The liability is on your balance sheet.
The control is not.
Your contractors compute wages you are liable for. Your payroll pays across jurisdictions your system resolves by guesswork. Your statutory dues are deposited by a process nobody has evidenced end to end.
None of that shows up as a variance. It shows up as a notice, a disallowance, a provision you did not plan for, or a question from your auditor you cannot answer from a system.
yfy puts a control in the payment path, sizes the exposure you are carrying, and produces the evidence your auditor asks for.
Four questions, and no current system answers more than one
Your HRMS answers none of these. Your ERP answers the fourth, partially. Your compliance consultancy answers the third, six months late.
What is my unrecognised statutory liability?
Contractor defaults you are the payer of last resort for; provisions and contingent liability disclosure under Ind AS 37.
Jump to Question 1 →Can I sign for internal financial controls?
Directors' responsibility statement; ICFR testing on the payroll and vendor payment path; person-level segregation of duties.
Jump to Question 2 →Can I answer what my auditor will ask about statutory dues?
CARO reporting on undisputed statutory dues and arrears beyond 6 months; evidenced status versus bank statements.
Jump to Question 3 →Where is cash leaking, and how much working capital is stuck?
Overbilled contractor invoices; billed-versus-paid drift; receivables held over incomplete compliance proof packs.
Jump to Question 4 →You are the payer of last resort for arithmetic you never saw
Under CLRA §21, EPF §8A and ESI §40, when a labour contractor fails to pay wages or fails to remit provident fund and ESI, the principal employer pays. You did not compute the wage. You are still liable for it, plus interest and damages.
| Component | Basis of Liability |
|---|---|
| Wage shortfall | Where the contractor paid below the notified minimum wage for that site's state, zone and skill category. |
| Unremitted PF and ESI | Where the challan you were given does not actually cover the workers deployed at your establishment. |
| Interest and damages | Interest under EPF §7Q and damages under §14B accrue on delayed remittance, independent of the principal amount. |
| Statutory bonus and overtime | Bonus under the 1965 Act, and overtime which the Factories Act requires at double the ordinary rate. |
None of this is visible in an invoice total, and an ERP three-way match will never find it. The purchase order was for a service. The invoice matched the purchase order. The money left. What nobody checked was whether the wage underneath it met the statute for that state.
Whether contractor statutory exposure is provided for or disclosed turns on whether an outflow is probable and whether it can be reliably estimated. Most finance teams cannot currently estimate it, which forces a judgement call under Ind AS 37 with no measurement behind it. Sizing it does not create the liability — it was always there on your balance sheet. Measuring it makes your disclosure defensible.
Four signatures on the money path, and a person-level check on top
Payroll is usually the largest single cash outflow a company makes each month, and in most organisations it runs on a control that would not survive being described out loud: one team prepares it and one person approves everything.
| Verb | Role | Decision |
|---|---|---|
| run_process | Payroll Admin | Compute the register |
| approve | Payroll Approver | The figures are right — accept the liability |
| approve_payment | Payment Approver | Money may leave the bank account |
| disburse | Treasury | Execute and reconcile bank file |
Grant-level separation stops one account holding two verbs. Only a person check stops one human making both decisions. We added the fourth verb after finding that two roles could both carry a single approval grant — which meant a four-eyes control became two eyes in practice. The payment-approval endpoint structurally refuses when the caller is the person who already approved the payroll. It is the kind of finding an ICFR walkthrough is supposed to produce.
On the vendor payment side:
The contractor release control is the same idea applied to accounts payable. The system computes an eligible-to-pay figure — verified wages plus statutory add-backs plus agreed margin plus GST — and payment above it requires an explicit human override with a recorded justification. Not a warning. A recorded decision with a name against it.
Period locks & immutable snapshots
Every per-employee figure is fixed at computation time. A later change to a salary structure or statutory rate cannot silently alter a payslip already issued.
Append-only evidence ledger
Filing and document events write to a tamper-evident ledger with hash verification. Holds no personal data, so it creates zero privacy liabilities.
Readiness gate before a run
A payroll run that is not fit to compute (missing pan, unmapped branch, broken threshold) is blocked, and any override is recorded.
Migration that cannot be unpicked
Go-live after data migration is a one-way door — imported history cannot be undone, and opening balances stay permanent opening balances.
These are the artefacts an ICFR walkthrough asks for on payroll and vendor payment cycles: a documented segregation matrix, evidence it is enforced by the system, and an audit trail that cannot be edited after the fact.
Statutory dues, evidenced — not asserted
Your statutory auditor is required to report on whether undisputed statutory dues — provident fund, ESI, income tax, GST, cess and other statutory dues — have been regularly deposited, and on any arrears outstanding beyond six months. Most finance teams answer this from a bank statement and a spreadsheet.
| State | What it means | What an auditor accepts |
|---|---|---|
| Computed | The liability is calculated for that state and wage month. | Not sufficient on its own |
| Filed | The return was submitted, with figures frozen at submission. | Partial |
| Paid | Marked remitted for that state and those months. | A bank statement is not evidence of what it discharged |
| Evidenced | The acknowledged return and the payment receipt are both held against the right head, state and wage month. | This is the state that survives an audit |
Most compliance dashboards show what is due. Ours also shows the gap between "we paid it" and "here is the proof." Missing evidence is its own work queue, per registration, per head, per period — because the difference between paid and provable is exactly the difference between a clean CARO report and a qualification.
"Which registration did this file under?"
Every PF, ESI and PT record is stamped with the registration in force for that wage month and never re-derived. Change a branch mapping in October and April still regenerates exactly the return you filed in April — so an auditor asking for the return as filed and the return as computed today gets the same document.
