative rulings, and precedents that address the legal rights of working people and the restrictions on their organizations. These laws define the rights and obligations of workers and employers in the workplace. Labour Laws arose due to the demand of employees for better working conditions, and their right to organize. From the employer side, the demand was to restrict the power of workers in many organizations and to keep labour costs down.

A wide number of Labour Laws were legislated and it was made mandatory for companies or organizations to strictly follow them. Companies, especially those employing a large number of employees look upon their Human Resources Management teams to handle these laws and keep the company compliant.

The role of the HR team becomes vital as these are subject to frequent changes, and therefore, there is a need for constant updation at the administrative level.

However, the Ministry of Labour and Employment, Government of India, introduced 4 Bills in 2019 to consolidate 29 of the existing labour laws into 4 Codes.  These Codes or Reforms hope to empower the worker, both in the organized and unorganized sectors, and safeguard their interests.

These 4 Labour Codes are:

  1. The Code of Wages, 2019
  2. The Code of Social Security, 2020
  3. The Industrial Relations Code, 2020 and
  4. The Occupational Safety, Health and Working Conditions Code, 2020

1.  The Code of Wages, 2019

The Code of Wages, 2019 subsumes the following 4 Acts.

1.     The Payment of Wages Act, 1936

The objective of this Act is to regulate the payment of wages to employees in time without delay and deduct the mandated contribution from the employees, and the employers under the provisions of the Act.

2.     The Minimum Wages Act, 1948

The objective of the Minimum Wages Act, 1948 is to secure minimum wages for all the workers whether skilled or unskilled in the scheduled employment. It hopes to safeguard employees and prevents exploitation by employers.

3.     The Payment of Bonus Act, 1965

The Payment of Bonus Act, 1965 provides the payment of bonus to persons employed in certain organizations, employing 10 or more employees, based on profit or productivity. The objective is to impose a legal responsibility upon the employer who is covered by the Act, to pay Bonus to their employees as an incentive.

4.     The Equal Remuneration Act, 1976

The Equal Remuneration Act, 1976 provides for the payment of equal remuneration to men and women employees without discrimination on grounds of gender.

2.  The Social Security Code, 2020

The Social Security Code has subsumed the following 9 Acts:

1.     The Workmen’s Compensation Act, 1923

The Workmen’s Compensation Act, 1923 provides workers employed in certain industries compensation for injuries suffered during employment and to make good the losses.

2.     The Employees State Insurance Act, 1948

The Employees State Insurance Act, 1948 is an Act to provide certain benefits to employees in the event of some eventualities like sickness, maternity, and employment-related injury.

3.     The Employees Provident Fund and Miscellaneous Provisions Act, 1952

The Employees Provident Fund and Miscellaneous Provisions Act, 1952 were enacted to provide social security to employees. Through this Act, the Employees Provident Fund was set up to provide a post-retirement benefit for the employees or their legal heirs in case of the death of the employee. The Act provides for the institution of provident fund, pension fund, and deposit-linked insurance fund for employees employed in establishments that come under the purview of the Act.

4.     The Employees’ Exchanges (Compulsory Notification of Vacancies) Act, 1959

The Employees’ Exchanges (Compulsory Notification of Vacancies) Act, 1959 provides for compulsory notification of vacancies to the Employment Exchange and the submission of returns relating to employment by the employer.

5.     The Maternity Benefit Act

The Maternity Benefit Act was enacted to regulate the employment of women at the time of their maternity. The Act entitles women employees to’ maternity benefit’ which is fully paid wages during the pre-maternity and post-maternity period. Women employees are eligible for maternity leave for 26 weeks.

6.     The Payment of Gratuity Act, 1972

The Payment of Gratuity Act provides for the payment of gratuity to employees as a token of appreciation for their contribution to the company. It is a monetary benefit provided to employees employed in mines, factories, plantations, oil fields, ports, and other establishments after their retirement.

The gratuity is 15 days’ salary for every year of employee service subject to a maximum of rupees ten lakhs.

7.     The Cine-workers Welfare Fund Act, 1981

The Cine-workers Welfare Fund Act, 1981 was enacted to provide for the levy and collection of a cess on feature films to finance the activities to promote the welfare of certain cine-workers. Workers covered under the Act received monthly remuneration of not less than Rs:8000/-.

8.     The Building and other Construction Workers Welfare Cess, 1996

This Act was enacted to regulate the employment and condition of service of building and other construction workers and to provide for their safety, health, and welfare measures and other matters connected therewith.

9.     The Unorganized Workers’ Social Security Act, 2008

The Unorganized Workers’ Social Security Act, 2008 enables the formulation of Welfare Schemes for the workers of the unorganized sector. This welfare scheme covers health and maternity benefits, life and disability cover, old age protection, etc.

3.  The Industrial Relations Code, 2020

The Industrial Relations Code, 2020 subsumes the following 3 Acts:

1.     The Industrial Disputes Act, 1942

The Industrial Disputes Act, 1942 was promulgated in April 1942. It was enacted to make provisions for the prevention and settlement of Industrial Disputes and for providing safeguards to the workers.

2.     The Trade Unions Act, 1926

The Trade Unions Act, 1926 was enacted to provide for the registration of Trade Unions and to define the law relating to registered Trade Unions.

3.     The Industrial Employment (Standing Orders) Act, 1946

The Industrial Employment (Standing Orders) Act, 1946 requires employers in Industrial Establishments to define conditions of employment under them.  The Act defines the laws which govern the relationship between the employer and the workman in an industrial establishment and includes the elements such as classification of worker, working hours, attendance, suspension, termination, etc.

4.  Occupational Safety, Health, and Working Conditions Code, 2020

The Occupational Safety, Health and Working Conditions Code, 2020 subsumes the following 13 Labour Acts in a single code.

1.     The Factories Act, 1948

The Factories Act, 1948 was enacted to consolidate and amend the law regulating labour in factories, with respect to occupational safety and health.

The Factories Act, 1987, amended the Act.

