Labour Inspector Visit Checklist India 2026

Critical Change: Paper Registers Are Now Non-Compliant

Under the new Labour Codes, all statutory registers-wage registers, muster rolls, attendance records, leave registers and EPF/ESI contribution registers-must be maintained in digital format. During an inspection in 2026, an employer presenting paper-only records is treated as non-compliant, even if the underlying data is correct. Voltech has already helped over 40 client companies migrate from manual systems to compliant digital registers since November 2025.

Ensure wage register compliance before your next audit →

Penalty for non-compliance:
First offence: Monetary fine up to ₹50,000. The absence of appointment letters for contract workers also triggers principal employer liability under the OSHWC Code for any wage or benefit disputes raised by those workers.

2. Wage Register (Digital Format, Updated Monthly)

What it is: A complete digital record of all wages paid to every employee, including gross wages, deductions (PF, ESI, TDS, Professional Tax), net wages disbursed and the mode of payment.

Legal mandate: Section 13 of the Code on Wages, 2019. The wage register must reflect the updated wage definition - basic pay + dearness allowance + retaining allowance must constitute at least 50% of total CTC.

Common audit gap: Companies maintaining wage registers structured under the old Payment of Wages Act, 1936 format. The new format requires components to reflect the 50% basic pay rule introduced under the Wage Code.

3. Muster Roll and Digital Attendance Records

What it is: A day-by-day attendance record for every employee showing present, absent, leave and overtime hours. Under the new codes, this must be maintained digitally and available for inspection at any time.

Legal mandate: Under the OSHWC Code, 2020 and the Industrial Relations Code, 2020 for overtime calculation and working hours compliance. Working hours are capped at 8 hours per day and 48 hours per week.

Common audit gap: Paper muster rolls are non-compliant in 2026. Companies using biometric systems must ensure the biometric data is exportable in a format compatible with digital inspection requirements.

Additional compliance point: Overtime must be calculated at double the ordinary rate of wages. The digital attendance register must clearly differentiate between regular hours and overtime hours to allow accurate computation.

4. EPF Registration Certificate and ECR Filing Records (Last 36 Months)

What it is: Your EPFO establishment registration certificate (issued at the time of crossing 20 employees) and a complete record of Electronic Challan cum Return (ECR) filings for the past 36 months, along with proof of contribution deposits.

Legal mandate: Employees Provident Fund and Miscellaneous Provisions Act, 1952 (now subsumed under the Code on Social Security, 2020). Applicability threshold: 20 or more employees.

2026 update: EPFO moved PF withdrawals to UPI rails in June 2025. Payroll systems must now have real-time API connectivity with EPFO. ECR filings must be current - missing even one month triggers automatic notices from the EPFO system.

Contribution rates: Employer contributes 12% of basic wages to EPF. Under the new wage definition (50% basic pay rule), the EPF contribution base has increased for most companies. Employers must ensure ECR filings reflect the updated contribution base.

5. ESIC Registration and Half-Yearly Return Records

What it is: Your ESIC employer registration certificate, monthly contribution deposit records, Insured Person (IP) registration details for all eligible employees and half-yearly return filings.

Legal mandate: Employees State Insurance Act, 1948 (subsumed under Code on Social Security, 2020). Applicability threshold: 10 or more employees in most states. Wage eligibility: Employees earning up to ₹21,000 per month.

2026 update: ESI coverage expansion: The 50% wage rule under the new Wage Code has reclassified many employees who were previously earning above the ₹21,000 ESI threshold. Because total CTC must now allocate at least 50% to basic wages, the ESI-eligible wage component has shifted for many employees. Companies should re-verify which employees fall under ESI coverage post restructuring.

Contribution rates: Employer contributes 3.25% of gross salary. Employee contributes 0.75% of gross salary. Deposits are due by the 15th of the following month.

6. Minimum Wage Compliance Records (State-Notified Rates)

What it is: Documentation showing that every employee - permanent, contract, fixed-term, or daily-wage - is being paid at or above the minimum wage notified by the state government for their category (unskilled, semi-skilled, skilled, highly skilled).

Legal mandate: Code on Wages, 2019. Under the new codes, minimum wage applies universally to all workers in all sectors, organized and unorganized. This is a significant expansion from the previous Minimum Wages Act, 1948, which covered only scheduled employments (approximately 30% of workers).

State variations: Minimum wage rates differ by state and are revised periodically based on the Consumer Price Index. Employers operating across multiple states must maintain a state-wise minimum wage compliance record. Companies in Tamil Nadu, Karnataka, Maharashtra and Telangana are among those with the most frequent revisions.

National floor wage: The Code on Wages establishes a national floor wage - the absolute minimum below which no state can set its rates. This ensures a baseline across all workers nationally.

