Why CLRA compliance remains a huge concern for the principal employer?

In India, a population chunk of as huge as 450 million people is employed in the semi-formal or informal sector. And while the overall management of this blue-collar workforce is still a pretty unorganised process, the last thing you as a principal employer want is to run into a legal trouble caused due to gaps in compliance. Compliance management essentially means ensuring that the interest of the employees is protected by the principal employer by adhering to statutory guidelines pertaining to attendance, ESI, PF etc. But the industries are grappling with challenges to streamline the governance and adhere to the CLRA (Contract Labour Regulation and Abolition Act) labour laws due to an unorganised process. Here’s a rundown of some of them.

Manual process for vendors distributed across multiple locations

Even though the government has a set of contract labour laws under the CLRA that all the employers have to stick to, this is easier said than done when considering principal employers who have a large enterprise with multiple vendors stationed across multiple locations handling a huge distributed workforce under them. The central and state contract labour laws in India might be different for different regions handled by a different set of vendors. The process for the blue-collar workforce is often a manual one which always has a room for error.  So, this often leads to a lot of shortcomings which the key employer might not even be aware of, even though they are the ones ultimately accountable for protecting the employees’ interest.

Discrepancies in issues like attendance and financial management

One of the biggest problems is the lack of visibility in the process followed currently at most organisations. For instance, even if the pricipal employer wanted to keep a regular check of the compliance management across various verticals, there isn’t a single window to check it as and when required. This becomes more important in blue-collar staffed industries because their attendance and financial management are manual in nature. The attendance management is done through physical records, which are not only prone to manipulation but also to physical loss or destruction, thereby putting the onus ultimately on the principal employer.

No option to customise the forms as per your requirement

Having multiple vendors at multiple locations report to you is no mean feat. This essentially means that your requirements from all of them working at different units are different. Yet, more often than not, you have to stick to the same form for them all. Not just statutory laws, the requirements differ in terms of corporate guidelines as well but as of now, there isn’t much room for customising the forms to cater to specific requirements. The umbrella for the CLRA (Contract Labour Regulation and Abolition Act) labour laws tends to be different for different states. This further adds to the inefficiency of the whole exercise for the principal employers even if they wanted to customise the form to cater to separate units or vendors.

Non-compliance can land you in legal consequences

Did you know there are around 21% gaps in compliance management across several industries currently? And whether or not the principal employer is aware of the non-compliance, the accountability will end up falling on their shoulders. Considering the loopholes in the current process, they are always running the risk of a potential legal trouble. For instance, if the audit by the regulatory bodies finds any discrepancies, the top management will be answerable for the same and can be charged with a hefty fine or even prison time. This, of course, comes with a set of more consequences involving the company’s name at stake and the anarchy within the organisation.

In today’s digital world, the need for having a digitally streamlined process for compliance management is more than ever. This is essential not only for smooth and accurate functioning, but also to keep any logistical or legal trouble at bay.

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