Over the past decade, India has grown a healthy and vibrant startup scene. A slew of new-age businesses has dominated this, often set up by young entrepreneurs. While the ideas, and usually the promoters, might be of a new age, all companies in India must comply with various labor laws dealing with compensation, working conditions, medical benefits, discrimination, and retirement benefits. A prominent labour law consultancy will significantly help in such cases.
One of the many challenges facing any entrepreneur or organization is that while the economy and the working culture in many places have progressed with time, the rules governing employment, benefits, and terminations have often been drafted between 50 to 150 years back. While most of these laws & acts have undergone amendments to make current specific key provisions, there still does not exist a labor law framework that is suitable for recent times.
Indian youth today is convinced to venture out independently, and a conducive ecosystem lets them see their ideas come to life. In contemporary circumstances, we have more startups and entrepreneurs than ever, and the movement is on the cusp of a revolution. However, many startups do not reach their full potential due to limited guidance and access.
Here is a list of the recent developments in the compliance framework for startups by India's leading labour law consultants:
A startup is defined as follows for these exemptions:
- An entity incorporated or registered in India, not before five years, and with an annual turnover not exceeding Rs. Twenty-Five Crores in any preceding financial year.
- Working towards innovation, development, deployment, or commercialization of new products, processes, or services driven by technology or intellectual property.
- Provided such a business is not formed by splitting up or reconstructing a company already in existence.
- Provided also that an entity will cease to be a startup if its turnover for the previous financial years has exceeded Twenty-Five Crores or it has completed five years from the date of incorporation or registration.
With nine labor and environment laws, startups shall be allowed to self-certify compliance through the Startup mobile app or with the help of a labour law compliance.
In the case of labour legislation, the law will conduct no inspections for three years. Startups may be inspected on receipt of a credible and verifiable complaint of a violation, filed in writing, and approved by at least one level senior to the inspecting officer.
In the case of environmental laws, Startups which fall under the ‘white category (as defined by the Central Pollution Control Board (CPCB)) would be able to self-certify compliance, and the judiciary would carry out only random checks in such cases.
Labour laws from which exemption is provided under the current scheme:
- The Building and Other Constructions Workers' (Regulation of Employment & Conditions of Service) Act, 1996.
- The Inter-State Migrant Workmen (Regulation of Employment & 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.
- The Employees' State Insurance Act, 1948.
- Environmental laws from which exemption is provided under the current scheme:
- The Water (Prevention & Control of Pollution) Act, 1974.
- The Water (Prevention & Control of Pollution) Cess (Amendment) Act, 2003.
- The Air (Prevention & Control of Pollution) Act, 1981.
Labour Law Compliance is a must for all the factories & industries to follow, but it is harassment for the new entrepreneurs. So, the government, with the sole aim to support & promote the startup, came up with a policy to self-certify nine labour laws & environmental laws for a period of 3 years so that the new entrepreneurs may have to face fewer problems & will get accustomed to all the labour law compliances during the three years. This is a good decision taken by the government to promote startups in India which will boost the startup sector, thus giving way to employment opportunities. Make sure to get in touch with Prompt Personnel Personnel Limited, a renowned labour law consultancy in India, for additional assistance.
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