Why Statutory Compliance is a Necessity in Payroll Processing?

June 22, 2022
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Companies are often concerned about certain legal issues associated with compliance, such as unreasonable wages, aggressive employees, and demands from trade unions. Even if you don’t intend to break laws, you may face trouble if not given proper attention.

It becomes necessary for organizations to spend ample time and effort to ensure payroll is compliant through a proper audit. However, calculating payroll manually can be difficult. That’s where the payroll management system comes to your aid to avoid the risk of non-compliance and simplify your workflow.

Let’s first understand what is statutory compliance and its importance.

Significance of Statutory Compliance

The word ‘statutory’ means rules and regulations and ‘compliance’ means adherence. Statutory compliance in HR is considered a legal framework that a company must adhere to when dealing with its employees.

Every country has certain state and central labor laws that companies need to comply with. Non-compliance can result in legal issues like penalties and fines. That’s why companies spend a lot of money and time to fulfill compliance requirements, from professional tax to the minimum wages act. Every company is required to be well-versed and pay attention to all regulations in labor laws to maintain compliance and reduce risks.

Advantages of statutory compliance for employees:

·         Ensures fair treatment of employees

·         Ensure they are fairly paid and the company complies with the minimum wage rate

·         Prevents employees from working for long hours or under insensitive conditions

Advantages of statutory compliance to organizations:

·         Avoid fines and penalties because of timely payments

·         Protect against unreasonable wage or benefit demands from trade unions

·         Prevent legal issues

·         Mitigate risks and increase compliance awareness

·         Low risk of adverse events

Risks of Non-Compliance:

·         Penal actions and financial losses

·         Affect reputation and business integrity

·         Customer loyalty will be affected

Why Use Payroll Management System to Remain Compliant?

As we have discussed above, clearly a company will save itself from serious legal troubles, if it is statutory compliant. This will lead to sustainable growth as employees get treated well and work with more ownership. It is essential to rely on an automated solution that ensures payroll statutory compliance and suits the ever-changing environment of regulations. 

Compliance with statutory requirements will help prevent a company from inevitable consequences like lawsuits, suspension of licenses, work stoppages, payment of penalties, and complete shutdown. It will further promote and preserve the company’s goodwill and help secure much-needed business contracts. This will cultivate a healthy work environment, resulting in satisfied and enthusiastic employees.

If a company strictly adheres to statutory compliance, it will ultimately improve the quality of its products or services. It allows the company to focus on its core objective instead of unnecessarily spending resources and time on paying penalties. It will help a company produce excellent outputs and reduce compliance-related risks.

Conclusion:

 

If you wish to spend your valuable time focusing on the company’s growth and not worrying about statutory dues, get started with HivePayroll, which offers an end-to-end solution for payroll and statutory compliance management. Moreover, to calculate payroll, you can use an income tax calculator to deposit requisite dues like TDS, PF, etc. with suitable authorities and filing returns.

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