2.     The Contract Labour (Regulation and Abolition) Act, 1970

The Contract Labour (Regulation and Abolition) Act, 1970 is an Act to regulate the employment of contract labour in specific establishments and also provide for its abolition under certain circumstances. The Act was enacted to prevent the exploitation of contract labourers as there was no existing law.

3.     The Mines Act, 1952

The Mines Act, 1952 was enacted to provide measures relating to health, safety, and welfare of workers employed in mines and oil fields. The Act specifies the duties of the employer to manage the mines or mining operations and the health and safety of mines.

4.     The Dock Worker (Safety, Health and Welfare) Act, 1986

The Act provides for the health, safety, and welfare of dock workers and matters connected therewith. Any work within the vicinity of any port where loading, unloading, movement, or storage of cargo into or from a ship or other vessel, port, dock, storage place, or landing place comes under the purview of this Act.

5.     The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996

This Act was enacted to regulate the employment and condition of service of building and other construction workers and to safeguard their health and provide for their safety and welfare measures and other matters connected therewith or incidental thereto.

6.     The Plantation Labour Act, 1951

The Plantation Labour Act, 1951 was enacted to regulate the working conditions of workers employed in plantations, and to provide for their welfare. According to the Act, land refers to any piece of land that measures 5 hectares or more that is used to cultivate tea, coffee, cardamom, cinchona, rubber or any other plant, and which employs 15 or more workers on any day of the preceding 12 months.

7.     The Inter-state Migrant Workmen (Regulation of Employment and Condition of Service) Act, 1979

This Act was enacted by Parliament to regulate the conditions of service of inter-state labourers. The Act’s objective is to protect migrant workers who are deployed outside their native states in India.

8.     The Working Journalists and other News Paper Employees (Conditions of Service and Miscellaneous Provisions) Act, 1955

The objective of this Act is to regulate the services of working journalists and other persons employed in newspaper establishments.

9.     The Working Journalists (Fixation of Rates of Wages) Act, 1958

This Act provides for the fixation of rates of wages of working journalists and matters connected therewith.

10.  The Cine Workers and Cinema Theatre Workers Act, 1981

The Cine Workers and Cinema Theatre Workers Act, 1981 was enacted to provide for the regulation of the condition of employment of certain cine workers and cinema theatre workers and matters connected therewith.

11.  The Motor Transport Workers Act, 1961

The Motor Transport Workers Act, 1961 provides for the welfare of motor transport workers and to regulate the conditions of their work.

12.  The Sales Promotion Employees (Condition of Services) Act, 1996

This Act was enacted to regulate certain conditions of service of sales promotion employees in certain establishments. The establishment in this instance applies to every establishment engaged in the pharmaceutical industry.

13.  The Beedi and Cigar Workers (Condition of Employment) Act, 1966

The Beedi and Cigar Workers (Condition of Employment) Act, 1966 was enacted to provide for the welfare of the workers employed in establishments that were involved in the manufacture of beedi and cigars, and to regulate the conditions of their work and for matters connected therewith.

These 4 Labour Codes were passed by Parliament but are yet to be implemented. These reforms will lead to a stable atmosphere for businesses to invest in and create a win-win situation for both the employer and the employees.

Other Laws that are mandated

A few more laws that are mandated are briefed below:

1.     Apprentices Act, 1961

The Apprentices Act was enacted to regulate and control the training of apprentices in the industry and to utilize the facilities available in the industry for imparting practical training with the view to meeting the requirements of skilled manpower for the industry.

2.     The Employees’ Liability Act, 1938

The Employees Liability Act, 1938 was enacted as a protective umbrella for workmen who bring suits for damages for injuries sustained by them against certain defenses of the employer. The Act has been amended in the year 1970 and is applicable throughout India.

3.     The Environment Protection Act, 1986

The Environment Protection Act, 1986 was enacted with the main objective to provide protection and improvement of the natural environment and for matters connected therewith. The act empowers the Centre to take all such measures as it deems necessary for the protection of the environment.

4.     The Indian fatal Accidents Act, 1855

The Indian Fatal Accidents Act, 1855 was enacted to deal with the recovery of damages for the death of a person caused by a ‘wrongful act, neglect, or default’ of another person.

5.     The Personal Injuries (Compensation Insurance) Act, 1963

This Act imposes a liability on the employers to pay compensation to workmen sustaining personal injuries and to provide for insurance for employers against such liability.

6.     Public Liability Insurance Act, 1991

This is an Act enacted to provide public liability insurance for the purpose of providing immediate relief to the persons affected by accidents occurring while handling any hazardous substances and for matters connected therewith.

7.     The Weekly Holidays Act, 1942

The Weekly Holidays Act, 1942 was enacted to grant weekly holidays to persons employed n shops, restaurants, and theatres without any deduction or abatement of wages. The Act is applicable throughout India but shall come into force only when the state government implements the same through a notification in the gazette.

Conclusion

All these Acts have been enacted with the specific purpose of safeguarding the interests of the workers both in the organized and unorganized sectors. With the Government of India passing the much-awaited Labour Reforms, we can see changes that will empower the worker and at the same time make it easier to do business in India. Human Resources Management teams have to be alert to the ever-changing rules and regulations, and they have to be fully prepared to update these changes as and when they occur.

GetifyHR has been supporting its clients across the country in handling all the relevant laws. With our hugely successful Payroll Outsourcing module, we have been able to handle these laws across industries and have assisted our clients to be fully compliant, always. Our cloud-based outsourcing module is a fully integrated package that can handle all aspects of Payroll including the generation of Payslips, Managing Leave and Attendance, Statutory Compliance requirements, and Recruitment. We are fully prepared to support existing clients and prospective clients in handling the new Labour Codes once the Government implements them. Contact us for more information.

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Specific points to be noted while drafting an employment agreement

Introduction

An employment agreement is a formal contract between the employer and employee that specifies the time of employment. These agreements are legally binding documents that have to be signed by the employer and employee agreeing to mutually acceptable terms and conditions related to employment.

