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Known & Unknown Regulations that govern Business Records Retention in India

As governed by the Indian Labour and Employment Laws, every employer is mandated to maintain business records for multiple years. ‘Records Retention" is a vital aspect of Statutory Compliance. The laws and acts that mandate records retention is a long list and hence this makes it a challenging process for businesses.

Whether it is in the digital format or in the physical paper-based files, employers should ensure that they preserve such records for a stipulated number of years. Failing to preserve such records may attract penal provisions under respective Acts.

List of ACTS that govern records-keeping compliance

No business is an exemption to this act. A business with over 20+ employees MUST register with EPFO and even businesses that have under 20 employees may voluntarily register with EPFO.  Because of the salary drawn by employees have economic significance, experts suggest a minimum of 10 years for which businesses are supposed to maintain the records. The EPFO has issued a detailed FAQ on their occasional inspection policy for auditing records retention.

Under the ESI Act, 1948, any establishment which has more than ten employees in the organisation and having a maximum salary of INR 21,000 per month should get registered with ESI Act.  This ESI ACT aims to offer socio-economic protection to the population employed in the organised sector and their dependent members. Under this insurance scheme, individuals can avail of financial assistance during medical emergencies due to occupational hazards, sickness, and maternity. 

The ESI Act, mandates employers to preserve required records for a period of five years. The ESI Regulations under Rule 32 (Register of Employees), 66 (Maintenance of Accident Book) and 102-A (Inspection Book), describes the type of records to be maintained as well as the Record Retention period as stated above.

The enactment of the Code on Wages2019 represents a significant overhaul of India's labour laws in relation to provisions governing. It is an elaborate law, comprising of a total of 69 sections, that has many new interesting facets. The Wages Code enforces employers to maintain records, returns and notices under Section 50. The Forms, Registers and Wage Slips are required to be maintained. However the ACT doesn’t dictate on how long these records are to be maintained.

An Act to provide for fixing minimum rates of wages in certain employments. The Act mandates the employer to maintain the records for a period of 3 years. The Acts’ Rules 26 (Form of registers and records), 26A (Preservation of registers), 26B (Production of registers and other records) and 26C (Provision for alternative forms). Under Minimum Wages Act,1948 an inspector can demand registers & records for a period of last three years authoritatively. Failure to produce records will attract inquiries and actions.

The Wages Act, under Section 13A, mandates employers to maintain registers and records as prescribed it in the Payment of Wages Rules, 1937 and all such records should be preserved for a period of 1 year to 3 years.

The Bonus Act under Section 26 mandates employers to maintain prescribed records without specifying the time-frame.

The Equal Remuneration Act under Section 8 and by virtue of the Equal Remuneration Rules, 1976 under Rule 6 mandates the employer to maintain registers and records but do not specify as to how many years of records have to be preserved.

The Contract Labour Act, under Section 29 mandates the principal employer and contractor to maintain registers and records as prescribed and by virtue of Rule 80 (3) under Chapter VII of the Contract Labour (Regulation and Abolition) Central Rules, 1971 mandates that all such registers and other records shall be preserved in original for a period of three years.

The BC Workers Act by virtue of Rule 241 (8), under the Building and Other Construction Workers’ (Regulation of Employment and Conditions of Service) Central Rules, 1998, mandates the employer to preserve the prescribed records in original for a period of three years.

The States have their own respective rules as governed under other enactments viz., the Factories Act, Labour Welfare Fund Act, Shops and Establishments Act, Professional Tax Act, The Maternity Benefit Act, etc., prescribing the preservation period for the records.

For example, the Tamil Nadu Clinical Establishments (Regulations) Rules, 2018 mandates that medical records shall be maintained for a period of Not less than 10 years.

Also, the Tamil Nadu Shops and Establishments Rules, 1948 demands that the registers, records and notices relating to any calendar year shall be preserved till the end of the next calendar year.

How to meet these records keeping compliance?

While maintaining records is definitely not any business’ core activity, NO BUSINESS IS EXEMPTED from doing so. The complications get multifold when certain acts don’t specify exact time frame for which they suggest preservation of these records.

It is imperative to stay on top of these unclear and changing regulations that may penalize your business and disrupt business continuity for not maintaining business records. Consult a professional Records Management Company like KAYMAN VAULTS who can assist in meeting records-keeping statutory compliance.

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