What is statutory compliance?
An organization’s time, effort and money are utilized to ensure that payroll is compliant through a statutory audit. From employee’s fair treatment of labor to protecting the company from unreasonable wage or benefit demands from trade unions or aggressive employees, every company faces several potential legal issues vis-à-vis compliance. Even though it might not be a company’s intent to break these laws, it may easily slip through the cracks without the necessary protection.
So how can you be sure that you can avoid the risk of non-compliance?
To address this, let’s first understand what statutory compliance is.
Every company or organization has one common thing at its core which is people. Without people, no organization or company can function. These people are the employees of the company, who work in various roles to fulfil its purposes. For an organization to perform well, it needs to be organized and streamlined through proper norms and regulations. These regulations extend to every facet, which includes the company’s interactions with its employees and its finances. This is known as statutory compliance.
Why is it important?
Every country has its own set of labor laws that every company needs to adhere to. Dealing with statutory compliance often requires companies to be aware and updated on all the labor regulations in their country. It is also mandatory for companies to comply with these laws. Non-adherence to these regulations can cause legal trouble, such as penalties and fines for a company. That is why every company invests a huge amount of money, effort and time to meet the compliance requirements from all the land laws like a professional tax to minimum wages act. To help in this, the company seeks expert advice from labour law and taxation law experts.
To manage a demanding regulatory environment, every company should be well-versed and updated on all regulations in the labour laws and need to formulate efficient ways to maintain compliance and minimize risks.
Need for Statutory Compliance
Doing business has become increasingly complex and has indeed become very challenging to be in sync with the operational aspect of every business. Organizations often seek the help of statutory compliance experts whose main job is to be compliant with the ever-changing regulatory environment.
A lot of companies also provide statutory compliance management services as they have a deeper understanding of the regulatory setting and provide specialized services to organizations. They basically streamline the entire process from the day-to-day maintenance of prescribed forms and registers to the filing and reports.
Advantages of Statutory Compliance
The most important advantage of statutory compliance to employees is that it ensures fair treatment of labor and prevents employee’s exploitation or when they are made to work for unmanly hours or in inhuman conditions. Statutory compliance also ensures that they are paid fair proportion according to work done and that companies adhere to the minimum wage rate.
This gives a strong advantage to organizations which are the timely payment of taxes, which also avoids legal troubles like penalties and fines. These rules make it easier for the Government to collect the revenue and for companies to organize their finances. Statutory compliance is important to prevent legal troubles. Depending on the non-compliance, companies can be fined monetarily as well as be tried in a court of law.
Statutory compliance is of great virtue and must be given due consideration and importance. Companies must have a proper payroll management system.