"How do you know your applicability is current?"
Statutory applicability recomputes inline when master data changes, against live headcount, with a ratchet. Obligations the engine can verify are closed automatically; anything dismissed by a human requires a written reason, is audited, and re-surfaces at the statutory deadline.
"What is your coverage, and how do you know it is current?"
We publish a state-by-state matrix showing what is loaded, to what depth, and when a named person last checked it against the gazette — including where we compute and evidence rather than generate a return file. Ask your other vendors for theirs.
Employees’ contributions to provident fund and ESI must be deposited by the due date under the relevant welfare statute. Deposited late, the deduction is permanently disallowed under section 36(1)(va) — a position settled by the Supreme Court in Checkmate Services in 2022, which held that section 43B does not rescue a late deposit of the employees' share. That converts a payroll timing failure into a permanent tax cost, not a deferral. A due-date register per registration per head, with evidence attached, is therefore a primary tax control.
Three leaks, and none of them appears as a variance
Where cash quietly leaves the business before accounts closing identifies it.
Overbilled contractor invoices
Claimed man-days trimmed against your own gate and biometric record, per worker. An invoice for 26 days against a turnstile record of 21 is not a rounding difference at scale, and no PO match catches it.
Budget committed before spent
Expense runs on a budget envelope tree with an encumbrance ledger — an approved claim commits the money before it settles, so the envelope reflects what is spoken for rather than only what has cleared.
Receivables held over evidence
If your group supplies manpower, an enterprise client with an incomplete compliance pack has a defensible reason to hold payment. A generated pack per contract per month removes the reason.
Plus, on the cost side:
Workforce planning derives employer PF, ESI and EDLI rates from the tenant’s own payslips rather than from a typed assumption. A hard-coded 12% employer PF overstated one real tenant by roughly seventeen times — which is why the derivation exists. Your headcount plan is costed from what you actually pay.
And planning runs on a two-key approval: the business head answers whether the people are needed, Finance answers whether they are affordable, and neither key alone approves.
Numbers your closing process can actually use
Audit-defensible datasets delivered directly into monthly and year-end closing cycles.
| Item | What the platform produces |
|---|---|
| Gratuity | Provisioning computed with continuous service held against the worker rather than the deployment, so multi-site and seasonal service histories are correct. Actuarial valuation stays with your actuary; we produce the data set they ask for. |
| Statutory bonus | Computed under the 1965 Act, with eligibility based on days worked in the accounting year — so a seasonal worker who has since left is not silently excluded. |
| Leave encashment | Balances and liability from the leave engine rather than a year-end estimate. |
| Contractor residual exposure | Sized per contractor, site and state, with per-worker traceability — the measurement that makes a provision or a contingent liability note defensible under Ind AS 37. |
| Statutory dues position | Per registration, per head, per period, split by computed, filed, paid and evidenced. |
We are not your actuary and we are not an accounting system. We produce the measured data set; the provisioning judgement, the actuarial valuation and the disclosure are yours and your auditor's.
No rip-and-replace, and no second source of truth
Your ERP keeps the ledger. Your HRMS keeps the employee. The contract labour and statutory layer is licensed separately and runs alongside both — because the control you are missing is in the payment path, not in the general ledger.
ERP stays
SAP, Oracle, NetSuite, Tally Prime or Zoho keep the GL and AP accounts. We feed clean payment releases.
HRMS stays
Darwinbox, Workday, greytHR, Keka or Excel keep your direct employee master data. Zero migration required.
One tenant, one DB
Your data sits in its own database schema, strictly partitioned and encrypted with dedicated keys.
Licensed per module
You do not pay for sixteen modules to use two. License contractor verification or statutory payroll independently.
Commercial terms a CFO cares about
Contractual protections built around operational realities rather than software sales quotas.
Billing starts at go-live
It is common in this market to bill from contract signature while implementation runs 90 days. We do not. Billing begins upon live run.
Priced on complexity
Own direct employees pay standard payroll user tiers; contract workers are metered strictly as verified active heads (from ₹20/worker/mo).
Migration included
Historical replay, two-cycle parallel runs and go-live assistance are part of standard onboarding, never an unexpected change order.
Read-only before commitment
The contractor exposure assessment and payroll replay write nothing to live systems and require nothing beyond a mutual NDA.
Governance, audit and implementation answers
Honest limits: What we do not do
We state our operational boundaries clearly so expectations align before you sign an agreement.
- We are not an accounting system. No general ledger, no statutory financial statement reporting, no consolidation of balance sheets. We post verified data to yours.
- We are not your actuary. We produce the employee service dataset; the actuarial valuation is your actuary's.
- We do not give tax or legal advice. The section 36(1)(va) position and reverse-charge treatments are our reading of settled law, not formal counsel. Confirm both with your advisers.
- We do not perform your ICFR testing. We give you a system-enforced control and the evidence trail. The risk-control matrix and testing are your internal audit function’s.
- India only. Deliberately. The depth in state minimum wage, professional tax, labour welfare fund and CLRA exists because we did not spread across international jurisdictions.
- We have three ISO certifications and few public references. We would rather size your exposure on your own three months of invoices than show you someone else's logo.
- We will not quantify your exposure for you in a marketing slide. Any figure published without your data would be a marketing guess. The calculator states its assumptions openly and the assessment uses your real invoices.
Size it before you decide anything
Send three months of contractor invoices, your contract worker attendance in whatever form you hold it, your site list with states, and the PF and ESI challans your contractors supplied. We run them through the same statutory engine our customers use to release payments. You get back a figure, and the workings.