Annual Returns as per Indian Labour Rules

As per the Indian Labour Rules, employers must submit yearly returns that provide details about the company’s compliance with labour laws like the number of employees, their wages, and more. This article is our attempt to create a comprehensive guide on the yearly labour law returns and procedures without complicated legal jargon.

Purpose of filing Annual Returns

In general, Indian labour laws require businesses to submit yearly reports in order to verify compliance, provide specifics regarding the number of employees and other pertinent information, and safeguard the rights of the employees.

These returns are used to make sure that labour rules are being followed and to give government officials information for creating and enforcing policies.

Labour laws that require the filing of Annual Returns

The main labour laws that require annual returns to be filed include the Factories Act, 1948, and the Contract Labour (Regulation and Abolition) Act, 1970.

Under the Factories Act, 1948, employers are required to file the annual returns with the Chief Inspector of Factories, providing information on the number of workers employed, details of working hours and leave, and any accidents or incidents that occurred during the year.

The Contract Labour (Regulation and Abolition) Act, 1970, requires employers to file annual returns with the appropriate government department, providing information on the number of contract workers employed and their wages.

Commonly applicable forms

• Form 5: This form is for employers with 20 or more employees. It provides information on the number of employees, wages, and other details related to the workforce.
• Form 14: This form is for employers with less than 20 employees. It provides similar information as Form 5, but in a simplified format.
• Form 6: This form is for employers in the construction industry. It provides information on the number of employees, wages, and other details related to the workforce.
• Form 7: This form is for employers in the manufacturing industry. It provides information on the number of employees, wages, and other details related to the workforce.
• Form 10: This form is for employers who have employed an apprentice. It provides information on the number of apprentices employed, wages, and other details related to the apprenticeship.

Penalties for non-compliance

Employers must file these returns precisely and by the due date. Failing to do so may result in fines and penalties. Additionally, employers must make sure they are abiding by any other pertinent labour rules, such as the Minimum Wages Act of 1948 and the Payment of Bonus Act of 1965.

Depending on the labour law, different penalties may be imposed for failure to file annual returns. Below are some of the potential penalties for the non-filing of annual returns under Indian labour laws.

• Factories Act: Under the Factories Act, employers who fail to file annual returns can face fines of up to Rs. 1,000 for the first offence, and up to Rs. 2,000 for subsequent offences.
• Employees’ State Insurance Act (ESI Act): Employers who fail to file annual returns under the ESI Act can face fines of up to Rs. 10,000, along with imprisonment for a term of up to six months.
• Payment of Wages Act: Employers who fail to file annual returns under the Payment of Wages Act can face fines of up to Rs. 1,000 for the first offence and up to Rs. 5,000 for subsequent offences.
• Minimum Wages Act: Employers who fail to file annual returns under the Minimum Wages Act can face fines of up to Rs. 500 for the first offence and up to Rs. 1,000 for subsequent offences.

Please note that the penalties and fines shown above are the highest possible amount as per labour laws; the actual fines and penalties may be lesser depending on the situation. However, employers should take measures to stay aware of their responsibilities under Indian labour regulations and file annual filings. This could not only save money spent on penalties and fines, but also avoid reputational damage and the risk of imprisonment. 

To comply with the numerous labour regulations and to timely file yearly returns, it is advised to seek the assistance of a labour law consulting firm. At Allsec, we help over 350+ clients across 25 states of India file their annual returns for around 12000 stores and establishments and more than 250 factories. And, we are extremely proud to say that our team has not missed one deadline in the last four years. Talk to our team and learn the secrets to our success.