Maslo Consulting is India's only HR firm with its own proprietary AI product suite. This guide is written by our HR practitioners with 20+ years of field experience across Indian companies. For specific advice on your situation, contact our team.
What an HR audit covers
A proper HR audit reviews statutory compliance (EPF, ESI, POSH, minimum wages, contract labour), documentation (appointment letters, policy manuals, leave and attendance records), and process health (recruitment, performance management, exits) against both legal requirements and internal policy. The output should be more than a pass/fail list — a useful audit scores each area by severity of risk, so leadership can see at a glance what needs fixing in the next 30 days versus what can be addressed over the next two quarters.
How often to run one
Most companies benefit from a full HR audit annually, with a lighter interim check at the half-year mark — particularly around statutory filings and POSH annual reporting, which have fixed deadlines that are easy to lose track of. Companies going through fast headcount growth, entering a new state, or preparing for funding due diligence should run one sooner, since these are exactly the moments when compliance gaps that were manageable at a smaller scale start to carry real legal and financial exposure.
Frequently asked questions
What is an HR audit?
An HR audit is a systematic review of an organisation's HR policies, practices, documentation, and compliance with applicable labour laws. It identifies gaps, risks, and areas for improvement. An HR audit covers statutory compliance, employment documentation, payroll accuracy, POSH compliance, policy completeness, and HR process effectiveness.
Why should Indian companies conduct HR audits?
Indian companies operate under a complex web of central and state labour laws. Non-compliance can result in fines, penalties, licence cancellation, and reputational damage. An HR audit proactively identifies gaps before a labour inspector or employee complaint does. For companies going through funding rounds or M&A, HR audits are also required as part of due diligence.
What does an HR compliance audit cover?
An HR compliance audit covers: statutory registrations and licences, EPF and ESI compliance, minimum wage compliance, Professional Tax compliance, POSH Act compliance, employment agreements and offer letters, standing orders, leave and working hours compliance, gratuity provisions, and payroll documentation.
How often should an HR audit be conducted?
An HR audit should be conducted annually at minimum. Additional audits are recommended when the company enters a new state, crosses headcount thresholds that trigger new compliance requirements (10, 20, 100 employees), undergoes a merger or acquisition, or when labour laws change significantly such as with the new labour codes.
What is the difference between an HR audit and a labour law audit?
A labour law audit focuses specifically on statutory compliance with applicable laws including EPF, ESI, minimum wages, POSH, and factories regulations. An HR audit is broader and includes policy review, process assessment, employment documentation, and HR system effectiveness in addition to statutory compliance.
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