As a business in India begins to expand and its workforce crosses the threshold of ten employees, the legal responsibilities and statutory obligations under labour laws significantly increase. Labour registration for such businesses is not just a regulatory formality but a fundamental compliance step that ensures worker protection, fair employment practices, and legitimacy of operations. Several central and state labour laws trigger mandatory registration once a business employs ten or more individuals, depending on the nature of the industry and the type of employment.

In this article, CA Manish Mishra talks about Labour Registration for Business with 10 or More Employees.

Legal Framework Governing Labour Registration

The core of labour registration in India lies in various employment and social security laws that activate based on employee strength. These include:

• The Shops and Establishments Act (as applicable in each state),

• The Factories Act, 1948,

• The Employees’ State Insurance Act, 1948,

• The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952,

• The Contract Labour (Regulation and Abolition) Act, 1970,

• The Payment of Gratuity Act, 1972,

• The Maternity Benefit Act, 1961,

• The Sexual Harassment of Women at Workplace Act, 2013,

• And now, the recently enacted Labour Codes, including the Social Security Code and Occupational Safety, Health and Working Conditions Code.

Trigger Point: 10 or More Employees

When a business reaches ten or more employees, the following compliance obligations become applicable:

• Shops and Establishments Act: Every commercial establishment, including offices, retail outlets, and service centers, must register under this Act when they employ ten or more people. This registration grants legal recognition and is mandatory to open bank accounts, apply for loans, and ensure welfare measures like weekly offs, work hours, leave policies, etc.

• Factories Act, 1948: If the business involves manufacturing and uses power, the threshold is ten employees. Registration under this Act ensures that the premises are inspected and approved by the factory inspector, focusing on safety, ventilation, lighting, health provisions, and compliance with working hour limits.

• Employees’ State Insurance (ESI): This Act mandates ESI registration if a business employs ten or more persons drawing wages up to a specified ceiling. It ensures medical and cash benefits to workers during sickness, maternity, or employment injury.

• Maternity Benefit Act, 1961: This Act becomes applicable when the number of employees exceeds ten. It mandates paid maternity leave for women employees, crèche facilities where the number exceeds a certain limit, and safeguards against dismissal during maternity.

• Payment of Gratuity Act, 1972: Applicability starts when a company has ten or more employees. It ensures a statutory gratuity payment to employees completing five years of continuous service.

• Sexual Harassment of Women at Workplace Act, 2013: Establishments with ten or more employees must form an Internal Complaints Committee (ICC) to deal with complaints of sexual harassment. They must also conduct awareness sessions and display notices about women's safety rights.

• POSH Reporting and Annual Compliance: In addition to forming the ICC, companies are also required to submit annual reports about complaints received and resolved, if any.

• Labour Welfare Fund: In many states, businesses with 10 or more workers are required to contribute to the state’s Labour Welfare Fund on a periodic basis.

Registration Process and Compliance Procedure

Once the threshold is met, businesses are required to obtain labour registration through the prescribed forms available either through state labour department portals or unified portals where implemented. The registration process involves:

• Submission of business incorporation documents,

• Details of employees including salary structure, designation, and joining date,

• PAN and address proof of the establishment,

• Identity of the employer or authorized signatory,

• Relevant fees as per state rules.

Post-registration, the business is issued a labour registration certificate or licence number, which must be prominently displayed on the premises.

Statutory Records and Returns

With registration comes the responsibility of maintaining statutory registers, such as:

• Employee attendance register,

• Register of wages, advances, and deductions,

• Overtime register,

• Leave records,

• Accident and medical records (where applicable).

Employers are also expected to submit periodic returns (monthly, quarterly, or annually) to the labour department in specified formats.

Consequences of Non-Compliance

Failure to register under applicable labour laws after crossing the 10-employee threshold can lead to serious consequences, such as:

• Monetary penalties, which may be calculated per day of default,

• Legal prosecution and fines under the respective Acts,

• Cancellation of business licences in certain cases,

• Disqualification from government tenders or subsidies,

• Reputational damage and labour unrest.

Regular inspections by labour officers may also be conducted to check compliance, and any adverse findings can lead to immediate enforcement action.

Recent Developments and Digital Reforms

In recent years, the government has taken strong steps to simplify and consolidate labour compliance. Four major labour codes have been passed which subsume over 29 central labour laws. Once these codes are fully implemented across all states, businesses will benefit from:

• Single Registration Number (Labour Identification Number - LIN),

• Unified returns across multiple laws,

• Digitised application and self-certification process,

• Ease of Doing Business through minimal inspector interference and e-compliance.

Many states have already launched unified labour portals and online licence application systems. These platforms allow businesses to register under multiple Acts through a single window and receive timely reminders for renewals and return filings.

Conclusion

Labour registration for businesses with ten or more employees is a cornerstone of lawful business operation in India. It not only safeguards the rights and welfare of employees but also protects employers from legal liabilities and penalties. With ongoing reforms and digitisation, the process is becoming more streamlined, but the onus remains on business owners to remain vigilant and up-to-date with their responsibilities. Establishing internal compliance mechanisms, designating HR or legal officers to handle statutory duties, and using digital tools for record-keeping can go a long way in ensuring smooth and sustainable operations.