Nowadays all the work is dependent on machines but still the machines can’t be equated with human beings, since their intellectual’s work on different pages. Labour is considered the most important asset of any industry and same in the case of Pharma Companies. Pharmaceutical industries work in different phases and for regulating these phases’ different legislations exists in India. The strict compliance with these pieces of legislation is required to avoid future legal hassles as well as to handle the present issues adroitly. This write up will shine some light on the compliances

Compliances under Labour laws: –

There are various legislations in India, which regulates different areas of employer-employee’s relationship. Presently, Indian Govt. has enacted four labour law codes i.e. Code on Social Security, 2020, Code on Wages, 2019, Industrial Relation Code, 2020, and Occupational Safety, Health, and Working Conditions Code, 2020, which have repealed 29 labour law legislations. While all the Codes have received presidential asset, the central govt. is yet to notify the date of their implementation.

Notably, the Pharmaceuticals firms are also regulated by these labour law legislations. Therefore, there are some mandatory provisions, which need to be complied with by the Pharma industries. The compliances are enumerated below in different categories: –

Registration & Renewals: –

The Pharmaceuticals firms must register themselves under the Shops & Establishment Act, if their registered/corporate office is located separately and there are regional/ branch offices or godowns. In the case of employment of medical representatives for the exclusive purpose of sales promotion operations, the Sales Promotion Employees Act would be applicable to such employees. Social security legislations like ESI, EPF, Gratuity, and Maternity Benefit would be applicable taking the establishment as a whole. The Pharma Company must register for the purpose of ESI and EPF. Moreover, CLRA (Contract Labour Regulation and Abolition Act) licence is necessary to be obtained by the Pharmaceutical firm to continue its hiring process, if it employs contract labour.

Apart from this, license under the Factory Act, 1948 is compulsory for pharma companies in order to carry out their manufacturing process. This Act gives various provisions related to the definitions i.e. worker, factory, employee etc, their working place, working hours, leaves, facilities must be provided by the industry to their employees. The Act makes it sure that there should be proper hygiene at the work and all the necessary precautions are taken care for the safety of employees

Recurring Compliances: –

The Pharmaceuticals companies need to file ESI return once every six months in two periods i.e. from 1st April to 30th September, and 1st October to 31st March.  Moreover, the PF return need to be filed every month alongwith details such as name of the organization, address of the organization, its code, account number of the employee, etc.

Additionally, notice of commencement/completion of each contract must be filed within 15 days from the date of such commencement/completion, in case of contract labour.

Apart from this, under the Factories Act, the Pharmaceutical companies have to file annual return with the Chief Inspector.

Social Security Benefits: –

  1. The EPF scheme is applicable to employees earning basic salary below or upto Rs. 15,000/-p.m. 12% of basic salary will be contributed by both employer and employer.
  2. In addition to this, employees earning monthly salary (excluding overtime, conveyance wages) below or upto Rs. 21,000/- p.m are covered under ESI scheme. An employee will contribute 0.75% of basic salary, whereas the company shall contribute 3.25 % of the basic wages. If salary of an employee exceeds Rs. 21,000/- after starting of contribution period then he/she will be continues to be covered under the scheme till the end of that contribution period (divided into six monthly contribution periods i.e. 1st April to 30th September and 1st October to 31st March). There is no wage ceiling limit for employees with disability.
  3. Payment of bonus is also required to be paid, if workforce is 20 or more. An employee earning upto Rs. 21,000/- basic salary and has worked for atleast 30 days in an accounting year, will be eligible for bonus. If salary exceeds than Rs. 21,000/- then bonus shall be paid at Rs. 7000/-. The bonus shall be paid at rate of 8.33% of the salary (not exceeding 20% of wages). It must be paid within a period of 8 months from the closing of the accounting year (1st April to 31st March).
  4. Gratuity if there are 10 or more employees, an employee who has completed 05 years of continuous employment shall be eligible for gratuity benefit. It shall be payable on cessation of employment by reason of resignation/termination/death/disablement. The same must be paid within a period 30 days when it becomes payable. Moreover, completion of five years of service is not necessary if employment has been terminated because of death or disablement or expiration of fixed term employment.
  5. Maternity benefit in case of 10 or more employees. Pharmaceuticals firms cannot knowingly employ a woman is their office/manufacturing unit during the six weeks after the day of her delivery, miscarriage or medical termination of pregnancy. It must be clarified before appointing. For married female employee who has completed 80 days of employment in last one year shall be eligible for maternity benefit of 26 weeks (8 weeks preceding the expected date of delivery), and female having 2 or more surviving children shall be eligible for 12 weeks (6 weeks preceding the expected date of delivery) maternity benefit.


  • Sexual Harassment Policy is needs to be drafted if there are more than 10 female employees. If the count of female employees is less, then an aggrieved employee can file complaint before Local Complaints Committee of District. Otherwise, Internal Complaints Committee is required to be incorporated to entertain sexual harassment complaints in the office/manufacturing unit.
  • Formation of Grievous Redressal Committee is also one of the compliance, as law provides that if there are 20 or more employees in any work place, there must be one Management Committee or Grievous Redressal Committee, which consists of equal number of members representing employer and employees to hear individual grievances.
  • Drafting of HR Manual depicting terms & conditions of the employment, since as per labour laws every employer must specify its terms & conditions for employment. Moreover, a written document in hand relating to terms & conditions can eliminate any future disputes between the employer and employee.


Compliance is essential to a business’s performance and to building a strong brand. Legal repercussions for breaking these laws and regulations include penalties and, in the worst situations, the closure of a corporation. Under the current labour regulations, India has a strict compliance regime. In order to make submitting returns with regulatory bodies under labour laws simpler, the Indian government has combined 29 labour regulations into 4 Labour Codes, which have not yet been put into effect.

-Kiranpreet Kaur

Associate at Aggarwals & Associates, S.A.S. Nagar, Mohali