The Labour Laws (Simplification of Procedure for Furnishing Returns and Maintaining Registers by Certain Establishments) Act: formula sheet

Key formulas

Small establishment (Section 2(e))

10 ≤ persons employed ≤ 40 on any day of the preceding 12 months

The upper limit was nineteen before 1 January 2015. Now it is forty.

Very small establishment (Section 2(f))

persons employed ≤ 9 on any day of the preceding 12 months

Employing nine or fewer persons on every such day keeps the unit in this class.

Scheduled Act (Section 2(d))

An Act in the First Schedule, in force on commencement, including rules made under it

Rules made under the Scheduled Act are part of it for this Act.

Form (Section 2(c))

A Form specified in the Second Schedule

Form I is the annual return. Forms II and III are registers.

Extent and commencement (Section 1)

Whole of India; in force on dates notified by the Central Government

Notified date: 1 May 1989. Notification of 30 October 2019 applies the Act to the UTs of Jammu and Kashmir and Ladakh.

Effect on other Acts (Section 3)

Scheduled Acts have effect subject to this Act

This is why the Act can override their return and register rules.

Scheduled Act

Scheduled Act = Act in the First Schedule + rules made under it

Section 2(d). Relief applies only to these Acts.

Small establishment

10 ≤ persons employed ≤ 40 on any day of the preceding 12 months

Section 2(e). The limit of forty replaced nineteen from 1 January 2015.

Very small establishment

persons employed ≤ 9 on any day of the preceding 12 months

Section 2(f).

Substitute compliance

Small: Form I + Forms II and III. Very small: Form I + Form III

Section 4(1) provisos. Registers are kept at the work spot.

Duties that continue

Wage slips + accident returns under Factories Act (sections 88, 88A) and Plantations Labour Act (sections 32A, 32B)

Second proviso to section 4(1).

Extent

Whole of India

Section 1(2). Notified for Jammu and Kashmir and Ladakh as well.

Small establishment

10 ≤ persons employed ≤ 40 (on any day of the preceding 12 months)

Section 2(e). The upper limit was 19 before 1 January 2015.

Very small establishment

persons employed ≤ 9 (on any day of the preceding 12 months)

Section 2(f).

Replacement of returns

Annual return in Form I (both categories)

Filed in lieu of returns under the Scheduled Acts. Section 4(1), first proviso (a).

Replacement of registers

Small: Forms II and III. Very small: Form III only

Maintained at the work spot. Section 4(1), first proviso (b).

Continuing duties

Wage slips + accident returns

Wage slips in the form under the Minimum Wages (Central) Rules, 1950, and piece-rate work slips under the Payment of Wages (Mines) Rules, 1956. Accident returns under sections 88 and 88A of the Factories Act, 1948 and sections 32A and 32B of the Plantations Labour Act, 1951.

Form of records

Physical or electronic; printout on demand

Section 4(2). Electronic records need a printout available to the Inspector on demand.

Penalty protection

Compliance with Section 4 proviso ⇒ no penalty under the Scheduled Act for not furnishing returns or maintaining registers

Section 4(5).

Small establishment

10 ≤ persons employed ≤ 40 on any day of the preceding twelve months

Section 2(e). The upper limit was raised from nineteen to forty with effect from 1 January 2015.

Very small establishment

persons employed ≤ 9 on any day of the preceding twelve months

Section 2(f).

Return required

Annual return in Form I, for both categories

Section 4(1) first proviso (a). It replaces the returns under the Scheduled Acts.

Registers required

Small: Form II and Form III. Very small: Form III only

Section 4(1) first proviso (b). Kept at the work spot.

Duties that continue

Wage slips and piece-rate slips, plus accident returns

Second proviso to Section 4(1). Accident returns arise under sections 88 and 88A of the Factories Act, 1948 and sections 32A and 32B of the Plantations Labour Act, 1951.

Form of records

Physical or electronic; printout to the Inspector on demand

Section 4(2). Form I may be sent in physical form or by email if the authority can receive it (Section 4(3)).

Penalty, Section 6

First conviction: fine up to ₹5,000. Second or later: imprisonment 1 to 6 months, or fine ₹10,000 to ₹25,000, or both

Applies to an employer who fails to comply with the 1988 Act.

Amending Forms

Central Government notification, laid before Parliament

Section 7. The notification is laid before each House and approval is sought by a resolution within fifteen days beginning with the day it is laid before the House of the People.

Quick revision

• The Act extends to the whole of India, and its commencement date was notified for different States as needed.
• Section 3: Scheduled Acts operate subject to this Act.
• Small establishment: not less than ten and not more than forty persons employed on any day of the preceding twelve months.
• Very small establishment: not more than nine persons on any day of the preceding twelve months.
• The limit for a small establishment was raised from nineteen to forty with effect from 1 January 2015.
• Section 4(1): the employer need not furnish returns or maintain registers required under a Scheduled Act.
• In lieu of returns, the employer files the annual return in Form I.
• In lieu of registers: Forms II and III for small establishments, Form III only for very small establishments, kept at the work spot.
• Wage slips and piece-rate work slips must still be issued, and accident returns under the Factories Act and Plantations Labour Act must still be filed.
• Records may be physical or electronic; a printout must be given to the Inspector on demand.
• Form I may be sent by email if the authority has the facility to receive it.
• Section 4(5): an employer who follows section 4 faces no penalty under the Scheduled Act for not filing returns or keeping registers.

Common mistakes

• Writing the upper limit of a small establishment as nineteen Fix: Remember that the 2014 amendment, effective 1 January 2015, replaced nineteen with forty.
• Using only today's headcount Fix: Always look for the peak figure in the last twelve months.
• Saying the Act covers all labour laws. Fix: Write that only Acts in the First Schedule are Scheduled Acts under section 2(d).
• Using the old limit of nineteen for a small establishment. Fix: Use ten to forty. The limit of forty replaced nineteen from 1 January 2015.
• Using the old limit of nineteen for small establishments. Fix: Remember that the limit is forty, substituted from 1 January 2015.
• Saying the exemption means no records at all. Fix: The employer must still file Form I and keep Form III (and Form II if small), and must issue wage slips.
• Saying a small establishment has fewer than twenty employees. Fix: Write ten to forty. The limit was substituted by Act 33 of 2014 with effect from 1 January 2015.
• Saying very small establishments file no return at all. Fix: The exemption is conditional. Every such employer files Form I and keeps Form III at least.

Exam tips

• Learn the numbers exactly: 10 to 40 for small and 9 or fewer for very small. A wrong figure loses the whole answer.
• In case-based questions, hunt for the peak headcount in the facts and state it before you classify.
• Mention the 2014 amendment effective 1 January 2015 when you discuss the forty limit. It shows you know the current law.
• End each answer with a one-line conclusion citing the section.
• Define Scheduled Act with section 2(d) before any analysis. Examiners reward the correct starting point.
• Quote the size limits exactly: ten to forty for small, nine or fewer for very small.
• Name the Acts mentioned in the Act itself with confidence, and learn the First Schedule list from the study material.
• In case questions, finish with a one-line conclusion naming the forms and the continuing duties.