The employment agreement is a covenant between the employer and employee that lays down the provisions of employment. This document governs all aspects of the job like the date of joining, designation, duties, and responsibilities, CTC, leave clause, termination rules, etc.  This article hopes to highlight the most important points that should find a place in an employment agreement.

What is the need for an employment agreement?

Though there is no legal mandate for the employers to have an employment agreement, it is recommended to define the terms of the contract to avoid further legal issues. Importantly, an agreement defines very clearly the relationship between the employer and employee. This avoids misunderstandings and smoothens the functioning of the business.

An agreement reduces the chances of a dispute between the employers and employees and assists in limiting the liabilities of the parties.

Features of an Employment Agreement

An employment agreement contains a formal Offer of Appointment and Acceptance. It also details the consideration which is the essential component of a valid contract. The competent parties in this case the employer and the employee are also clearly detailed in the agreement. The purpose of the contract is provided in the Legal Object. The free consent clause explains that the agreement has been entered into without any coercion, undue influence, fraud, misrepresentation, or mistake.

Important points to be included in an Employment Agreement

1. Nature of Job

You should clearly define the role and responsibilities of the employee. This includes the Job Title, Job description, the department assigned to, the role and skill requirement, and educational qualification.

2.  Remuneration and benefits

The agreement should contain details of the Annual salary package and should also include raises, bonuses, and incentives.  The agreement should have details of Health benefits, Company stock options, if any, investments/retirement plans, and any other fringe benefits. The employer should adhere to the guidelines of the Equal Pay for Equal Work (Remuneration) Act and Minimum Wages Act while fixing the remuneration

3.  Leave Policy

This clause deals with the number of holidays allowed by the business and the types of leave that can be availed by the employee during the course of his employment. These include Earned Leave, Sick Leave, Casual Leave, Privilege Leave, Annual Leave, Maternity Leave, Compensatory time-off, etc.

4.  Non-disclosure Clause

An employer may include this provision to protect the confidentiality of important trade secrets of the organization. This provision may have an effect even after the employee has left the services of the services of the company and prevents the dissemination of propriety information of the organization.

5.  Termination of Contract

The condition for termination of the contract has to be specified. This includes the period of notice to be given on both side, and the remuneration to the employee on termination.

6.  Reimbursement of Expenses

A mention has to be made in the agreement that all expenses incurred by the employee on behalf of the company will be fully reimbursed to the employee.

7.  Social Security Benefit

This clause should specify the deduction from both the employer and employee side towards EPF and Insurance. The benefits that accrue to the employee should be explained as per the statutory rules and regulations.

8.  Probation Period

This is relevant when the employee is taken on probation. Normally the probation period is six months and the conditions during this period should be specified.

9.  Breach of Contract

This clause specifies the remedies for liability if the parties breach any of the terms of the contract. The remedies and actions to be followed for the resolution of the dispute have to be specified.

10.  Disability or Death

In the event of the death of an employee or if they suffer a serious disability, the kind of support that the family can get has to be mentioned. This could be in the form of monetary compensation or by providing a job opportunity to a family member of the deceased.

11.  Jurisdiction for resolving disputes

This comes into effect when a dispute arises out of an employment agreement. When a jurisdiction clause is included in the agreement this specifies that the dispute will be resolved through a judicial court or forum and will be governed by the governing laws of the state. Laws relating to employment vary from state to state; therefore, it is advisable to state the governing laws in the contract.

Conclusion

An employment agreement is an important document that is proof of the relationship between the employer and the employee. This is a legally binding document that needs to spell out all the terms and conditions of employment. The agreement must be carefully drafted after taking into consideration all the laws and employment rules and regulations in the country. This may differ from state to state so a lot of effort must go into framing the agreement. What we have detailed above are the more important points to be noted when preparing an employment agreement.  There are many more points that have to be included in such an agreement.  A talk with GetifyHR would bring more clarity on the subject.

GetifyHR has had vast experience in employment-related activities and have simplified the art of drafting highly effective employment agreements. Our clients spread across the county have benefitted from our expertise in this regard.  As one of the leading outsourcers, we have been providing excellent service through our platform that integrates Payroll management, HR management, Attendance & Leave management, Statutory Compliance and Task management.  Talk to us for more guidelines in creating an employment agreement that takes care of all the laws and statutory requirements.

Maternity blog

The Maternity Benefit (Amendment) Act, 2017

Introduction

The Maternity Benefit Act, 1961 was enacted to protect women employees during the maternity period.  The legislation entitles women employees maternity benefit of full paid wages during pre pregnancy and post pregnancy periods.  According to the Act, a woman employee is entitled to 12 weeks maternity benefits.

This has now been amended by the Maternity Benefits (Amendment) Act, 2017 passed by parliament on March 09, 2017.

Maternity Benefit (Amendment) Act, 2017

The provisions of the Maternity Benefit (Amendment) Act, 2017 is effective from April 01, 2017.  The Act is applicable to all establishments that include factories plantations, mines, Government establishments, shops & establishments or any other establishment as may be notified by the Central Government.  Any such establishments that employ 10 or more employees are liable to follow this Act.   As per the amendment, the maternity benefit period has been raised to 26 weeks from the previous 12 weeks.

Eligibility: 

To be eligible to avail the benefit of this Act, a woman must have been employed in an establishment for a period of at least 80 days in the past 12 months. 

The Key Highlights

Increase in Maternity Benefit period

The period of paid maternity leave which is the benefit provided by the Act has been increased from 12 weeks to 26 weeks.  Prior to the amendment, a pregnant woman could avail the benefit for 6 weeks before the date of expected delivery.  Through this amendment, this has been increased to 8 weeks.  The balance 16 weeks can be availed after delivery.

Benefit for 3rd delivery

As per the Amendment the paid maternity period of 26 weeks is only available for the first two children.  Any deliveries beyond the 2nd child will be eligible for only 12 weeks of Maternity Benefit of which not more than 6 weeks can be availed before the date of expected delivery.

Rules pertaining to Adoption or Surrogacy

In the case of a woman employee who adopts a child below the age of 3 months or a commissioning mother (a biological mother who uses here egg to create an embryo implanted in a surrogate mother) will be entitled to Maternity Benefit for a period of 12 weeks from the date the child is handed over to the adopting mother or the commissioning mother.

