Concessions to startups regarding Labour Laws

Replying to a question in the Lok Sabha posed by Shri Bandaru Dattatreya, the Minister of State (IC) for Labour and Employment, relating to certain concessions to startups under the labour laws, the Ministry of Labour and Employment has issued an advisory to states and the same has been recorded in a press release dated 25 April 2016.

Key Highlights

If such start-ups furnish self-declaration for compliance under the following nine labour laws for the first year from the date of starting the start-up, no inspection under these labour laws, wherever applicable, will take place. The nine labour laws, included in this advisory are:

  • the Industrial Disputes Act, 1947;
  • the Trade Unions Act, 1926;
  • the Building and Other Constructions Workers’ (Regulation of Employment and Conditions of Service) Act, 1996;
  • the Industrial Employment (Standing Orders) Act, 1946;
  • the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979;
  • the Payment of Gratuity Act, 1972;
  • the Contract Labour (Regulation and Abolition) Act, 1970;
  • the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952; and
  • the Employees’ State Insurance Act, 1948.

From the second year, up to three year from the setting up of the units, such start-ups are required to furnish self-certified returns and would be inspected only when credible and verifiable complaint of violation is filed in writing and approval has been obtained from the higher authorities.

The press release adds that the advisory to State Governments is not to exempt the Start-ups from the ambit of compliance of these labour laws but to provide an administrative mechanism to regulate inspection of the startups under these labour laws, so that they are encouraged to be self-disciplined and adhere to the rule of law. These measures intend to avoid harassment of the entrepreneurs by restricting the discretion and arbitrariness. Punitive action shall, however, be taken whenever there is a violation of these labour laws.

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One comment

  1. Puneet Shah

    Governance on self regulation basis is always a welcome step. However, more importantly the similar advisory should also be acknowledged and implemented at the local administration level to successfully achieve the ‘ease of doing business’ and ‘make in India’ initiatives of Government of India.

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