7. Contract Labour Register and Contractor Compliance Records

What it is: If your company engages contract workers through a contractor, you must maintain a register of contractors, copies of the contractors' labour licences, a muster roll of all contract workers and proof that the contractor has deposited PF and ESI contributions for all workers deployed at your premises.

Legal mandate: OSHWC Code, 2020. Applicability threshold: Companies engaging 50 or more contract workers require a principal employer certificate of registration.

Critical 2026 change: Principal employer liability: Under the new codes, if a contractor fails to pay wages or fails to deposit PF/ESI contributions, the principal employer (your company) becomes directly liable to pay. This liability exists regardless of whether your contract with the contractor specifies otherwise.

What this means in practice: If a contractor deploys 200 workers at your manufacturing plant and fails to deposit 3 months of PF contributions, the EPFO can directly approach your company for the arrears. Your company cannot use the contractor agreement as a defence.

8. Leave Records and Leave Policy Documentation

What it is: A leave register showing each employee's entitlement, leaves availed, leaves carried forward, and leave encashment records. The leave policy document must reflect the entitlement structure mandated under the new codes.

Legal mandate: OSHWC Code, 2020. Key change: Paid leave now commences after 180 days of service (previously 240 days under the Factories Act, 1948). Carry-forward provisions and leave encashment terms must be reflected in the updated leave policy.

Common audit gap: Companies maintaining leave records under the previous Factories Act or Shops and Establishments Act format, which does not align with the new 180-day eligibility threshold. HR managers using legacy HRMS software that has not been updated for the new codes are particularly at risk.

9. Standing Orders (Establishments with 300+ Employees)

What it is: A formally certified document that specifies the conditions of employment for workers in your establishment - covering shift timings, attendance, leave, disciplinary procedures, grievance redressal and termination conditions.

Legal mandate: Industrial Relations Code, 2020. The threshold for mandatory certified standing orders has been revised upward from 100 workers to 300 workers. Establishments below 300 employees may adopt the Model Standing Orders issued by the government without formal certification.

Action required for companies between 100 and 299 employees: Under the previous Industrial Employment (Standing Orders) Act, 1946, companies with 100+ workers required certified standing orders. Under the new IR Code, this threshold is 300. However, companies that already had certified standing orders must review and update them for alignment with new IR Code provisions - particularly around fixed-term employment, digital registers, and the expanded definition of workers.

10. Grievance Redressal Committee Records

What it is: Documentation showing the constitution of your Grievance Redressal Committee (GRC) - member names, designation, tenure dates and the minutes of any GRC proceedings in the current year.

Legal mandate: Section 46 of the Industrial Relations Code, 2020. GRC is mandatory for all industrial establishments. The committee must include women representatives. GRC constitution documents must be maintained and available for inspection.

Common audit gap: GRC constituted on paper with no active records of proceedings. Under the new codes, the GRC is expected to be an operational body - not just a compliance checkbox. Inspectors will ask for records of complaints filed, hearings conducted, and resolutions issued.

11. PoSH Compliance Documents (Internal Complaints Committee)

What it is: Proof of constitution of the Internal Complaints Committee (ICC) under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. This includes the appointment order, member details, annual report submitted to the district officer and records of any complaints received and their disposal.

Legal mandate: PoSH Act, 2013. Mandatory for all establishments with 10 or more employees. Annual report must be submitted by 31 January of each year. The ICC must be reconstituted every 3 years or when a member leaves.

Critical compliance gap: A mid-size IT company in Bengaluru had an ICC on paper with a Presiding Officer who had resigned 8 months prior. When a complaint was filed in January 2026, the entire inquiry was challenged due to improper constitution. The proceedings were invalidated and the employer faced a show-cause notice. Reconstitution of the ICC must happen immediately when any member leaves the organisation.

12. Professional Tax Deduction and Deposit Records

What it is: State-level Professional Tax deduction records showing monthly deductions from employee salaries per the applicable state slab and proof of deposit to the state Commercial Tax department.

Applicability: Professional Tax is levied in 18 Indian states and Union Territories including Maharashtra, Karnataka, Tamil Nadu, Telangana, Andhra Pradesh , West Bengal, Gujarat, Madhya Pradesh and Kerala. The tax is not applicable in states like Rajasthan, Delhi, Haryana and Uttar Pradesh.

Employer obligation: Two-part compliance - employer registration (PTRC) and employee deduction registration (PTEC). Both must be current. Failure to deduct and deposit PT is a direct violation even when all other payroll compliance is in order.

Common gap: Companies operating across multiple states often have Professional Tax compliance for their headquarters state only. Branch offices in states like Tamil Nadu, Karnataka or Maharashtra are frequently non-compliant on PT due to oversight.

