At the commencement of audit, the Independent Professional like Company Secretary in Whole Time Practice
should define the scope of his audit. The scope will certainly differ from employer to employer. Accordingly, if
the employer does not own a factory, the provisions of the Factories Act, 1948 will not be applicable. Similarly,
certain factories in remote areas may not have the facilities of Employees State Insurance Corporation. In such
cases, there is no need to ensure compliance of ESI Act.
As stated Independent Professional like Company Secretary in Whole Time Practice should identify various
Central and State Acts and Rules that are applicable to an employer. Based on such identification, he should
commence scrutinising the compliance of provisions of various Acts/Rules. It will be in the fitness of things that
the Report is drafted in the same manner as PCS do for Compliance Certificate under the proviso to Section
383A(1) of the Companies Act, 1956. Checklist for compliance of each legislation has to be formulated before
commencement of his audit.
BENEFITS OF LABOUR AUDIT
Benefits to the Labour
(a) Introduction of Labour Audit will boost the morale of the workers to a large extent.
(b) It will increase their Social Security.
(c) It will inculcate on workers a sense of belongingness towards their employer.
(d) It will secure timely payment of wages, gratuity, bonus, overtime, compensation etc. of the workers.
(e) Timely payment of entitlements will reduce absenteeism in the organisation.
Benefits to Employer
(a) Increased productivity in view of lower absenteeism in the enterprise. Higher the productivity, higher will be the profit.
(b) Status in the Society for the employer will increase, in view of the recognition that may be bestowed on them by the Government.
(c) Strict compliance of all labour legislation will be ensured by each of the employers, which, in turn, will reduce or even eliminate penalties / damages / fines that may be imposed by the Government.
(d) Co-operation of and understanding with the workers will improve labour relations. The congenial atmosphere is indispensable for good corporate governance.
Benefits to the Government
(a) Reduction in the number of field staff for inspection of Industries/Factories/ Commercial Establishments as most of their work will be done by an Independent Professional like Company Secretary in Whole Time Practice.
(b) Compulsory Labour Audit will ensure compliance of past defaults.
(c) In case the Government seeks to introduce filing fees for Compliance Report under Labour Legislation, the revenue of the Appropriate Government will rise phenomenally.
(d) India’s image before the International Labour Organisation will improve as a country with negligible non-compliance of labour legislation.