Establishing a Creche facility

As per the Act, it is mandatory for every establishment have 50 or more employees to have a crèche facility either separately or along with the other common facilities.  The crèche premises should be located within the prescribed distance from the establishment.  The beneficiary woman is allowed 4 (four) crèche visits per day and this includes the interval for rest allowed to her.

Work from Home

Given the present situation where work from home has become the norm, the employer may allow the beneficiary to work from home post the period of Maternity Benefit.  The terms of working can be mutually agreed to between the employer and the woman employee.

Keep the employee informed

The Act requires the employer to provide the woman employer all the relevant information about the maternity Benefit Act during the initial period of appointment.

Conclusion

The Maternity Benefit (Amendment) Act, 2017 is an enactment that provides protection for women employees to exercise here rights to continue with her profession during the maternity period.  This right is guaranteed under the Indian Constitution.  GetifyHR provides excellent consultation to companies regarding all aspects of the Maternity Benefit Act and Amendments.  Our outsourcing package is been perfectly modified to handle all the changes brought on by the amendment and is also future ready for any more changes.

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The government has released four new Labour Codes

The much-discussed New Labour Codes which were to be implemented on 1st July 2022 has been postponed as of now. These 4 Labour Codes are an amalgamation of the 29 Labour laws. According to the Ministry for Labour and Employment, only 23 states and UTs have released the draft rules under the Code of Wages.

The introduction of the new Labour Codes brings about much-needed reforms in the working conditions of employees in the country. They bring about changes relating to wages, social security, labour welfare, health, safety, and working conditions of employees.

Let us now delve into a few takeaways from these new codes when they are implemented by the Government.

Capping of Daily Working hours

The new labour codes allow the capping of daily working hours from the current 8 to 12 hours. However, the weekly work hours remain capped at 48 hours. This means that if any employee prefers a 4-day work week, he or she can increase the daily working hours to 12 and generate the required working hours for the week.

The new code also allows an increase in maximum overtime hours from 50 hours (as per the Factories Act) to 125 hours in any quarter across industries. The law will enable companies to adopt the 4-day week and employ workers on the weekend, if necessary.

However, the 4 day week could also be a double-edged sword. On the one hand, the employees would benefit from a more extended rest period, but on the other hand, it entails longer working hours during the weekdays which may negatively affect the workers’ health. In the same vein, the increase n overtime may enhance the earnings but it will be at the expense of longer working hours or probably working on weekends as well.

Changes in take-home salary

The take-home salary may get reduced especially for employees of the private sector. On implementation of the new codes, the basic salary would be capped at 50% of the gross salary. However, it proposes to increase the PF contributions of both the employees and employers. The changes will also bring about an increase in the retirement corpus and gratuity amounts. This will be beneficial to all employees during their retirement days.

Changes in leave availed

The new codes hope to rationalize the leave an employee can avail of during the course of their employment, carry-forward of leave to a succeeding year, and encashment of leave during the period of employment. The new labour codes have reduced the eligibility requirement for leave from 240 days of work to 180 days of work in a year.

The effect on the unorganized sector

The New Labour codes allow workers of all sectors including the unorganized sector to avail the benefits of the ESIC scheme. A national database of workers in the unorganized sector will be created through registration on a portal under the new labour codes. This will provide medical care to the employees and their family members who work in the unorganized sector.

The ESIC infrastructure that includes the hospitals, dispensaries, and branches is being expanded up to the district levels. On implementation, all 740 districts will get this facility.

Any worker engaged in hazardous work would be given the benefit of ESIC.  Similarly, gig workers engaged in new technology will also become eligible to become ESIC members. Plantation workers will also be eligible for its benefits. Institutions involved in hazardous work have to compulsorily register for ESIC.

Conclusion

These reforms hope to empower the workers in the organized and unorganized sectors. This will herald a major change in labour laws in the country and bring in the much-needed changes that have been discussed about for decades.

GetifyHR is fully prepared to guide our valued clients about all aspects of the new labour codes as and when they are implemented.  Our professional team is fully knowledged about these changes and is capable of providing immediate solutions to any doubts and queries regarding these laws.  Our outsourcing payroll package will also be able to support these changes so that our associates can be fully compliant during the proposed changeover to the new laws.

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The importance of paying salaries on time and how outsourcing payroll helps businesses grow!

Introduction

Fixing employee salaries and paying them on time is a critical operation in any business, whether big or small. The employer and the HR managers put their heads together to chalk out the salary structure of the employees based on designation, rank, performance, etc.  These decisions are crucial as they impact the performance of the company as a whole.

From the point of view of the employee, the real driving force is the salary they take home. This is what pushes him or her to put in their best efforts at the workplace and only when the employee works wholeheartedly does the business grow. Achieving higher productivity is closely linked to the performance of each employee.

Where the work atmosphere and culture are good the employee will show greater loyalty, but it also depends on whether or not you pay your salaries on time every time.

Let us now look at why you should pay your employees on time.

Why you should pay salaries on time, every time?

Paying salaries on time is an Employee Right!

Governments, whether Central or State have made it mandatory that the salaries of employees are disbursed at a fixed schedule. Companies may pay their salaries on a weekly, bi-weekly, or monthly basis. Whatever the case, companies should pay according to their schedule without any delay.

In the event of non-payment or late payment, the employee can file a claim with the concerned department to seek redressal of their grievances. This would lead to a lawsuit against the employer which is not in the interest of the business. The company may end up paying fines or penalties to sort out this problem.

Loss in Productivity

When you delay payment of salaries you are creating unwanted tension within the workforce. This could lead to losing your efficient employees as they look for better paymasters or the performance of employees drop.  This will lead to productivity loss.

When you pay your employees promptly you are sending the message across that you appreciate their contribution and want them to remain loyal. The employees on the other hand become more loyal and wish to associate with the company for longer periods. This is a win-win situation for both. It improves productivity and generates loyalty.