13. Factory Licence or Shops and Establishments Registration

What it is: Your establishment's primary operating licence - either a Factory Licence under the OSHWC Code (for manufacturing units) or a Shops and Establishments registration under the applicable state act (for commercial establishments).

Applicability: OSHWC Code, 2020 for factories. State-specific Shops and Establishments Acts for commercial establishments. The licence must be prominently displayed at the premises. Annual renewal must be current.

Employer obligation: Two-part compliance - employer registration (PTRC) and employee deduction registration (PTEC). Both must be current. Failure to deduct and deposit PT is a direct violation even when all other payroll compliance is in order.

Common gap: Renewed licences not displayed at the premises. Licences for original office location not updated after shifting premises. Multi-location companies maintaining registration for one location only.

2026 update: The OSHWC Code raises the factory applicability limits - easing regulatory burden for small units while retaining full safeguards for workers. Employers should verify whether the new thresholds affect their registration obligation.

14. Gratuity Liability Register and Payment Records

What it is: A register showing the calculated gratuity liability for all employees who have completed the qualifying service period, with payment records for any gratuity disbursements made.

Legal mandate: Code on Social Security, 2020. Critical change effective November 2025: Fixed-term employees are now eligible for gratuity after completing one year of service (previously five years under the Payment of Gratuity Act, 1972). The gratuity ceiling has also been doubled from ₹10 lakh to ₹20 lakh.

Gratuity calculation: 15 days of wages for every completed year of service. Under the new wage definition, the wage base for gratuity calculation has increased for companies where basic pay was previously below 50% of CTC.

Impact on staffing companies: Staffing companies deploying fixed-term employees at client sites now carry gratuity liability after each worker completes 12 months. This is a significant cost and documentation change from the previous 5-year threshold.

15. Reskilling Fund Contribution Records (Establishments Retrenching Workers)

What it is: Records showing contribution to the Reskilling Fund mandated under the Industrial Relations Code, 2020. This applies to establishments that have retrenched workers since November 2025.

Legal mandate: Industrial Relations Code, 2020. Amount: 15 days of last-drawn wages per retrenched worker. This contribution must be credited to the worker's account within 45 days of retrenchment.

Applicability: Mandatory for all industrial establishments that retrench workers, irrespective of establishment size. The Reskilling Fund is in addition to statutory retrenchment compensation - it cannot be offset against it.

Common gap: Companies have been treating this as optional or are unaware of the 45-day deposit deadline. An inspector reviewing a retrenchment in 2026 will ask for proof of Reskilling Fund contribution.

What Penalties Can a Labour Inspector Issue in 2026? A Quick Reference

The following table summarises the penalty structure under the four Labour Codes for the most commonly cited violations. All penalties are subject to final Central and State rules, which are being notified progressively through 2026.

Violation	Governing Code	First Offence Penalty	Repeat Offence
Wages below minimum floor	Code on Wages, 2019	Fine up to ₹50,000	Fine up to ₹1,00,000
Non-deposit of EPF contributions	Code on Social Security	12% interest + 5-100% damages	Fine ₹5 lakh + imprisonment
Non-registration under ESIC	Code on Social Security	Fine ₹50,000	Up to 2 years imprisonment
No appointment letters issued	OSHWC Code, 2020	Fine up to ₹50,000	Not compoundable within 5 yrs
Paper registers (non-digital)	All four codes	30-day correction notice	Fine up to ₹1,00,000
No Grievance Redressal Committee	Industrial Relations Code	Fine up to ₹10,000	Not compoundable within 5 yrs
PoSH ICC not constituted	PoSH Act, 2013	Fine up to ₹50,000	Double penalty + licence issues
Reskilling Fund not deposited	Industrial Relations Code	Fine up to ₹50,000	Not compoundable within 5 yrs

How to Use the 30-Day Correction Window After an Inspection Notice

Under Section 51 of the Code on Wages, 2019, an Inspector-cum-Facilitator must issue a 30-day notice before initiating legal action for first-time violations. This 30-day window is a statutory right - not a discretionary grace period.

When you receive a notice from an Inspector-cum-Facilitator, the following four-step process is the standard response protocol:

1. Acknowledge the notice in writing within 7 days. This confirms receipt and prevents the default assumption that you have ignored the notice.

2. Prepare a gap assessment against the checklist above. Identify exactly which documents are missing, outdated, or in non-compliant format.

3. Engage a qualified compliance specialist to prepare the corrective documentation. For EPF and ESIC arrears, engage your payroll service provider for recalculation and backdated deposit processing.

4. Submit the corrective action report to the Inspector-cum-Facilitator before the 30-day deadline. The submission should include copies of the rectified documents and proof of any payments made.

