Statutory Compliance Checklist for Manufacturing Industry

One can argue that manufacturing is at the heart of all industry. Statutory compliance in the manufacturing industry is crucial to the safety of its workers, the quality of the products and services delivered and to the reputation of the company itself. And this is where a statutory compliance checklist for manufacturing companies becomes so crucial.

The Government cares for employee welfare but also wants organisations to succeed. For this, the Government has created statutory schemes. These schemes are instituted by the government to guarantee employee health and safety. These include the provisions made under enactments such as the Factories Act 1948, the Mines Act 1962 etc.

If you are a manufacturing company, then you must have a statutory compliance checklist in accordance with the Factories Act of 1948 amended in several amendments since then; one that you follow regularly and adhere to without exception. But what exactly is statutory or regulatory compliance in the manufacturing industry?

What Is Statutory Compliance for Manufacturing Industry?

Statutory compliance in HR refers to the efforts made by a company to comply with labour laws and regulations set by the state and central governments. In the context of the manufacturing industry too, there is statutory compliance that companies must follow for the sake of employee welfare and to keep the brand reputation intact.

In the case of statutory compliance for the manufacturing industry, it is possible that in certain domains, such as minimum wage laws, only directives from specific state governments exist whereas other domains may have both state and central laws.  A statutory compliance checklist for manufacturing companies can help clear the air when it comes to clarifying whether laws are being followed.

Statutory Compliance Issues in Manufacturing

There are several issues in statutory compliance possible on the industrial floor. Many of these statutory or regulatory compliance issues can seriously hamper the functioning of the enterprise. Let us look at some of the common issues now:

Lack of Minimum Age and Qualification for Work

Child labour is a rampant problem in India. Several factories still employ children in their factories. Organisations are looking at ways of cheap labour through apprentices. Though apprentices are eligible to work on the factory floor, they too have some minimum requirements such as a fifth-grade qualification and other skill requirements.

Lack of Minimum Wages

Workers in the factories in many parts of India are underpaid and not even offered minimum wages. The state governments have fixed minimum wages which must be followed in each state but not everyone abides by it. Not paying minimum wages can lead to employee mistrust and risk of interventions from labour unions, low engagement levels, and lower productivity levels.

Working Beyond Work Hours

Working beyond the 9 hours of work stipulated by the government is unfortunately a norm in many factories across India. When people are overworked, their stress levels increase, errors in production also lead to product quality issues, which will eventually lead to customer dissatisfaction. If workers are working overtime, then they must be paid overtime pro rata, failing which the company does not follow statutory compliance.

Lack of Work Safety and Hazard Protection

The Occupational Safety and Hazard Management Code (OSH) stipulates that workers can have an open discussion with their floor supervisors on safety conditions and that they must be informed of the potential risks of employment and other hazards on the floor before they begin the work. Workers must also be offered sufficient compensation in the case of accidents under the provisions of the code.

All of these are sufficient reasons why a statutory compliance checklist for manufacturing companies is very necessary.

Statutory Compliance Checklist for Manufacturing Companies

The legal statutory compliance checklist for manufacturing companies includes several points that companies must adhere to. Let us look at some of these points now.

Quality Assurance

• Develop a quality management policy that ensures compliance with current standards and considers risk management.
• Continuous improvement of all aspects of manufacturing such as procedures, personnel, documentation and testing.
• Implement ways to recover from failures with deviation and change control, investigate batch failures etc.
• Periodic testing of automation to ensure that they are working correctly.

Financial Compliance

• Analyze the negative impact of a compliance breach and see what happens to production or the orders placed.
• Keep a check on all the financials periodically to ensure that there are no issues of compliance or any pending payments.
• Review internal controls on financial compliance, operations etc. and see if they are working to detect fraud.

Environmental Regulations

• Make sure that hazardous waste is recovered and broken down and reused for processes or transported safely.
• Ensure that there is no discharge into water bodies around the facility, and that water remains clean and pure.
• Regulate the production of particulate matter like sulfur dioxide and nitrogen oxides. Make sure the air leaving the factory is treated well before it leaves.

Health

• The factory floors, walls, vents and other fixtures must be cleaned and maintained well to prevent spread of disease.
• Disposal of waste must happen through proper methods and workers must wear gloves and other safety accessories when handling waste.
• There must be sufficient ventilation and a proper temperature in the factory to ensure that the health of the workers is not affected.
• Avoid overcrowding on the factory floor or elsewhere to reduce the risk of hazards.
• Ensure that the areas are well-lit to prevent any hazards
• Sufficient drinking water must be provided, especially to prevent the risk of dehydration in the summer months.
• The toilets must be easily accessible to workers
• First aid and medical facilities must be within reach in case of any emergency

Safety

• Train people for operating the machinery safely and conduct several drills
• The machines should be maintained well to prevent any hazards
• Ensure that workers do not undertake any work that will most certainly risk their health
• Ensure that there is no leakage of poisonous gases and fumes
• The factory should have proper measures in place to combat a fire

Welfare

• Facility must be provided for sitting and relaxing when workers or supervisors are tired
• Canteen must be present adjacent to the factory and must be clean and hygienic
• Restrooms must be at a nearby distance and must be well-maintained and hygienic
• Welfare officers must be present on the floor to ensure that workers’ rights are not violated

Work Hours

• Workers should not work in a factory for more than 48 hours
• Workers must not work for more than 9 days without a holiday
• If the weekly holidays are not adhered to, then workers must be offered compensatory leaves in the same month
• Workers must not work for more than 9 hours a day
• Workers should be paid pro rata for working overtime

Looking for Statutory Compliance Assistance?

We hope you found that statutory compliance checklist for manufacturing companies a useful one. A safe workplace (in this instance, a safe factory) is a result of not only aligning the workplace policies with the laws and regulations laid down by the government but also securing the cooperation of the employees in making it happen. This could be a balancing act not all companies are necessarily prepared for, and it not only costs additional resources but takes away from the time that can be spent on other strategic activities.

Did you know for instance that you could recruit apprentices under the NAPS Act of 2016 for your factories, but that they should meet certain minimum requirements for age and skill levels. Did you also know that you are eligible for reimbursement from the government during both their training and work on the factory floor under NAPS?

Alp Consulting can partner with you in your NAPS journey and to ensure statutory compliance on the factory floor and even help you manage your payroll effectively. As an HR consulting company with over 25 years of experience, you can count on us to manage all functions of HR for you, right from recruitment and staffing to payroll and compliance. When are you talking to us, and how can we help?

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Hariharan Iyer

Associate Director - HRO

Hariharan Iyer is the Vice President – Operations at ALP Consulting, bringing over 40+ years of experience in HR outsourcing and labour law compliance. He leads end-to-end HRO operations, ensuring process efficiency, statutory compliance, and seamless service delivery for clients across industries. With a strong background in labour law governance and workforce management, Hariharan plays a key role in driving operational excellence and compliance-led HR solutions at ALP Consulting.