Labour Law Compliance for GCCs in India: Key Requirements

ByBNW TEAM

India remains one of the most sought-after destinations for Global Capacity Centres (GCCs). As international businesses look at venturing into Indian terrain and expanding their operations, including technology, analytics, finance, & other services. Labour law compliance has moved beyond HR or administrative functions. 

These compliances are now fundamental to legal risk management, continuity of manpower, governance benchmarks, and business agility. GCCs therefore need to integrate labour law compliance from the get-go.  It needs to be integrated at every stage and in every structure. 

Critical Areas of Labour Law Compliance in India

  • Working Hours & Overtime Compliance for Employees

GCCs operating in specific locations and states must comply with the Shops and Establishments Act applicable to the state. Employees must work within the framework and will not be permitted to work more than nine hours in a day. 

Way Forward:

The GCC labour law requirements in India will involve accurate evaluation of shift allocations, approval processes, working hours & overtime records. Another significant aspect that GCC employers must take care of is analysing their employee approaches in terms of the Occupational Safety, Health and Working Conditions Code, 2020.

  • PF & ESI Compliances

One of the most significant statutory registrations for GCC workers is the applicability of Provident Fund and Employees’ State Insurance under the Code on Social Security, 2020. Statutory compliance services in India help organisations to adhere to this law. The PF regime essentially covers establishments employing 20 or more employees. Similarly, ESI covers establishments employing 10 or more employees.

Way Forward:

To avoid statutory defaults & repetitive errors, GCCs in India need to assess each stage of salary structuring, employee composition, and proper registrations. 

  • Gratuity Rules & Employee Benefit Costs

Under the Code on Social Security 2020, within 30 days from the date, gratuity should be paid to employees from the date it is payable & for eligible fixed-term employees, gratuity must be paid upon the contract termination after a year of service.

 Way Forward:

Instead of focusing on the current payroll expenses, GCCs must also consider looking into accumulated gratuity liabilities, especially when they have to deal with an unplanned salary framework involving long-term statutory payouts.

  • Maternity Entitlements

 Maternity benefits also come under the Code on Social Security, 2020. This is where eligible employees are entitled to maternity benefits, like 26 weeks of paid maternity leave in eligible cases, with an additional 12 weeks in specific situations. 

 Way Forward

GCCs must therefore design a compliant structure that entails policies related to leave, manager conduct, return-to-work procedures, & childcare-associated duties that are laid out in a legally protected and practical manner.

  • POSH & Internal Committee Needs

Workplace harassment compliance is one of the most important constituents of a well-structured labour law compliance policy. The Prevention of Sexual Harassment at Workplace Act (POSH) operates independently. Under this, an employer with a workplace having more than 10 employees forms an internal committee. This regulation also demands a formal anti-sexual harassment policy and a proper grievance management mechanism in place.

Way Forward:

GCCs in India require an India-focused approach when it comes to designing a POSH framework that entails formation of committees, reporting, inquiry, & training processes.

  • State-Focused Labour Law Compliance

Companies often make the mistake of giving more importance to central laws & regulations, overlooking the state-level or regional labour laws and rules. One of the crucial GCC labour law needs in India is highly influenced by state-level regulations mandating employment, establishment registration, working conditions, holidays, and records.

Way Forward

For GCCs in India, it is well established that the statutory registrations for GCC employee compliance need to be treated as a serious and extensive procedure that should entail central and state laws.

 A Future-Ready Compliance Framework for GCCs in India

GCCs usually face challenges related to labour compliance as they take care of these compliances very late, inadequately, or without making an effort to connect legal needs to daily functions. A practical blueprint for GCCs in India will begin with planning to shall therefore begin with a employee strength focused applicability evaluation. 

  • The first step is to identify the laws that will be based on the number of employees, salary structure, office location, obligations related to gender, & the utilisation of contractual staff. 
  • The second vital step for GCCs is managing and maintaining documents. Organisations need to ensure that they handle important documents like offer letters, employment agreements, employee work hour protocols, leave policies, maternity-related issues, POSH documentation, and other documents accurately.
  • The third & final step is building a robust compliance governance structure. The framework should include registration procedures, contribution systems, formation of committees, audit preparedness, & more.

Conclusion

International businesses cannot achieve enhanced HR compliance through common or standard compliance formats. It requires a strengthened India-specific structure that is flexible and substantiated.