The Short Answer

Why Legal Compliance Matters

Complying to laws in an organisation is a very interesting aspect because that is one of the key expectations from a leader.

That you, as an organisation should be compliant.

We don’t want to be a legally non-compliant organization.

The Standard Compliance Framework

So let’s spend a little time trying to understand what kind of a compliance system do we have.

It’s somewhat standard globally.

What Is an Act?

So we have something called as an Act.

An Act means certain instructions.

The Parliament discusses, and once they discuss, they figure out, this is what we are going to do.

And then it is passed by the Parliament.

Once it is passed by the Parliament, it goes to the President.

And the President gives it an assent, which means the President signs it.

Gazette and Enforcement

Once that is signed, it is released to the public by way of a gazette.

Which means the official newspaper of the government.

Once that is done, it is assumed that the law is in force.

The Concept of Effective Date

However, a lot of times, it also adds up one more specific thing.

Which says even though the law is approved by the authorities, it will be effective from the date on which the government notifies.

Which is what has happened to the four labor codes.

The laws are passed.

The laws are ready.

But only from the date on which the government notifies, the laws become applicable.

Till such date, the laws are not applicable.

They are there, but nobody can be checked on those laws.

Acts Need Rules to Be Implemented

But for the act to be applicable, you also need certain finer details.

And those finer details are what we call as rules.

Rules mean that at the macro level, this is what the law says.

The specifics come in the rules.

So we combine an act and the rules.

This forms the law.

Notifications and Clarifications

Now, what also happens as time progresses, the government realises that the rules require further clarification.

So we come out with further notifications.

Sometimes the law itself requires periodic notifications.

Example: Minimum Wages

For example, the Minimum Wages Act requires the authorities to declare minimum wages.

Once in six months or once in a year.

Depending on the state.

This does not mean the law is changing.

It means the law is being operationalised through notification.

What Organisations Must Follow

So for an organisation, we need to follow the act.

We need to follow the rules.

And we need to follow the notifications.

So for an organisation, we need to follow the act, the rules, and the notifications.

This is not a choice.

You cannot choose to follow the act and ignore the rules or notifications.

All three are applicable.

Central and State Laws

Now, all these can come from two different sources.

One is the center, meaning the Government of India.

The second is the state.

Each state has its own laws.

For example, the Shops and Establishment Act is a state law.

Whereas the Factories Act is a central law.

Factories across all states follow the same act.

When Interpretation Leads to Litigation

There is a possibility that there is a disagreement between how authorities interpret the act and how organisations interpret it.

As a result, these matters go into courts.

Role of Courts

When courts give an order, that order also becomes enforceable.

If a High Court gives an order, all organisations in that state must follow it.

Other states may not be bound by it.

If the Supreme Court gives an order, every organisation in India must follow it.

That order becomes law.

Case Laws as a Source of Compliance

These court decisions are what we call case laws.

They form an additional layer of compliance.

Practical Challenges in Compliance

Following an act is fairly simple.

Following rules is also manageable.

But once you get into notifications and case laws, complexity increases.

When to Use Practitioners

When complexities arise, it is always advisable to use a practitioner.

Depending on the issue, you should use either a legal practitioner or an HR practitioner.

HR Practitioner vs Legal Practitioner

If you are creating HR policies, an HR practitioner is best suited.

If you are involved in litigation or court filings, a legal practitioner is required.

The Ideal Situation

If you can afford both an HR practitioner and a legal practitioner, it provides a very strong way of managing the organisation.

If not, you must clearly understand when to use which expertise.

This article is based on the transcript of the original podcast of the same name featured in India HR Guide.
The transcript has been translated into this article with the support of AI and a human‑in‑the‑loop process.