The Hindu Business Line : ICSI moots concept of labour laws audit

SEEKING a larger role in the operations of corporate sector, the Institute of Company Secretaries of India (ICSI) has now mooted the concept of `audit of compliance of labour laws'. The institute is set to make a formal presentation before the Ministry of Labour on the subject.

On the new concept, the ICSI President, Mr Mahesh Anant Athavale, told Business Line, "Focus of all other audits is on financial implications, with little consideration on human values."

The scope of labour laws audit would include scrutiny of records of factories, industries and commercial establishments for ensuring compliance of provisions of all labour laws. Further, it will also report compliance or non-compliance of labour laws by these establishments, he said, adding that the audit will also suggest remedial action, wherever required.

Commenting on the benefits of such an audit, Mr Athavale said that while the employees would benefit in terms of increased social security, lower absenteeism and congenial atmosphere, the employer would gain in terms of lower penalty, higher productivity and increased belongingness. On how does the Government benefit; he stated that the audit would help them in recovery of past dues.

He agreed that the likely objections to be faced from the industry on the proposal could be that it would increase the cost of compliance, besides the fear of adverse reports in the audit. Further, the industry could also question the rationale of this audit when statutory auditor confirms payment of provident fund, ESI dues, and gratuity liability, among others.

Regarding how the institute proposes to tackle these objections, Mr Athavale stated that amnesty for past violations unless it is of culpable nature and recognition of employers with good track record of compliance of labour laws could be a step forward. Further, educating the employers as is being done by the Securities and Exchange Board of India would also help.

On why only a Company Secretary (CS) should be doing such audits, he said, a CS is compliance-oriented professional. Besides, the institute is preparing modules for making them expert auditors under labour laws. All stakeholders will accept a practising company secretary, as he is an independent professional, Mr Athavale said.