HR Audit Readiness Checker

Mandatory: Appointment letter for every employee, PF nomination Form 2, ESI declaration Form 1, Attendance register, Wage register, Leave register, Accident register (for factories), Shops and Establishments registration certificate display, and POSH policy display at workplace. Non-maintenance of these registers is a compoundable offence.

Essential HR policies: Leave Policy (earned leave, sick leave, casual leave, maternity leave as per applicable act), Code of Conduct and Discipline, POSH (Prevention of Sexual Harassment) Policy, Grievance Redressal Procedure, IT and Data Security Policy, Travel and Expense Policy, Performance Appraisal Policy, and Anti-Bribery Policy.

Internal HR compliance audit: annually at minimum, preferably twice yearly. POSH compliance audit: annually as per regulatory requirement. Labour law compliance audit: before expansion to new states, before any planned government inspection, and when hiring crosses key thresholds (10 employees for ESI, 20 for PF, 100 for Factories Act provisions).

The Shops and Establishments Act is state-specific and governs non-factory establishments. Requirements: registration with local labour office within 30 days of opening, display of registration certificate, compliance with prescribed working hours (typically 9 hours per day, 48 per week), mandatory rest intervals, regulated overtime, and provisions for leave and holidays.

Penalties by violation: PF non-compliance — interest 12–25% plus penalty up to PF amount. ESI non-compliance — interest 12% plus penalty equal to ESI amount. Minimum wages violation — up to ₹500 fine per offence (being increased under new code). POSH non-compliance — ₹50,000 first offence. Factories Act violation — up to 2 years imprisonment. Penalties are being substantially increased under new labour codes.