Save on the Cost of Hiring

When you don’t pay your salaries on time your employees are more likely to be dissatisfied. This would entail greater expenses for the company as they have to pay for fresh hires. This would lead to:

– Loss of Productivity as the new employee may take a long time to be as productive as his predecessor.

– Impact the workplace culture due to high employee turnover.

– Increased hiring costs as you may have to spend on the job advertisement, interviewing, and screening the applicants.

– Spend more on Lawyer fees as non-payment or late payment may lead to litigation.

Non-payment or delayed payment of salaries greatly impacts your business. It is imperative that you pay your employees regularly if you are serious about the growth of the company. Companies normally process their payroll either manually using a readymade package like Excel or make use of a customized payroll package that is fully automated. Manual processing is a cumbersome process and is prone to errors. Making use of a customized payroll package is an ideal solution that can handle the process very efficiently. However, it does have its disadvantages.

How Outsourcing can promote business growth

One way to enable regular payment of salaries is by outsourcing your payroll to an efficient service provider. There is no doubt that this will go a long way in improving performance and creating a harmonious work atmosphere.

Payroll outsourcing is a process in which companies hire a service provider to manage all payroll functions. This includes generating accurate payslips, managing leave and attendance, keeping the company compliant with all the statutory rules and regulations, and also handling all recruitment needs. Outsourced payroll solutions have a few advantages and in the long run, they could help the business to grow. Let’s evaluate a few of these advantages and how they support business growth.

Reduce expenses by cutting down on time spent on payroll processing

When you outsource payroll to an efficient service provider, you not only save time but will also cut down on your expenses. Since professionals run the package, you will be able to save time when compared with manual or in-house payroll processing. This will conversely help you to cut down on your costs as you can do away with a dedicated team to handle payroll and also reduce on investment for costly hardware.

Improve capacity utilization to enhance productivity

Outsourcing to a professional service provider will enhance productivity. How does this happen? During manual or in-house processing you will have a dedicated team conducting the operations. The HR team would be on hand to confirm the outcome of the process and take further action.

However, when you outsource the service provider handles the entire operation and this releases the HR team and the other staff from handling this task. This would enable better capacity utilization as the HR team can apply their mind and effort to core business activities and are released from the pressures involved in a mundane activity. This would significantly enhance productivity.

Preventing Data theft and misappropriation of funds

Data security is a vital factor in payroll processing. The risks include data theft, data tampering for personal gains, and misappropriation of funds. When you outsource payroll you are assured of a high degree of security as all the critical data are stored in highly secure cloud-based servers that ensure the very best of data protection.

Keeping the Company Compliant

Being compliant with all the statutory rules and regulations is of utmost importance in any business.  Any business that employs 10 or more persons is liable to comply with these rules and regulations.

Outsourcing payroll to a service provider will ensure that the company is fully compliant with all rules and regulations. Any changes brought about by the Government will get immediately updated so that the company can be compliant always. By being compliant you are avoiding legal issues.

The functioning of the HR and accounting departments is fine-tuned.

Outsourcing frees the HR department to concentrate on core business activities. This will enable them to monitor the employees better, improve employee retention, attract better talent, and enhance the training process. This will improve the overall functioning of the company.

The accounting department would benefit from getting the required data at the end of the payroll process regularly. This will help them to reconcile the accounts and be ready with all the MIS reports required by the management.

Assist employees with an efficient ESS facility

One of the important features of outsourcing is the highly efficient ESS module that comes with the package. This module will be beneficial for both the employees and the employer. The employees can have access to all relevant information, especially about leave and attendance. The mobile app that is inbuilt gives them the required information on their smartphones.

Conclusion

Payroll processing is a highly critical function that directly affects the business. Whether you do it manually or through in-house automation or outsourcing, any inefficiency in the performance would adversely affect the business. However, outsourcing to a professional service provider will provide a platform that integrates Payroll management, HR management, Leave and Attendance Management, and Statutory Compliance.

GetifyHR offers an exceptional cloud-based payroll module that integrates all aspects of payroll processing. This package provides a high degree of integration of all modules that give the user highly accurate reports as and when required.

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How can strategic Payroll Integration boost your ROI in Human Capital Management?

Human Capital plays a vital role in the growth of an organization. As organizations evolve, the role of the employee also grows and it becomes important for the company to keep its employees happy. To achieve this, companies have to ensure prompt and accurate payment of salaries always. Manual processing of payroll especially where there are a large number of employees is not only redundant but is also prone to inaccuracies. This will in no way help the organization.

Opt for full automation

Full automation of the Payroll process is one solution that companies can adopt to deliver the best results. A step higher would be to outsource the entire process to a professional service provider. Such automation packages or service providers utilize inbuilt algorithms that facilitate companies to process payroll with utmost accuracy and also ensure they stay compliant and are up-to-date in all statutory compliance requirements throughout different geographical locations. GetifyHR is one of the leading outsourcers of Payroll processing in the country. Their cloud based application uses the most robust technology available to offer the users a package that not only performs the payroll process but also handles Leave & Attendance, Statutory Compliance and Recruitment.

Strategic Payroll Integration

To ensure higher ROI you need to implement strategic payroll integration. The system offered by professional service providers is a fully automated package that integrates the payroll process with core human resources, time and attendance management, statutory compliance management, and talent acquisition. This helps companies to streamline their payroll process thus saving on costs. GetifyHR provides cloud-based applications that ensure seamless integration of the Payroll process with Statutory Compliance and Employee Leave and Attendance.  Our Bangalore office provides excellent support for this package in this region.

When you integrate payroll you enable companies to comply with all company-specific rules and regulations across locations. This will bring about standardization of the practices thus ensuring greater profit. The earnings, deductions, arrears, bonuses, attendance, and leave get streamlined and are in sync with the business goals of the company.

Manual processing is prone to errors; however, the risk is negligible when you opt for payroll automation or when you outsource the process. This can help you to perform even the most complex tasks with ease and within a short span of time. This enables the company to save time and effort. Where the need is to expand one’s footprint across the country, this is a much-needed transformation. This process need not depend on Excel sheets to calculate manually to arrive at the salaries.

