Labour laws compliance audit

Audit under Labour Legislations is an effective tool for compliance management of labour legislations. It helps to detect noncompliance of various labour laws applicable to an organisation and to take corrective measures. Objectives of labour audit is to protect the interests of all the stakeholders. This leads to better Governance and value creation for the organisation and to avoid any unwarranted legal actions against the organisation and its management. Labour Audit is a process of fact finding. It is a continuous process. The Labour Audit will ensure a win-win situation for all interested persons. Initially, the Employers may frown at the idea of such Audits, but with passage of time, the compulsion of labour audit will infuse self- regulation amongst certain employers. Audit under labour laws is a new concept, which is necessitated, indirect consequence of its non-compliance in large scale. Even after over six decades of attaining independence, India is still plagued with victimisation, non-compliance of labour legislations is still at large. An analysis of these practices reveals that many employers resort to short cut methods to avoid the compliance of labour legislations. There is no system in place for reporting non-compliance of labour legislations by an independent professional like Company Secretary. Workers in India report many cases relating to non-compliance of labour legislation by employers 

It is a detailed check of the policies, procedures and standards of the company in respect of labour, compliances and non-compliances of the labour laws.

Benefits of Labour Audit to various stakeholders

• It enhances the morale and social security of the employees.
• It helps in maintaining the sense of belongingness between employers and employees.
• It ensures timely payment of wages, remuneration and other statutory amount of the employees such as – pension, gratuity, provident fund, etc.
• The positive outcome of the audit enhances the reputation of the employer in the industry.
• Audit eliminates the penalties, damages, compensation that can be imposed by the government on the organization.
• Labour Audit will ensure compliance of historical defaults committed by the organization under various labour laws.
• It reduces the burden of the government because audit will be conducted by an independent professional.
• It ensures higher productivity and lower absenteeism.
• It helps in preventing lockout, retrenchment, strikes etc.
• Co-operation and good understanding improve labour relations and this is indispensable for the good corporate governance.