What Voltech Has Observed in Labour Inspections Across India

Voltech HR Services has managed statutory compliance for 300+ companies across India since 2010. Based on our team's direct experience in supporting clients through EPFO inspections, ESIC audits, factory compliance reviews and labour department notices - the following patterns represent the most common compliance gaps found during actual inspections.

Compliance Gap	Frequency
EPF ECR filing gaps (1–3 months outstanding)	Very common - especially post-growth periods
Contract worker appointment letters missing	Common - especially in manufacturing and logistics
Wage register in paper format only	Common - especially in SMEs below 200 employees
ESI coverage gaps after CTC restructuring	Emerging post November 2025 wage code change
PoSH ICC not reconstituted after member exit	Common in growing companies with high attrition
Professional Tax non-compliance in branch states	Very common in multi-state companies
Gratuity register not updated for fixed-term staff	Emerging since 1-year gratuity rule change

Closing Insights on Labour Compliance 2026

Labour inspections in 2026 are no longer routine or predictable-they are data-driven, documentation-focused and unforgiving of gaps. Companies that rely on outdated processes, paper records or incomplete compliance systems are at significantly higher risk of penalties and operational disruption.

The shift to digital registers, expanded employer liability and stricter enforcement under the new Labour Codes makes proactive compliance essential-not optional. Organisations that prepare in advance, maintain accurate documentation and regularly audit their records will not only avoid penalties but also build stronger operational credibility.

At Voltech HR Services, we have seen that the difference between a smooth inspection and a costly compliance issue often comes down to preparation. Ensuring your documentation is complete, updated and audit-ready is the most effective way to stay protected in this evolving regulatory environment.

Frequently Asked Questions: Labour Inspector Visits in India 2026

Q1. Can a labour inspector visit without prior notice in 2026?

Yes. Under the Inspector-cum-Facilitator system introduced by the four Labour Codes, inspections are triggered by a web-based, randomised algorithm. A company can receive an inspection visit without any prior notice. However, the key change is the response to violations - inspectors must now issue a 30-day correction notice before initiating legal proceedings for first-time violations.

Q2. Does the new Inspector-cum-Facilitator system mean inspections are less strict?

No. The Inspector-cum-Facilitator role changed the enforcement philosophy from punitive to advisory for first-time violations. The documentation requirements actually became more stringent - digital registers are mandatory, the scope of inspection widened to cover gig workers and platform workers and the principal employer's liability for contractor compliance increased significantly. Companies interpreting the new system as "less strict" are at higher risk during an inspection.

Q3. Which companies are most at risk of an inspection in 2026?

According to the inspection data pattern under the new algorithm-driven system, the following company profiles face higher inspection frequency: manufacturing establishments with 50+ contract workers; companies that recently crossed EPF or ESIC applicability thresholds; establishments that have received employee complaints filed with the labour department; and companies in sectors with high labour mobility such as logistics, e-commerce fulfillment and construction.

Q4. What is the 50% wage rule and does it affect my documents?

The 50% wage rule under the Code on Wages, 2019 mandates that basic pay plus dearness allowance plus retaining allowance must constitute at least 50% of an employee's total CTC. This directly affects your wage register, EPF contribution records, ESI eligibility records, and gratuity liability register - all of which must now reflect the updated wage definition. Companies that restructured CTC after November 2025 must ensure all statutory contribution registers reflect the post-restructuring wage base.

Related Resources for Employers & HR Leaders

Looking to strengthen your compliance, staffing and payroll operations in 2026? Explore our in-depth guides:

→ Contract Staffing in India 2026 - HR & Business Guide - Understand how India's four Labour Codes effective November 2025 permanently changed the legal obligations of every company that engages contract workers. Learn why principal employer liability now makes your contractor's compliance failures your financial responsibility, how the 50% wage rule has increased fixed-term employee costs by 5–15%, why deploying contract workers in core activities is now prohibited and what the 10-point compliance framework looks like for selecting a contract staffing partner in 2026 - before signing any service agreement that exposes your company to direct legal risk.

→ Why Urgent Hiring Fails Even When You Have Candidates Ready And How to Fix It - Understand why day-one show rates drop to 41% in urgent staffing scenarios even when candidates have verbally confirmed. Learn how structured commitment reinforcement systems - including SMS confirmation protocols, tiered backup strategies, and pre-shift check-ins — increase show rates to 78% and reduce failed placement costs of ₹2.65 lakhs per incident.

→ Why Delaying Your 2026 Payroll Switch Could Cost You ₹29 Lakhs - The Complete Guide - Understand the hidden financial risks of postponing payroll modernisation under India's new Labour Codes, including backdated PF and gratuity liabilities, compliance penalties and payroll errors. Learn how proactive payroll restructuring aligned to the 50% wage rule protects your margins and reduces audit exposure in 2026.