Once all the relevant employee data has been input into the system, the payroll is processed with minimal complexity. This will enable the saving of money and can facilitate a smoother working environment thus optimizing human resources. GetifyHR provides a wholesome package that ensures timely and accurate processes through its technology-enabled cloud-based payroll module. With this you can handle all aspects of payroll processing that includes managing leave and attendance and also the mandatory deductions as per government rules and regulations. We have our office in Hyderabad to support and service our clients in Telengana and Andhra Pradesh.

Ensuring data accessibility

Strategic Payroll integration provides for easy accessibility of data in real-time and also keeps the data secure. Once human resources and payroll systems are successfully integrated, it enables maximizing profits. Moreover, the HR personnel can involve themselves in core business activities rather than be directly involved in the mundane activity of payroll processing. This will also ensure greater growth for the company.

Legacy-based human resource technologies used to be cumbersome as they relied on multiple file types and data sources. A large volume of critical data had to be input for each pay cycle and the further process takes place through another interface. This process requires more time and effort on the part of the HR team and burdened the system. Payroll integration helps to avoid the use of large, redundant databases for the process during each cycle. GetifyHR has seamlessly integrated all modules of Payroll Processing to provide the user with one of the kind solutions that handle all aspects of payroll and human capital management. Our Chennai office is at your call to support and service clients in this region.

The integrated payroll system helps clients to get better control of the payroll process. Providing hassle-free access to the records and increasing transparency is the hallmark of the system. There is scope for greater flexibility and a better understanding of the system paving the way for greater efficiency and accuracy.

The system is especially suited for organizations that have a workforce distributed across different locations in the country. It enables single-window accessibility to data at corporate or regional levels. Payroll integration helps organizations manage the workforce in a timely and secure manner. GetifyHR offers a high-end outsourced solution that provides excellent features that handles the entire gamut of payroll processing with ease.  Apart from generating accurate payslips, you will be able to perfectly manage leave & attendance, and statutory compliance requirements in a seamless manner.  This gives greater control within the organization. You can seek the support of our Delhi office for any issues regarding payroll processing.

Efficient Employee Self-service module

These specialized outsourced payroll packages help the employees across multiple locations to access a highly efficient Employee Self Service module. With the help of this module, the employees can get better access to the required information on the system or their mobiles. This will greatly enhance the transparency and trust within the organization and boost the confidence and morale of employees.

GetifyHR offers a highly efficient ESS module that is in-built within their payroll package.  Our Coimbatore office is always on call to handle any issues regarding payroll and related issues.

Conclusion

Payroll integration brings about business transformation on an enterprise-wide scale without the requirement of any additional investments. It gives the management access to relevant information in real-time at the click of a button. This will, in turn, enable quicker decision-making as all relevant information is at the fingertips.

Payroll integration across multiple locations is an innovation that enables companies to grow exponentially from within. This growth in turn will facilitate the development of an intelligent ecosystem of stakeholders, thus making it easier for companies to show quick results. The improvements can range from entering the market with innovative products, enhancing the services, or driving growth by engaging and retaining customers.

GetifyHR helps organizations to handle payroll and human capital across multiple locations and eye further horizons for growth. This will help the company set bigger goals while still focusing on its core strength – human capital. They have been in the industry for many years and have established a large client base across the country. Their payroll outsourcing module is technology-driven and cloud enhanced for great efficiency and accuracy. An association with GetifyHR is the ideal way to boost your ROI in Human Capital Management.

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Does outsourcing help you to alleviate payroll pains?

Payroll processing is a vital business function that requires proper application of mind, human resources, and technology. Human Resources Management professionals consider it a pain as it needs a huge amount of effort and time to successfully maintain this regular process. Surveys have shown that HRs are stressed while handling payroll. Badly managed payroll will bring a lot of employee frustration and the spectre of non-compliance. Both these will seriously affect the growth of the business. Let’s try to understand some of the pains associated with maintaining payroll and the ways to alleviate them.

1.  Being compliant with the Statutory rules and regulations

Being compliant is one of the most important requirements in any business. The statutory rules and regulations have been enacted to provide the best working conditions and support for employees in emergencies and after retirement. The onus is on the business to adhere to these rules and regulations without deviation.

That said, there is also a need to keep in touch with the changes in these rules and regulations when they are implemented.

These rules and regulations keep changing frequently and it is very easy for the HR team to fail in updating the changes. This would create a whole lot of problems for the management as they would have to be ready with their explanation for both the employees and the authorities.

Moreover, failure to update would also entail the imposition of a penalty which could be in the form of imprisonment or fines, or both.

The deductions towards EPF, ESI, and tax payments towards TDS have to be accurately maintained for a problem-free functioning of the organization. This requires a high degree of expertise and alertness to changes in the government rules. The best option is to outsource the entire payroll processing to an experienced service provider. This would enable reducing the pressure on the in-house team. GetifyHR has been providing excellent service from their Coimbatore location to a large number of clients in this region. Their cloud-based payroll processing module uses the latest technology to handle these processes simplistically and seamlessly.

2.  Accurate calculation of salaries

Calculating the employee salaries is a time-consuming and laborious process. The payslips differ from employee to employee and will keep changing from month to month due to various factors. All these aspects have to be implemented meticulously to get error-free payslips. Handling this process manually or through in-house software may not bring in the expected results and would become frustrating for both the management and the employees.

Outsourcing this operation to a service provider would enable error-free generation of the payslips thus avoiding tensions in the workplace. The Chennai branch of GetifyHR has been at the forefront of providing excellent service in this region with its high-end technology-based payroll processing package.

3.  Tracking Time and Attendance

Maintaining the leave entitlement of employees is a tedious task when handled manually or with in-house software. Especially in an organization employing a large workforce with different shifts and leave patterns, this would become more complicated and prone to errors. How do we overcome this problem? Well, the best solution is to outsource the entire payroll process to a qualified and experienced service provider.

