TeamLease RegTech Audit Identifies 4,694 Compliance Gaps Across Indian Workplaces
TeamLease RegTech has identified 4,694 compliance gaps during physical audits of 52 workplaces across 17 states and union territories in India. The findings, published in its 2026 compliance audit report, highlight the legal, financial and operational risks businesses may face when statutory requirements are not fully met.
The report found that none of the 52 audited locations was completely compliant. On average, each location had approximately 90 compliance gaps, demonstrating that regulatory risks can remain even in organisations that have established compliance teams and internal monitoring systems.
One of the report's most significant findings concerns potential legal liability. Approximately 46 percent of the identified non-compliance findings involved legal provisions carrying imprisonment clauses. In addition, 29 percent of the findings named directors, senior officers or factory occupiers as individuals who could face personal liability under applicable laws.
The findings underline the importance of checking whether legal obligations are being fulfilled in practice, rather than relying solely on internal reports and completed paperwork.
Key Findings From the Compliance Audit
TeamLease RegTech's report, titled Hiding in Plain Sight: Compliance Audit Insights 2026, examined compliance conditions at 52 workplaces across 17 states and union territories. The assessment focused on actual workplace conditions and the requirements applicable to individual locations.
The audit identified 4,694 non-compliance findings, averaging around 90 findings per site. The company reported that every audited location had at least one gap.
The report also found that approximately 46 percent of the findings were associated with statutory provisions that include imprisonment as a possible penalty. This does not mean that 46 percent of the audited companies or their employees will face imprisonment. It indicates that the relevant legal provisions can carry criminal penalties for certain violations, depending on the circumstances and applicable law.
Another important finding was that 29 percent of the identified gaps named directors, senior officers or factory occupiers. This highlights how compliance responsibilities can extend beyond the employees who handle routine documentation and reporting.
Labour Laws and Workplace Safety Remain Major Concerns
The report found that labour laws and environment, health and safety requirements accounted for approximately 92 percent of the identified findings.
Labour compliance can include requirements relating to employee wages, working conditions, statutory registers, employment records, contractor management and other workplace obligations. Businesses may also need to maintain licences, submit prescribed returns and meet requirements established by central and state authorities.
Environment, health and safety compliance covers a different but equally important set of responsibilities. Depending on the facility and its activities, these may include fire safety, workplace infrastructure, equipment inspections, environmental permissions and other operational safeguards.
The report indicates that compliance failures are not always caused by major or deliberate violations. Missing notices, incomplete registers, unrecorded appointments and documentation deficiencies accounted for a substantial share of the findings. Although these issues may appear administrative, they can still breach legal requirements and attract regulatory consequences.
The findings suggest that businesses should verify both the documents maintained at their offices and the actual conditions at their factories, warehouses, branches and other operating locations.
Directors and Senior Officers Could Face Personal Liability
Corporate compliance is often treated as a responsibility of legal, human resources or administrative departments. However, some laws also place specific obligations on directors, key managerial personnel, designated officers and factory occupiers.
TeamLease RegTech's audit found that 29 percent of the findings identified directors, senior officers or factory occupiers in connection with potential personal liability.
The legal consequences of a compliance failure depend on the relevant legislation, the nature of the violation, the individual's statutory responsibilities and the facts of the case. The audit findings do not establish that any particular director or officer has committed an offence.
Nevertheless, the results highlight why senior management should maintain clear responsibility for compliance oversight. Companies need systems that identify applicable legal obligations, assign responsibility for completing them, preserve evidence and escalate unresolved issues before they lead to regulatory action.
Regular reporting to senior management and board-level oversight can help organisations identify recurring problems and ensure that corrective measures are completed within appropriate timelines.
Why Compliance Gaps Continue to Occur
Indian businesses must navigate a complex regulatory environment involving central, state and local requirements. The obligations applicable to a company can vary according to its industry, location, workforce, activities and operating licences.
A company with offices and facilities in several states may need to comply with different local requirements in addition to national legislation. Its registered office, manufacturing plant, warehouse and branch offices may therefore face different compliance responsibilities.
Regulations also change over time. Organisations must monitor amendments, new notifications, revised filing requirements and changes in the interpretation or implementation of applicable laws.
A central compliance dashboard may show that all assigned tasks have been completed, but it may not reveal a missing document or an unsafe condition at a physical site. The report argues that independent audits are important because they compare the organisation's recorded compliance status with the legal requirements and conditions found at the workplace.
New Labour Codes and Continuing Compliance Requirements
The report noted that approximately 37.7 percent of the findings fell under labour laws consolidated into India's Labour Codes.
This finding highlights the need for businesses to assess their obligations carefully as labour legislation and its implementation evolve. Companies should establish which legal provisions and rules apply to their operations and confirm that their procedures, records and workplace practices meet the relevant requirements.
The existence of consolidated legislation does not automatically eliminate every compliance obligation. Businesses must consider applicable provisions, effective dates, rules, notifications and other legal requirements relevant to each location.
Organisations should also ensure that their compliance processes are updated when legal changes affect employee documentation, contractor arrangements, workplace safety or statutory reporting.
How Businesses Can Reduce Compliance Risks
The findings point to several practical steps that businesses can take to strengthen their compliance systems.
First, organisations should conduct independent compliance audits that cover all relevant workplaces and applicable laws. Such reviews can identify gaps that may not be visible through routine internal reporting.
Second, companies should maintain an accurate inventory of licences, registrations, statutory records, filing deadlines and operational requirements. Responsibility for each obligation should be clearly assigned to an individual or department.
Third, businesses should regularly verify contractor compliance and the conditions at warehouses, factories, branch offices and other locations. Compliance oversight should extend beyond the corporate headquarters.
Fourth, organisations should document corrective actions, establish deadlines and monitor unresolved findings. Serious risks should be escalated promptly to the appropriate management level.
Finally, senior leaders and boards should receive clear reports showing compliance status, significant risks and progress in closing identified gaps.
What the Report Means for Indian Businesses
TeamLease RegTech's audit highlights the difference between completing routine compliance tasks and verifying that an organisation meets all applicable legal requirements.
The identification of 4,694 gaps across 52 audited locations does not mean that every Indian business has the same level of exposure. The findings relate to the workplaces examined in the study. However, they illustrate the challenges companies can face when legal obligations are spread across multiple locations and regulatory frameworks.
With potential penalties ranging from financial sanctions to criminal consequences under certain provisions, businesses have a strong reason to treat compliance as an ongoing management responsibility.
The report's central message is that effective compliance requires more than paperwork. Organisations need reliable records, workplace-level verification, clear accountability and independent reviews to identify and address problems before they escalate.
For Indian businesses, strengthening these processes can help reduce legal exposure, improve workplace governance and support more reliable operations.
