Significance of Statutory Compliance

Significance of Statutory Compliance

A payroll system consists of everything that can affect an employee’s salary like keeping a record of his leaves, tracking clock in and clock out timings, medical bills, employee loans, tax deductions, PF contributions, etc. All organizations have distinct methods of dealing with these factors but their common motive is to shield themselves from any sort of legal trouble. While dealing with them organizations need to abide by a certain set of rules and regulations which is called Statutory Compliance.

What is Statutory Compliance?

Simply put, Statutory Compliance in Human Resource refers to a legal framework comprising of numerous labor and federal laws to which a company is expected to adhere to while dealing with its employees. Every business has to function and grow within this framework and is morally obliged and accountable to deal with any kind of employee leave, payroll, and tax-related issues. The provision of support and benefits provided by an organization is essential for maintaining stability and future growth for which Statutory Compliance is necessary. It facilitates the development of a company’s strategies and reduces extra costs.

What is its Working Process?

The working process of the Statutory Compliance Management System takes place in two basic forms: Labor Law & Legal Law. The HR Industry’s four major elements- recruitment, training, rewards, and efficiency management are taken into account through this process.

Statutory Compliance integrates the strategies of the HR Department by every staff member and brings out their hidden potential. Some of the laws applicable under the Statutory Compliances in the Indian Payroll System are- Minimum Wages Act, Payment of Wages Act, Maternity Benefits Act, Tax Deduction at Source (TDS), Professional Tax, Employees Provident Fund (PF), and Miscellaneous Provisions Act, Gratuity Act, Employee State Insurance Act, Shops and Establishments Act, Contract Labor Regulation Act, etc.

These days a lot of online clouds and HRMS software like Zimyo are available in the market that provides total assistance in abiding with all kinds of statutory obligations.   

What is its importance?

Like every other country, India also has its own set of central or state’s labor laws and legal obligations that business organizations need to comply with. While dealing with statutory compliance companies have to stay updated with all labor regulations and adhere to them. Non-compliance with any of the regulations can cause a lot of legal trouble to companies in the form of huge penalties and fines. It eliminates the risk of penal actions, financial losses, loss of goodwill and business integrity, and consumer loyalty might also get impacted severely. That is why Statutory Compliance is of great significance and companies invest a massive amount of time, effort, and money to meet compliance requirements.

Advantages of Statutory Compliance

For employees

Statutory Compliance ensures that employees are treated fairly in the organization and get justified payment for the work they do as companies have to comply with the minimum wage rate. It also makes sure that employees get a sound working environment thereby preventing them from working for long hours or in inhuman conditions.

For organizations

Missing out on deadlines or negligence of any of the regulations might result in a huge penalty but with the help of the Statutory Compliance Management System, all timelines are duly met without any problems. It protects the organization from extravagance and legal troubles as the company becomes fully compliant. It conciliates the risks and increases the awareness about compliance.


Organizations that spend sufficient resources on the requirements of Statutory Compliance in HR will find their investment worth it as they will enjoy numerous other benefits along with getting complete protection against non-compliant issues. Zimyo HRMS software can help you to keep track of all changes concerned with regulations and receive notifications for making sure that your firm is complying with the latest legislative updates.

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