This would ensure accurate tracking of time and attendance as these modules rely on the latest tracking technology. The chances of errors are greatly minimized and hence would enable error-free tracking of time and attendance. GetifyHR has been providing this service from their Madurai branch to a large number of satisfied clients.

4.  Maintaining the Payroll data

All payroll records have to be maintained for many years and should be available for retrieval as and when required. Maintaining this voluminous data and retrieving them may become cumbersome over time when handled manually or using in-house software. The best option is to outsource this process to a service provider.

The advantage lies in the technology used by such vendors. Most of them use cloud-based technology and this makes it easier for accessing data from any location. Moreover, it reduces the expenses of the purchase of extra hardware in the organization.

GetifyHR, Tiruchirapalli has been providing excellent service to its clients in this region. Their cloud-based payroll module provides the ideal solution to handle all aspects of payroll processing.

5.  Assists in the administrative process

One of the biggest headaches faced by organizations is in maintaining the administrative process related to employee activities. The HR team that normally handles this process is pushed to the limits in maintaining this process. Undertaking this process manually or through in-house software has a lot of shortcomings.

Organizing all the data and filling out the regular paperwork during each payroll cycle is not an easy task. These shortcomings can be overcome by associating with a qualified and experienced service provider that is capable of handling the complexity simply and seamlessly.

GetifyHR, Vellore has been a top-notch player in this field with their cloud-based payroll module that can handle all these needs with a great deal of simplicity and accuracy.

6.  Data Security and Confidentiality

Data security and confidentiality are vital factors concerning payroll processing. The most vital information about the employees is handled here. Therefore, the onus is on the organization and the HR team to handle the data in a highly secure and confidential manner.

Employees on the other hand expect their vital data to be fully secure and confidential. Any shortcomings here would increase the chance of data getting into the wrong hands. This will cost the company dearly. One of the ideal solutions to maintain a high level of data security and confidentiality is to outsource the payroll process to an experienced service provider. They offer a high degree of data security and confidentiality by way of password protection, access control and secure storage, and adherence to all data security norms.

GetifyHR is one of the top players in payroll process outsourcing with a huge number of clients throughout the country. They bring in vast experience and use of the latest technology to provide their clients with a sophisticated package that handles all aspects of payroll processing with simplicity. All their modules are seamlessly integrated so that the required information is available in real-time.

Conclusion

The pain points of payroll processing as briefed above can be overcome by outsourcing to a qualified and experienced service provider. The package that they offer makes use of high-end technology and is cloud-based. The solution that they offer not only ensures strict compliance with the statutory rules and regulations but also provides the user with a highly integrated module that can provide the required information at the click of a button.

GetifyHR, with its highly sophisticated, cloud-based package provides a stable platform to handle all aspects of payroll processing with a great deal of simplicity and in a user-friendly manner. Associating with GetifyHR is associating with the best in the industry.

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Top 10 reasons why Payroll Outsourcing makes smart business sense!

Payroll Processing has always been a very challenging task especially when the workforce is fairly large. When we think of Payroll, we are not just thinking of generating the payslips. The entire gamut of Payroll Processing includes Attendance and Leave Management, Statutory Compliance, and Recruitment. All these aspects have to be perfectly integrated and work seamlessly if you are to run your payroll error-free.

The best option is to outsource this activity to a reputed service provider that could relieve HR from the pressures involved in maintaining the payroll in-house. In this article, we endeavor to familiarize you with the 10 compelling reasons on why you should outsource Payroll Processing.

1.  Allow the HR to focus on core business activities

The HR teams are hard-pressed to handle payroll processing and there is no denying the fact that this activity is taking up too much of their valuable time. HR teams are supposed to focus more on talent management, improving the work culture, evaluating and enhancing performance, training and development, hiring and retaining top talent, etc. On the contrary, they are forced to focus on the mundane activity of payroll processing. By relieving the HR team from this activity, you free them to focus on core business activity.  This will help the business to grow.

2.  Saving on costs

Outsourcing Payroll saves money. When you manage payroll in-house your expenses will soar as you not only need to hire a workforce to specifically handle this task, but you also have to provide the infrastructure, both hardware, and software. When you outsource you can cut costs and reduce errors.

3.  Save time

Payroll processing requires a great deal of time and attention to detail when performed in-house. The process involves generating the payslips and at the same time calculating leaves and benefits and updating the entitlements and deductions. When you outsource this activity you can save time in a process that is routine and very repetitive.

4.  Enhance Productivity

Payroll processing is a mundane activity that is cumbersome and requires a lot of adjustments to frequent changes. Time is of the essence in any organization and payroll processing consumes a lot of time and effort. However, when you outsource this task to a Service Provider, you are improving the working of the employees and thereby enhancing productivity.

5.  Improve Accuracy

Payroll processing is prone to errors and these errors negatively impact the working of the company.  Inaccuracies in Payroll will attract penalties from the government departments and create friction with the employees. Error-free payroll processing is a must and the best option to achieve this is by outsourcing to a qualified service provider. When you outsource your payroll you can generate error-free and highly accurate reports as they use high-end technology supported by a team of highly qualified professionals.

6.  High Level of Data Confidentiality & Security

Payroll involves the vital data of employees. Any leakage of such data would give rise to lawsuits, discontent, and damage to the reputation of the company. The privacy of this data is paramount and a reputed service provider will guarantee high security, strong internal controls, and restricted access to the data.  Moreover, the service provider will guarantee confidentiality and security with contractual rights to damages in case of breach of contract.

7.  High level of Integration

The package offered by service providers comes with a high degree of integration. All the modules namely, Payroll, Attendance & Leave management, and Statutory Compliance are seamlessly integrated so that you can get all your reports in real-time with a great degree of accuracy. This is a great advantage to the company as all information is available to the various departments as and when needed.

8.  Keeping the Company Compliant

This is a very vital factor for any business. Following the Statutory Compliance rules and regulations is a must for all businesses.

