Default

Meaning & Definition

A default occurs when an obligation, law, or condition has not been met on time or at all. In Relation to Human Resource Management and Payroll, default generally involves a failure to comply with statutory payments, late filing, violation of policy, and not following contractual or procedural guidelines.

Important features of Default

• Highlights instances of non-compliance and breakdowns in process.
• Can result in fines, penalty assessments, and lawsuits.
• Damages the reputation of the industry and affects its auditing process.
• Assists human resources in identifying where corrections are required.
• Encourages prompt compliance with regulations and policy.

Compliance Requirements 

In the case where there are defaults in HR-related areas, a business in India can be liable for action under laws like the Income Tax Act, Employees’ Provident Fund Act, ESI Act, Payment of Wages Act, or various labour laws, depending on the type of default committed. Timely compliance can help avoid interest, penalties and lawsuits.