Whether it is handling EPF, ESI, Income tax, Professional Tax, or other Labour laws, any errors would have serious ramifications for the company. The statutory rules and regulations are prone to change frequently, but service providers can handle these changes without any delay. This will enable the business to be compliant always and avoid legal issues or paying penalties to the concerned government departments.

9.  Quickens Turnaround time

Outsourcing the Payroll process enables a quicker turnaround time. The outcome of outsourcing is on-time data processing, fewer errors, accurate reporting, and the support of a professional & dedicated team.

Outsourcing makes employee management easier and smoother and thus provides a quick turnaround time.

10.  Work without Pressures

Apart from the cost & time-saving advantages, outsourcing your payroll allows you to work without any pressure. ‘Lesser the headache, better the working’. When you outsource payroll, you can take your mind off paying employees on time, calculating & paying the taxes, or distributing the payslips. When your mind is off these pressures, all other activities of the business work smoothly, thus paving the way for greater growth.

Conclusion

Outsourcing your payroll processing to a qualified service provider can reap a lot of benefits for the business. One important reason is that payroll processing is their core area of expertise. They are manned by professional staff that brings in a wealth of experience that enables accurate processing and full compliance with statutory rules and regulations.

GetifyHR with its high-end cloud-based technology offers the best solution for all your payroll needs. If you are on the lookout for an outsourcer, you don’t have to look any further. Click here for further information or call us to help you make a decision.

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Tax obligations of Businesses – Corporate Tax and Payroll Tax – A brief tour

Introduction

Income tax is the tax levied by the government on the income earned by an individual or corporate in a particular year. The Act is called Incometax Act, 1961 and this came into force on the 1st of April 1962. Companies are liable to pay their corporate tax dues and also deduct the tax dues from the salaries of those employees who are liable to pay tax in the form of Tax Deducted at Source (TDS) and remit to the government.

What is Income as per the Act?

The word Income is defined under section 2(24) of the IT Act. For a businessman, the profits and gains he makes will constitute income. This is corporate tax.  Corporate tax is a direct tax levied on the net income or profit of a corporate entity from their business, whether domestic or foreign.

For an employee who is liable to pay tax as per the Act, the income constitutes Basic salary and also includes salary advance, Leave Encashment, Commissions Earned, Annuity and Gratuity. The employer deducts the tax liability from the salary of the employee who is liable to pay tax and remits to the government account. This is Tax Deducted at Source (TDS)

For Professionals & Freelancers, the earnings from different sources like professional fees, other incomes, etc form part of the income.

For a landlord, the rental received from part of the income. Similarly, capital gains from the sale of property or shares and buying of assets are also considered income.

However, certain incomes like the interest earned on Public Provident Fund (PPF) are exempt from tax.

The Assessee

The corporate entity or the person who is liable to pay Income tax and who is required to file the Income tax Return (ITR) is known as an Assessee. Accordingly, any business that has reached the threshold for paying tax is an assessee and any employee who is liable to pay tax is also an assessee.

The Assesse has to file the Income tax Return for each Assessment Year. Here we have to familiarize ourselves with two terms Financial Year and Assessment Year. The Financial Year is the period during which you earned the income and the Assessment Year is the succeeding year when you file your return for the previous year.

PAN & TAN

PAN is a ten-digit unique alphanumeric number issued by the Income tax Department. PAN which is the abbreviation for Permanent Account Number is a prerequisite for filing IT Returns. The IT Department can trace all transactions, returns, refunds, and other activities relating to Income tax through PAN.

TAN refers to Tax Deduction Number. This is a 10-digit alphanumeric number allotted to those who are liable to deduct TDS by the IT Department.

The obligation of the Business

Corporate Tax obligations

As a business entity, the employer has to pay corporate tax once they become liable to pay tax as per the IT Act, 1961. One of the basic conditions for paying IT is if your income exceeds Rs:2,50,000/- in a Financial Year. The tax on income for a financial year has to be paid to the IT Department during the succeeding year, which is known as the assessment year.

However, there are provisions to pay tax in advance based on estimated income for that particular year. In case the advance tax paid is more than the actual tax to be paid, then the excess tax paid is refunded to the assessee.

Payroll Tax obligations

Payroll tax is the tax an employee has to pay to the IT department after deducting the amount from the salaries of his employees who are liable to pay tax. Any employee whose income, in this case, the salary, exceeds Rs:2,50,000/- in a Financial Year is liable to pay Income tax. As per sec.192 of the Income tax Act, the employer is required to deduct tax at source from the salaries payable to an employee during the financial year. The tax liability of the employee is determined by the rate as applicable during the particular year. Every month, 1/12 of the net tax liability should be deducted from the employee’s salary along with a 3% Education Cess on Income tax. This has to be remitted to the IT department within the prescribed time as per sec.200 of the IT Act.

Further, the employer or deductor is required to furnish a certificate to the employee giving particulars of the tax deducted. The certificate has to be issued in Form No.16. Similarly, it is mandatory to file a return that certifies the deduction of tax and payment along with the required details. The authorized person has to sign and submit this to the Department. The employer has to quote the TAN and PAN numbers of all employees in all the certificates and returns.

When an employer fails to deduct tax, he is liable to pay interest. In the event of the employer deducting tax but not paying the tax to the department, he is in default and is, therefore, liable for penal action.

Conclusion

The employer has multiple obligations when it comes to paying Income tax. From the business point of view, the employer has to pay corporate tax under the prevailing rates. From the employee’s point of view, he has to efficiently manage the tax liabilities of each employee and calculate the TDS, deduct the amount from the salaries and remit the same to the department.

This is an ongoing process and the employer has to show great efficiency in managing these issues.

The TDS part can be efficiently managed by outsourcing to a third party who can efficiently manage all requirements of payroll that includes generating payslips, managing attendance and leave, and all statutory requirements like EPF, ESI, Incometax, and Professional Tax.

GtifyHR, one of the leading Payroll and HR outsourcing companies in the region offers a technology-driven cloud-based package that handles Payroll and Statutory requirement issues in an efficient and simplistic manner. Outsourcing Payroll operations is the best solution to overcome the problems associated with handling TDS and other tax-related issues.